Depth of UK welfare cuts revealed in Sheffield case study

“Households with dependent children, when all the planned cuts have taken effect, will suffer an average loss of £1,690 per year. Lone parents with dependent children will lose over £2,000 per year”

by Simon Whelan
7 September 2015

Research conducted by two British academics offers a citywide snapshot of the large financial losses incurred by the working class under the coalition government.

The research by Professors Christina Beattie and Steve Fothergill of Sheffield Hallam University, “The Impact of Welfare Reform on Communities and Households in Sheffield,” documents the impact of welfare reform on the city’s population. It uses data from official statistics, including Treasury estimates and local social security figures.

While the report notes that the majority of the cuts were imposed by the 2010-2015 Conservative/Liberal Democrat coalition government, some of the cuts, most notably to Incapacity Benefits, are measures enacted by the previous Labour government. These have only recently taken effect. The latest cuts made to the incomes of the poorest by the new Tory government are yet to be catalogued by academics.

In total, these cuts amount to almost £10 per week off the income of every adult of working age in Sheffield. Sheffield has a population of approximately 560,000 and is Britain’s fifth most populous city.

The authors estimate that the city of Sheffield is losing almost £170 million in benefit income (equivalent to £460 per adult of working age living in the city) once all the government cuts (2013/14) make their impact felt.

The most vulnerable—the sick, the infirm and disabled—will suffer the biggest financial losses because of brutal cuts to Incapacity Benefit, which, just within Sheffield, amounts to losses of £42 million per year.

Workers struggling to survive on poverty wages whose income is subsidised through the Tax Credit scheme will suffer large financial losses, regardless of recent bogus claims of the impact of raising the minimum wage. The failure to link benefit increases to prices, rather than the annual rate of inflation, collectively costs millions in losses to the poorest sections of society.

Unsurprisingly, the impact of the cuts has been uneven across Sheffield, with inner city districts, overwhelmingly working class, hit hardest. Students and some middle class families with children have also been hit through the imposition of student fees and cuts to child benefit.

Households with dependent children, when all the planned cuts have taken effect, will suffer an average loss of £1,690 per year. Lone parents with dependent children will lose over £2,000 per year.

The devastating effects of the cuts are multiplied in households where members are sick or unable to work and affected by the slashing of Incapacity Benefit and cuts to Housing Benefit and Council Tax benefit—not to mention the chronic failure of benefit rates to reflect the rising cost of living.

The report, commissioned on behalf of Sheffield City Council, covers the impact of cuts to existing benefits as well as that of new financial sanctions on the poor. These include the loathed “bedroom tax”, a cap on housing allowances based upon “under occupation” of a rented property.

Drastic cuts have hit council tax benefit, housing benefit, disability living allowance, incapacity benefit and child benefit. Benefits like Jobseekers Allowance and other income-based (means tested) benefits have risen just 1 percent, well below the rate of inflation. Cuts to working tax credit fall on households with one or more adults in employment.

The cuts documented by the research, when fully implemented nationwide, will save the government £19 billion. However, these cuts have already been superseded by further savage austerity mapped out by the Tories. These have not yet been the subject of in-depth research.

read more here: https://www.wsws.org/en/articles/2015/09/07/shef-s07.html

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Parliament knows about the effects of the benefit cap, but the Conservatives plan to make them worse..

The Impact of the Benefit Cap.

The Welfare Reform Act 2012 provided for a cap on total household benefits. The cap limits the total benefit a household can receive to £500 per week for a family and £350 per week for a single person with no children. The difference between a claimant’s total benefit and the Cap level is subtracted from Housing Benefit, or from support for housing costs under Universal Credit. The Cap was initially piloted in four London boroughs from April 2013 and was then implemented in all local authority areas in Great Britain by spring 2014.

The Parliamentary work and Pensions committee reported on the effects of the benefit cap last year. I copy some of their evidence below.

The current conservative government does not plan to act on any of this. Instead the plan is, if re-elected, to further reduce the total amount people can receive in benefits, regardless of the widespread and serious problems this is causing to vulnerable people and families.

