No government decision has yet been made on how to uprate universal credit and other benefits for next year, because the economics is tricky. Mordaunt is correct that, in theory, adjusting all benefits and tax thresholds for inflation annually “makes sense”. Policy should deliver constant levels of assistance to living standards. If today’s support is at the “correct” level, lifting the money value of benefits and thresholds by inflation each year ensures that its real purchasing power is protected.
In practice, this principle has been abandoned regularly for both taxes and benefits. Working-age benefit levels were often increased by less than inflation or even frozen between 2010 and 2019, as governments considered them too generous. The state pension triple-lock typically guarantees increasing real support for pensioners. Even that, though, was suspended in 2022 when the Covid rebound sent average earnings growth soaring.