New Times,
New Thinking.

  1. Politics
8 March 2017updated 01 Aug 2021 7:20am

What welfare changes did Philip Hammond make in his Budget 2017?

The Chancellor offered nothing new to help ease the Tory squeeze on benefits.

By Anoosh Chakelian

You could be forgiven for believing this Chancellor is more sympathetic towards benefit claimants than his predecessor. While George Osborne used arbitrary cuts to the welfare budget as an ideological weapon against the state, hitting the most vulnerable, the current government has changed the rhetoric about those who have the least.

Who could forget the fawning over Theresa May’s first statement as Prime Minister by even the most progressive corners of the press? Her claim outside No 10 that she is “squarely at the service of ordinary working-class people” – and the dedication of her speech to those who “can just about manage but […] worry about the cost of living” – led to excitable cries of One Nation, blue-collar Toryism and even Milibandism.

But, as I have argued before, the Chancellor Philip Hammond’s first financial statement last Autumn showed that this rhetoric wouldn’t be backed up by a huge amount of policy. Hammond and May’s inheritance of Osborne’s severe welfare cuts continues to characterise their attitude towards benefit claimants.

The welfare cap is still there. The four-year freeze of working-age benefits continues. This means those claiming Jobseeker’s Allowance, Employment and Support Allowance, income support, housing benefit, Universal Credit, child tax credits, working tax credits and child benefit will be worse off, as inflation increases but their benefits remain flat.

Child tax credits and child benefit through Universal Credit will be limited to two children, and the government recently announced its plan to remove the entitlement to housing benefit for some 18-21 year olds.

Select and enter your email address Your weekly guide to the best writing on ideas, politics, books and culture every Saturday. The best way to sign up for The Saturday Read is via saturdayread.substack.com The New Statesman's quick and essential guide to the news and politics of the day. The best way to sign up for Morning Call is via morningcall.substack.com
Visit our privacy Policy for more information about our services, how Progressive Media Investments may use, process and share your personal data, including information on your rights in respect of your personal data and how you can unsubscribe from future marketing communications.
THANK YOU

Hammond’s only offer to those depending on the state to boost their income is to reduce the taper rate at which your benefits through Universal Credit are withdrawn as you begin to earn more – from 65 per cent to 63 per cent.

The Chancellor announced this in his Autumn Statement last November and has made no new announcements about benefits since. In fact, his only reference to welfare in his Spring Budget speech was to repeat his softening of the taper rate:

“The Universal Credit taper rate will be reduced in April from 65 per cent to 63 per cent, cutting tax for 3 million families on low incomes.”

But remember, this isn’t giving more money to claimants – it’s very slightly reducing the amount Universal Credit is being cut. According to the Independent, the planned £3bn-a-year reduction in the work allowance (which is the amount benefit claimants can earn before their benefits start being withdrawn) has only really been reduced by about £700m by Hammond.

And the Office for Budget Responsibility’s analysis of the Budget finds less expenditure on the new benefit regime of Universal Credit than the old welfare system – reflecting the fact that the new system is “less generous on average”, particularly for those who will be claiming the equivalent of tax credits and disability benefits.

Not exactly relieving those worries about the cost of living May was so sympathetic about on Downing Street last July.

Content from our partners
The UK’s skills shortfall is undermining growth
<strong>What kind of tax reforms would stimulate growth?</strong>
How to end the poverty premium