The £20-per-week uplift to Universal Credit (UC) will be extended for six months, Rishi Sunak has announced.
Delivering his budget in the Commons on Wednesday, the chancellor said it would support “the lowest paid and most vulnerable ”.
The benefit was increased at the start of the pandemic in 2020 and was due to expire at the end of March.
MPs on the Commons work and pensions secretary had called for increase to remain until April 2022 “at the very least” as people struggled to cope with economic impact of Covid.
Keir Starmer, the Labour leader, said Sunak had been “dragged kicking and screaming” to extend the uplift was “deferring the problem”.
“As a result, insecurity and the threat of losing £1,000 a year still hang over six million families,” he said.
Starmer said Labour would keep the increase “until a new, fairer system could be put in place”.
Paul Johnson, the director of the Institute for Fiscal Studies (IFS) think-tank, said failing to extend it for a year or make the uplift permanent would likely mean “just mean another six months of campaigns to keep it”.
“In any case why not phase it out gradually rather than hit incomes of poorest by £20 a week all in one go?” he said.
There were 4.5 million UC claims between March 13 2020 and January 14 this year, according to figures from the Department for Work and Pensions (DWP).
It represents 39% of the 11.4 million claims made since the benefit was introduced in April 2013.
Sunak said his budget was designed to “get people through to the other side of the crisis”.
The furlough scheme was extended until the end of September, and 600,000 more self-employed people will be able claim help.
As a result of the budget, the tax burden will increase to its highest level for more than 50 years.
Taxes on business profits are set to be hiked from 2023, while income tax thresholds will be frozen meaning more people will be dragged into paying.