It will also effectively wipe out the cost of living allowance save for potential increases once every five years.

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Under austerity measures introduced thus far, civil servants have taken an average 10% cut in pay, VAT has been increased and the cost of living allowance has been suspended.

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Now, in terms of the COLA, the formula -- COLA stands for Cost of Living Allowance, so it's put in place to make sure that Social Security is keeping up with inflation.

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Chancellor George Osborne has proposed a cap of 1% - which is below the expected rise in the cost of living - on increases in most working-age benefits, such as Jobseeker's Allowance and maternity pay, and tax credits for three years from 2013-14.

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