A north-east MP has suggested low-income families could “lose control of their spending power” amid rising inflation and a benefits freeze.
Eilidh Whiteford said it would be a “complete dereliction of duty” if the Conservative government did not scrap its freeze on working-age social security payments in light of the economic uncertainty caused by Brexit.
Former Chancellor George Osborne announced last summer that benefits would no longer rise with inflation.
If social security payments remain frozen, low-income families would be hit in the pocket as prices rise.
The Institute for Fiscal Studies (IFS) recently warned the decision could lead to an “arbitrarily determined” cut of 6% to working-age payments if prices continue to rise.
The UK Government has insisted it is working to make the best of Brexit.
But Banff and Buchan MP Ms Whiteford said: “Figures from the IFS reveal the cold, hard reality of Brexit – that working families could lose control of their spending power, be forced further into poverty and families will face higher consumer costs with less money in their back pockets.
“It would be a complete dereliction of duty for the Tories to allow the cost of all the uncertainty and volatility caused by their ill-thought out EU Referendum to fall squarely on the shoulders of low and average income families who rely on tax credits to make ends meet.”
According to the IFS report, which was published last week, the economic impact of the Brexit vote poses a “real risk” to low-income families.
It states: “Previously, higher inflation was a risk to the public finances, increasing cash spending on benefits.
“Now the risk is borne by low-income households: unless policy changes higher inflation will reduce their real incomes.”
A fall in the value of the pound since the Brexit vote has led to imports increasing in cost, causing inflation.
It has dropped by almost a fifth against the dollar since June, with 5% of that fall coming after Theresa May outlined her preferred timescale for Britain leaving the EU.