Proposals to abolish the Work Capability Assessment
An overview of proposals to abolish the Work Capability Assessment first announced in March 2023

This briefing covers rising prices including food and energy inflation, Government support, and how the cost of living affects households.
Rising cost of living in the UK (1 MB , PDF)
The cost of living increased sharply across the UK during 2021 and 2022. The annual rate of inflation reached 11.1% in October 2022, a 41-year high, before subsequently easing. Recent data shows it fell from 6.8% in July to 6.7% in August 2023. High inflation affects the affordability of goods and services for households.
UK consumer prices, as measured by the Consumer Prices Index (CPI), were 6.7% higher in August 2023 than a year before, down from 6.8% in July, and the lowest rate since February 2022. This was lower than was expected, with economists forecasting an increase to 7.0%.
Measures of underlying inflation in the economy, which had risen during the spring, also eased in August. “Core” inflation, which excludes the volatile energy and food components of the CPI, unexpectedly fell from 6.9% in July to 6.2% in August.
A slowing or falling inflation rate means that prices are rising more slowly than before; it does not mean that price levels are actually falling. For example, if the annual inflation rate drops from 10% to 5%, this means prices are still 5% higher compared with a year before.
Figures for inflation in September 2023 will be published by the Office for National Statistics on 18 October.
The combination of statistical effects, falling energy prices, and other factors like easing global cost pressures, are forecast to continue to reduce the UK’s annual inflation rate during the remainder of 2023.
The average forecast among economists surveyed by the Treasury in the first half of September 2023 was for inflation to be 4.8% in the final quarter of 2023. This survey was conducted before the inflation data for August was published.
The Bank of England expects inflation to ease in 2023. In its latest set of forecasts published in early August 2023, it forecast an inflation rate of 4.9% in the final quarter of 2023.
The inflation rate is typically expressed as the percentage change in consumer prices compared with one year before. For example, the most recent data compares prices in August 2023 with prices in August 2022.
This means that changes to prices that occurred more than a year ago, before August 2022 in this example, “drop out” of the annual inflation rate. Economists expect this effect to lead to the inflation rate generally falling during the remainder of 2023, as some past price increases – like the sharp increases in energy bills – “drop out” of the annual comparison.
The initial phase of this increase in inflation was mainly due to international factors. These included:
As the UK is a large net importer of goods (including energy), these global factors affected consumer prices in the UK.
While global factors were the original drivers of high inflation, price rises in many areas of the domestic economy have also accelerated. This is partly due to strong pay growth, with labour costs making up a large share of costs for many firms, particularly in the services sectors.
Services prices, a measure the Bank of England pays close attention to, also fell, are less exposed to global factors and more dependent on domestic costs. Inflation in services was at a 31-year high of 7.4% in July 2023 but fell to 6.8% in August.
Food prices rose sharply during 2022 and 2023, as global supply chain disruptions and the effects of Russia’s full-scale invasion of Ukraine lifted the input costs of food producers.
UK food and non-alcoholic drink prices were 13.6% higher in August 2023 compared to the previous year, based on the CPI measure of inflation. This continued the decline from the recent peak of 19.1% in March 2023, which was the highest rate of increase in food prices since 1977.
Over the two years from August 2021 to August 2023 food prices rose by 28.4%. It previously took over 13 years, from April 2008 to August 2021, for average food prices to rise by the same amount.
Another important driver of high inflation has been energy prices, with household energy tariffs and road fuel costs increasing in 2022. Gas prices increased to record levels after Russia launched its full-scale invasion of Ukraine and continued to rise during much of 2022 due to cuts in Russian supply. Electricity prices are linked to gas prices and followed a similar trend. The largest jump in prices was in April 2022 and this annual increase has now ‘dropped out’ of the inflation figures.
On 8 September 2022 the then Prime Minister announced a new Energy Price Guarantee (EPG) would be introduced on 1 October, to cap typical consumption at £2,500 a year. This limited increases in typical bills to 27% in October 2022.
The EPG became less generous in July 2023, increasing to £3,000 a year. However, a fall in the price cap in July 2023 meant that the EPG no longer set maximum prices and consumer bills fell. The price cap is due to fall again in October 2023.
Oil prices spiked after Russia’s 2022 invasion of Ukraine. They fell for much of the second half of 2022 and the first half of 2023. UK road fuel prices peaked at new record levels in July 2022. They fell for much of the following year before starting to increase again in late summer 2023.
Consumer price inflation rose in much of the world during 2021 and 2022, peaking in many economies in late 2022, with a decline in the annual rate of inflation evident in 2023. However, the speed of this period of disinflation has varied by country.
In August 2023, the UK’s annual inflation rate of 6.7% was higher than in most comparable economies such as Germany (6.4%), France (5.7%), Italy (5.5%), the Eurozone average (5.2%), and the US (2.5%).
The Bank of England has been raising interest rates to try and get the inflation rate back to its 2% target. Interest rates were raised at 14 consecutive policy meetings from 0.1% in December 2021 to 5.25% in August 2023.
On 21 September, the Bank’s Monetary Policy Committee (MPC) left rates unchanged at 5.25%. Shortly after the decision, financial markets and economists either expected rates to have already peaked, or for there to be one further increase to 5.5%.
High rates have led to higher borrowing costs for households, notably mortgage interest rates which have risen sharply from the very low rates seen previously. Rental price growth has also been rising in recent years.
According to a Office for National Statistics (ONS) survey from late August and early September, 51% of adults in Great Britain reported an increase in their cost of living compared to the previous month.
In September 2023, the Resolution Foundation projected real incomes to have fallen in 2022/23 and then stagnated in 2023/24, which would mean a combined two-year fall in real household income of 4%.
Low-income households are most affected by rising prices. ONS data shows that households with the lowest incomes experience a higher than average inflation rate, while the highest-income households experienced lower than average inflation. This disparity is due to low income households being more affected by high food and energy prices.
Food bank charities are reporting an increase in demand: the Trussell Trust reported that in the year to March 2023 they provided nearly 3 million emergency food parcels, a record number, more than during the pandemic and more than double the number in the same period five years before.
The Energy Price Guarantee (EPG) caps the unit of cost of energy for households. A household’s bill is still influenced by how much energy they use, but a typical household may have saved around £1,500 between October 2022 and June 2023, according to the government. As energy prices have fallen, households will pay less than the EPG unit cost during July to December 2023 (at least).
The EPG is estimated to cost around £27 billion across 2022/23 (£23 billion) and 2023/24 (£4 billion).
During 2023/24, the government is also providing cost of living payments of varying size to different recipients. Those eligible include:
This followed more extensive and wider support to households in 2022/23.
On 23 June 2023, the Chancellor, the principal lenders and the Financial Conduct Authority agreed a range of support measures for people struggling with mortgage payments.
Rising cost of living in the UK (1 MB , PDF)
Commons Library publications on the rising cost of living in the UK, including cause of inflation, the effect on households, and Government support.
An overview of proposals to abolish the Work Capability Assessment first announced in March 2023
Components of GDP: data on the components that make up GDP, including household consumption, government spending, investment, trade and output by sector.
Financial Indicators: Data from FTSE100, as well as oil prices and gold prices.