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 Images
Show Hide image

What's to be done about racial inequality?

David Cameron's words on equal opportunities are to be welcomed - now for some action, says Sunder Katwala.

David Cameron made the strongest, clearest and most high profile statement about ethnic inequalities and the need to tackle discrimination ever yet offered by a British Prime Minister in his leader’s speech to the Conservative Party conference in Manchester.
“Picture this. You’ve graduated with a good degree. You send out your CV far and wide. But you get rejection after rejection. What’s wrong? It’s not the qualifications or the previous experience. It’s just two words at the top: first name, surname. Do you know that in our country today: even if they have exactly the same qualifications, people with white-sounding names are nearly twice as likely to get call backs for jobs than people with ethnic-sounding names? … That, in 21st century Britain, is disgraceful. We can talk all we want about opportunity, but it’s meaningless unless people are really judged equally”, said Cameron.
While the proof of the pudding will be in the eating, this was a powerfully argued Prime Ministerial intervention – and a particularly well-timed one, for three reasons.

Firstly, the Prime Minister was able to root his case in an all-but-universally accepted appeal for equal opportunities. It will always prove more difficult in practice to put political energy and resources behind efforts to remedy discrimination against a minority of the population unless a convincing fairness case is made that values cherished across our whole society are at stake. Cameron’s argument, that any party which tells itself that it is the party of the ‘fair chance’ and ‘the equal shot’ must have a response when there is such clear evidence of discrimination, should prove persuasive to a Conservative Party that has not seen race inequalities as its natural territory. Cameron argued that the same principles should animate responses to discrimination when it comes to race, gender and social class. Put like that, wanting job interviews to be fair – by eradicating conscious and unconscious patterns of bias wherever possible – would strike most Britons as offering as clear a case of the values of fair play as wanting the best baker to win the Great British Bake-Off on television.
Secondly, Cameron’s intervention comes at a potential "tipping point" moment for fair opportunities across ethnic groups. Traditionally, ethnic discrimination has been discussed primarily through the lens of its impact on the most marginalised. Certainly, persistent gaps in the criminal justice system, mental health provision and unemployment rates remain stark for some minority groups. What has been less noticed is the emergence of a much more complex pattern of opportunity and disadvantage – not least as a consequence of significant ethnic minority progress.

Most strikingly of all, in educational outcomes, historic attainment gaps between ethnic minorities and their white British peers have disappeared over the last decade. In the aggregate, ethnic minorities get better GCSE results on average. Ethnic minority Britons are more likely, not less likely, to be university graduates than their fellow citizens. 

As a result of that progress, Cameron’s intervention comes at a moment of significant potential – but significant risk too. Britain’s ethnic minorities are the youngest and fastest-growing sections of British society. If that educational progress translates into economic success, it will make a significant contribution to the "Great British Take-Off" that the Prime Minister envisions. But if that does not happen, with educational convergence combined with current ‘ethnic penalties’ in employment and income persisting, then that potential could well curdle into frustration that the British promise of equal opportunities is not being kept.  Cameron also mirrored his own language in committing himself to both a ‘fight against extremism’ and a ‘fight against discrimination’: while those are distinct challenges and causes, actively pursuing both tracks simultaneously has the potential, at least, depolarise some debates about responses to extremism  - and so to help deepen the broad social coalitions we need for a more cohesive society too.

Thirdly, Cameron’s challenge could mark an important deepening in the political competition between the major parties on race issues. Many have been struck by the increase in political attention on the centre-right to race issues over the last five to ten years. The focus has been on the politics of representation. By increasing the number of non-white Conservative MPs from two to seventeen since 2005, Cameron has sent a powerful signal that Labour’s traditional claim to be ‘the party of ethnic minorities’ would now be contested. Cameron was again able to celebrate in Manchester several ways in which his Cabinet and Parliamentary benches demonstrate many successful journeys of migrant and minority integration in British society. That might perhaps help to ease the fears, about integration being impossible in an era of higher immigration, which the Home Secretary had articulated the previous day.

So symbolism can matter. But facial diversity is not enough. The politics of ethnic minority opportunity needs to be about more than visits to gurdwaras, diversity nights at the party conference fringes and unveiling statues of Mahatma Gandhi in Parliament Square. Jeremy Corbyn’s first speech as Labour leader did include one brief celebratory reference to Britain’s ethnic diversity – “as I travelled the country during the leadership campaign it was wonderful to see the diversity of all the people in our country” – and to Labour bringing in more black, Asian and ethnic minority members - but it did not include any substantial content on discrimination. Tim Farron acknowledged during his leadership campaign that the Liberal Democrats have struggled to get to the starting-line on race and diversity at all. The opposition parties too will no doubt now be challenged to match not just the Prime Minister’s rhetorical commitment to challenging inequalities but also to propose how it could be done in practice.

Non-white Britons expect substance, not just symbolism from all of the parties on race inequalites.  Survation’s large survey of ethnic minority voters for British Future showed the Conservatives winning more ethnic minority support than ever before – but just 29 per cent of non-white respondents were confident that the Conservatives are committed to treating people of every ethnic background equally, while 54 per cent said this of Labour. Respondents were twice as likely to say that the Conservatives needto do more to reach out – and the Prime Minister would seem to be committed to showing that he has got that message.  Moreover, there is evidence that ethnic inclusion could be important in broadening a party’s appeal to other younger, urban and more liberal white voters too – which is why it made sense for this issue to form part of a broader attempt by David Cameron to colonise the broad centre of British politics in his Manchester speech.

But the case for caution is that there has been limited policy attention to ethnic inequalities under the last two governments. Restaurateur Iqbal Wahhab decided to give up his role chairing an ethnic minority taskforce for successive governments, unconvinced there was a political commitment to do much more than convene a talking shop. Lib Dem equalities minister Lynne Featherstone did push the CV discrimination issue – but many Conservatives were sceptical. Cameron’s new commitment may face similar challenges from those whose instinct is to worry that more attention to discrimination or bias in the jobs market will mean more red tape for business.

Labour had a separate race inequalities manifesto in 2015, outside of its main election manifesto, while the Conservative manifesto did not contain significant commitments to racial inequality. The mid-campaign launch in Croydon of a series of race equality pledges showed an increasing awareness of the growing importance of ethnic minority votes - though the fact that they all involved aiming for increases of 20 per cent by 2020 gave them a slightly back-of-the-envelope feel. 

Prime Ministerial commitments have an important agenda-setting function. A generation ago the Stephen Lawrence case opened the eyes of middle England to racist violence and police failures, particularly through the Daily Mail’s persistent challenging of those injustices. A Conservative Prime Minister’s words could similarly make a big difference in the mainstreaming of the issue of inequalities of opportunity. What action should follow words? Between now and next year’s party conference season, that must will now be the test for this Conservative government – and for their political opponents too. 

Sunder Katwala is director of British Future and former general secretary of the Fabian Society.