‘We’ve got Universal Credit, Workfare and the
benefits cap. My dear Pickles, this is the final
piece in
the jigsaw.’
problem as well!’
|
‘April is the
cruellest month’, wrote T.S. Eliot in The
Wasteland, and it certainly will be for almost anyone who is currently
claiming benefit. Throughout April, a series of far-reaching changes to benefit
rules come into force, which will put a final nail in the coffin of the
post-war consensus on social security. Some of these changes have received
widespread publicity – such as the ‘bedroom tax’ (see our earlier Spare
room for thought?), while others are less well-known.
Very briefly the
main changes are:
The introduction of a cap on benefits restricting the payment to any household to
a maximum of £26,000 per annum: initially
applying in only apply in four pilot areas, the cap is scheduled to be rolled
out more generally later in the year.
Housing benefit: bedroom tax comes into effect, costing those
with what has been defined as a ‘spare room’ 14% of their housing benefit or
25% if they have two ‘spare’.
Partial abolition of the social fund: The discretionary parts of the Social Fund
(providing grants and zero-interest loans to help vulnerable people with
essential outlays such as beds, cots or cookers) are abolished. Responsibility – and a reduced budget – has
been passed to local authorities, which will be entitled, but not obliged, to
operate their own schemes. A number have recently announced that they will use
the money to provide food stamps, support food banks or issue ‘credit cards’
which may be used for a restricted range of purchases.
Council tax benefit: Council tax support will replace the current
system of support for people paying council tax, replacing payments of council
tax benefit and council tax discounts, exemptions and reductions.
For many, especially people with families, this will mean reduce the
amount of benefit they receive.
Local Housing Allowance rates: LHA rates will be increased in line with the
Consumer Price Index instead of rent levels in each area – which will reduce
levels of allowance for those living in high rent areas.
Universal
Credit: Duncan Smith’s pet project to simplify the complex array of benefits and
allowances that make up what we used to call the social security system, it was
originally expected to start in four pilot areas in April, but a week ago DWP
announced that there would be just one pilot area. It’s in such chaos that
no-one knows what effect it will have: the DWP recently announced that 2.8
million families would receive lower benefits once UC was in place, while Grant
Schapps (or someone using that alias) claimed it would show that you’re always
better off in work – presumably if benefits are cut sufficiently.
The government is defending all these changes on
two main sets of grounds: they’re necessary to reduce the deficit; and secondly
they are designed to free people from benefit dependency by providing
incentives to work. But the changes are
seriously flawed on both accounts.
First, the sums many of these will save are, according to official figures
small, and some are likely to increase public expenditure. For example, the savings generated by the
changes to the social fund will be just £52m; we already showed (In Spare room
for thought) that the bedroom tax was likely to cost more than it saved. The
benefits cap, which applies to just 1% of those receiving benefits, is expected
to save £275m a year – a drop in the ocean compared to the £178bn spent on
benefits last year. But even Eric
Pickles has warned that the cap could force 20,000 families to become homeless
and that this could undermine any savings made by the cap. A leaked
letter from Pickles's office last year said: "In fact we think it is
likely that the policy as it stands will generate a net cost." And providing incentives to work? Well, in many areas there aren’t any jobs for claimants to be incentivised to find; and in any case, according to the Institute for Fiscal Studies (IFS) seven million working families will be hit by the cuts – in fact more people in work will be affected than those unemployed: a strange outcome for a package designed to provide incentives to work.
It’s too early to
calculate with any certainty the cumulative impacts of all these changes,
though at the risk of stating the bleeding obvious, they are targeting the most
vulnerable. The Guardian in a worthy headline last week proclaimed ‘welfare
cuts will hit the poorest’. (No shit Sherlock? On other pages, Pope Francis discusses his
theology, and David Attenborough on bears’ toilet habits.)
While it may be
self-evident, it’s worth saying that the DWP itself has been reporting the
impact of many of these cuts. The Observer cited a leaked government memo
suggesting that 100,000 children would be pushed below the poverty line as a
result of the benefits cap. In a revised impact assessment of UC, DWP itself
has said that 2.8 million households will get a lower entitlement to benefits. Yet
Duncan Smith, Schapps and other ministers still say the cuts are fair.
But above all, the cuts
and the way they’ve been announced (and trumpeted in the right wing press) are
designed to persuade us that the poor are responsible for their own
poverty. The Victorians distinguished
the deserving and undeserving poor; for Duncan Smith they’re all undeserving
now.