‘We’ve got Universal Credit, Workfare and the
benefits cap. My dear Pickles, this is the final
piece in the jigsaw.’
‘Brilliant IDS – solves the bedroom tax
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.