The untold story of April’s welfare cuts: the combined impacts

440,000 families will lose £16.90 a week as they are hit by both the bedroom tax and cuts to council tax support.

A great deal of attention has been paid to the many individual changes to social security that are taking place this month. Not known are the combined impacts – when individuals and households get hit by numerous changes. It is a notable omission that no official estimates of the overlap between different reforms have been published. Our research, published today, tries to fill that gap.

We have analysed four major changes. Three of them are “absolute” cuts: the bedroom tax; the replacement of council tax benefit by council tax support; and the overall benefit cap (which is being piloted this month, with the aim of full rollout by September). All of these will result in a reduction of the amount of money these households have to spend on everything else. Additionally, the uprating of out of work benefits and some elements of tax credits by only 1 per cent, below the level of inflation (2.7 per cent), will result in a cut in real terms for those families receiving such benefits.

The headline figures show that 2.6 million families are affected by at least one of the three absolute benefit cuts, and 440,000 are affected by more than one. Almost two thirds (63 per cent) of the families affected by an absolute cut in benefit have also seen a fall in real terms to other benefits.

The biggest single group of losers from this month’s absolute cuts are those being hit by change to council tax benefit only, some 2 million families. Their average loss per week is around £2.60, but most will lose out additionally from a below-inflation increase in benefits. The smallest group to lose out are those being hit by the Household Benefit Cap: around 50,000 families. The average loss per week for these families is huge, however – some £93 per week. 

Those families hit by the bedroom tax are likely to be hit by other changes as well. More than two thirds of them will also lose out through changes in council tax benefit – around 440,000 families. The average loss in weekly income for these families is £16.90, which is 20 per cent higher than the individual bedroom tax cut. Around 320,000 of those hit by both changes, more than 7 out of 10, will also see a cut in real terms in the value of their benefits as a result of the 1 per cent uprating.

These changes inevitably hit those on lowest incomes. Sixty three per cent of those hit by any of the reforms are already in poverty, which rises to 67 per cent of those affected by both the bedroom tax and council tax benefit changes. Seventy five per cent of families hit by a single cut and 82 per cent losing out from both are workless.

Around half of the families losing out have a disabled adult, and a third of these adults receive Disability Living Allowance (DLA). Some of these families might be hit again by the transfer from DLA to the Personal Independence Payment, as 20 per cent are expected to lose their entitlement entirely under the changes, according to the DWP Impact Assessment.

This is, of course, only part of the picture. There have been various other reforms since 2010, such as the caps on Local Housing Allowance (Housing Benefit for the private rented sector); changes to Working Tax Credits; and the abolition of the Social Fund. These will have further overlaps with this month’s changes, particularly with council tax benefit changes.

The point here is not that any reforms are bad, even if they take money away from people in poverty. But the fact that there has been no analysis from government of the overlapping effects of these changes is indicative of a poorly thought-through process. Social housing could be better allocated, benefit uprating does need a consistent principle when wages stagnate, and council tax does need reform. But this month’s changes address symptoms, not causes, leading to misery for many for no good end. 

Adam Tinson is research analyst at the New Policy Institute

The New Policy Institute's report - How many families are affected by more than one benefit cut this April - can be read here

Washing hangs out to dry above children's bikes on the balcony of a residential development in the London borough of Tower Hamlets. Photograph: Getty Images.

Adam Tinson is research analyst at the New Policy Institute

Photo: Getty
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Sooner or later, a British university is going to go bankrupt

Theresa May's anti-immigration policies will have a big impact - and no-one is talking about it. 

The most effective way to regenerate somewhere? Build a university there. Of all the bits of the public sector, they have the most beneficial local effects – they create, near-instantly, a constellation of jobs, both directly and indirectly.

Don’t forget that the housing crisis in England’s great cities is the jobs crisis everywhere else: universities not only attract students but create graduate employment, both through directly working for the university or servicing its students and staff.

In the United Kingdom, when you look at the renaissance of England’s cities from the 1990s to the present day, universities are often unnoticed and uncelebrated but they are always at the heart of the picture.

And crucial to their funding: the high fees of overseas students. Thanks to the dominance of Oxford and Cambridge in television and film, the wide spread of English around the world, and the soft power of the BBC, particularly the World Service,  an education at a British university is highly prized around of the world. Add to that the fact that higher education is something that Britain does well and the conditions for financially secure development of regional centres of growth and jobs – supposedly the tentpole of Theresa May’s agenda – are all in place.

But at the Home Office, May did more to stop the flow of foreign students into higher education in Britain than any other minister since the Second World War. Under May, that department did its utmost to reduce the number of overseas students, despite opposition both from BIS, then responsible for higher education, and the Treasury, then supremely powerful under the leadership of George Osborne.

That’s the hidden story in today’s Office of National Statistics figures showing a drop in the number of international students. Even small falls in the number of international students has big repercussions for student funding. Take the University of Hull – one in six students are international students. But remove their contribution in fees and the University’s finances would instantly go from surplus into deficit. At Imperial, international students make up a third of the student population – but contribute 56 per cent of student fee income.

Bluntly – if May continues to reduce student numbers, the end result is going to be a university going bust, with massive knock-on effects, not only for research enterprise but for the local economies of the surrounding area.

And that’s the trajectory under David Cameron, when the Home Office’s instincts faced strong countervailing pressure from a powerful Treasury and a department for Business, Innovation and Skills that for most of his premiership hosted a vocal Liberal Democrat who needed to be mollified. There’s every reason to believe that the Cameron-era trajectory will accelerate, rather than decline, now that May is at the Treasury, the new department of Business, Energy and Industrial Strategy doesn’t even have responsibility for higher education anymore. (That’s back at the Department for Education, where the Secretary of State, Justine Greening, is a May loyalist.)

We talk about the pressures in the NHS or in care, and those, too, are warning lights in the British state. But watch out too, for a university that needs to be bailed out before long. 

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to British politics.