With less than a week to go until the Emergency Budget, there is growing speculation about how the further £12bn savings from the welfare budget will be made. In the last few days alone there have been more rumours, including of cuts to Employment and Support Allowance and Housing Benefit.
Throughout, the Government has consistently maintained its intention to protect vulnerable people while at the same reducing spending on benefits and tax credits. While this intention to protect is welcome, it is still unclear exactly where the cuts will fall – so it is difficult to establish whether Government will be able to deliver on this promise. That’s why it is vital that the Government understands the full impact further cuts will have on people’s lives and has the right support in place.
New analysis from Citizens Advice, published today, adds front line perspective to three potential reforms that have been mooted in the Conservative manifesto or already outlined by Ministers: lowering the benefit cap, freezing working-age benefits and removing housing benefit for young people who are unemployed.
Plans have been set out to reduce the benefit cap to £23,000 and reports today suggest that outside of London and the South East it could be brought down to £20,000.
A reduction to £23,000 would mean an additional 70,000 adults and 200,000 more children having their benefits capped. Those subject to the benefit cap include people who are temporarily out of work and looking for a job as well as those with full-time caring responsibilities for elderly relatives.
It’s clear from those already turning to Citizens Advice for help around the cap that the measure has a disproportionate impact on women, ethnic minorities and households in high rent areas. Lowering the cap could exacerbate adverse effects on these groups and could mean rent in London is completely unaffordable to families where no one is currently in work.
Rent is also the big issue that should be causing concerns around the proposal to freeze most working age benefits for two years – affecting an estimated eleven million families. While inflation has been low over recent years, rents have been steadily rising, and are forecast to keep doing so. Increases in rates of private rent are expected to be twice those of CPI inflation over the next four years, so there would be a significant risk of more people falling into debt.
The Government intends for young people to be ‘earning or learning’ and to avoid benefit dependency. Plans to restrict access to Housing Benefit for unemployed young people, which would save just £0.1bn, need to be considered carefully as they could hit vulnerable groups including care leavers, orphans or people who have parents in prison.
Young families could also fall foul of the changes: one in ten young JSA claimants receiving Housing Benefit have children of their own. Preventing unemployed people aged 18-21 from claiming Housing Benefit could have a negative impact on many young people’s long term prospects, including greater risks of homelessness and unemployment. This goes against the grain of government intentions.
It is clear from our analysis and experience that any reforms which do go ahead must be implemented at a safe and steady pace. Benefit queries have rapidly overtaken debt to be the biggest issue people turn to Citizens Advice for help with – standing at almost two million queries in the last 12 months. That’s why support must be available to help people affected adapt to the changes and move forward.
A government serious about making sustainable savings from the welfare bill will need to get to the heart of the issues that lead to people claiming benefits to top up their income. Low paid, insecure work; childcare issues where costs and flexibility inhibit parents from getting a job or increasing their hours; and sky high private rents are all driving higher welfare expenditure. The benefit system also needs to function as a modern, responsive public service.
It is these problems which need addressing at source if welfare spending is going to be reduced in a way that genuinely protects vulnerable people. This is what Citizens Advice and our clients will be looking for the Chancellor to address in his Budget on Wednesday.
Rachael Badger is Head of Policy research for Families, Welfare and Work at Citizen’s Advice.
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