 

The impact of the Benefit Cap on affected tenants

96. As of January 2014, 38,600 households had been affected by the Cap. Those most likely to be capped were families with several children, and those who live in high rent areas or expensive accommodation (such as temporary accommodation). Almost half of all capped households, 47%, were in London. Of households subject to the Cap in January 2014: 60% contained between one and four children and 36% contained five or more children. 59% were single-parent households with children.[99]

97. Witnesses expressed concerns regarding the large proportion of income that affected households were losing. The average loss differed between different areas. In Newcastle, the average loss among the 56 affected households was £48pw, with six households losing in excess of £100pw (reducing their Housing Benefit to less than 50p weekly). Z2K, a London-based charity, found that tenants were losing between £5 and £500pw, with an average loss of £91pw. According to the DWP, 22% of all capped households are losing more than £100 per week as of January 2014.[100]

98. The Chartered Institute of Housing, and Haringey Council, were concerned that reductions in income arising from the Cap could lead to poverty for affected claimants. They were particularly concerned about the effect the Cap could have on levels of child poverty.[101] The Children’s Society provided calculations, illustrating the way in which the Cap might affect the poverty level of families in private rented housing under Universal Credit:

Table 3: Disposable income after cap applied for out of work couple with average private rental sector rent for relevant property sizes[102]

Average PRS rental prices Disposable income after cap applied Poverty line (after housing costs deducted)
1 child £146 £196 £272
2 children £175 £261 £367
3 children £175 £325 £413
4 children £236 £264 £508
5 children £236 £264 £553
6 children £236 £264 £649

The Cap and relocation of affected tenants

99. Witnesses told us that some tenants affected by the Benefit Cap were being made homeless as a result of accruing unmanageable levels of arrears. Yvette Burgess of the Coalition of Care and Support Providers in Scotland said that placing homeless people in the private sector had become more difficult and expensive for local authorities because the Benefit Cap had reduced the range of affordable properties. The London Borough of Brent said that it was having to look “further afield” for affordable accommodation. However, moving people out of London could cause increases in rents in other areas: according to Z2K, private sector rents were starting to go up in areas such as Enfield where inner-London based local authorities were placing people.[103]

100. There is evidence that some private sector landlords have specifically been evicting or ending tenancies of people on Housing Benefit because of fears they might be affected by the Cap. The London Borough of Brent reported that evictions of private sector tenants due to the Benefit Cap were causing an increase in homelessness. Joanna Kennedy of Z2K said that currently around 18% of private sector landlords were renting to tenants on Housing Benefit, while two years ago the proportion was closer to a third. She cited a survey which found that “57% of landlords actively said that they would not take Housing Benefit tenants”.[104]

The parliamentary committee report goes on to itemise the effect of the cap on disabled people and carers, on its especial effect on people forced to live in expensive temporary accommodation as a result of homelessness, and to dispute the number of people the government claims has gone into work as a result of the cap.

Access this report through the House of Commons Website here http://www.publications.parliament.uk/pa/cm201314/cmselect/cmworpen/720/72007.htm

The annual benefits cap – Diane Abbot’s speech to Parliament.

Any member of the public watching this debate this afternoon and listening to people jeer, laugh, smirk and joke might imagine that some Members of this House were playing a game. Well, I am rising to say to the House that this is not a game; this is about people’s lives.
Whether they be elderly people who are dependent on some of the age-related benefits that will fall under the cap, the disabled or people in low-paid work who depend on the system of tax credits, this is not a game; this is people’s lives. If it is really the position of Government Members that poor people should be made to live on even less, they should at least have the grace to be dignified about it, and not turn it into a game.
I put it to Government Members and to those on my own Front Bench that social security and people’s lives should not be made a matter of short-term political positioning.
Everyone in the House wants to bring down welfare spending, because welfare spending is the price of Government and social failure. The Chancellor talked as if he were some brave warrior wreaking vengeance on an army of “Benefits Street” layabouts. The reality for British people is very different.
Just this week, we saw 1,500 people queuing for three hours for a low-paid job at Aldi. The picture Government Members like to paint of the British people and what is happening in the benefit system is false, misleading and derogatory, yet it is feeding through to public attitudes.
The public thinks that 41% of the benefits bill goes to the unemployed. In fact, it is only 3% of the benefits bill. The public thinks that 27% of benefits are claimed fraudulently. In fact, only 0.7% is so claimed. The truth is that 80% of the people who claim jobseekers allowance—those so-called “Benefits Street” layabouts—only claim it for less than a year.
There is no credit to MPs if they constantly talk in a derogatory way about people who claim benefits when, at any given point in our lives, we may be dependent on social security—be it child benefit, benefits for the elderly or in-work benefits.
This benefits cap is arbitrary and bears no relationship to need, as our benefits system should. It does not allow for changing circumstances—rents going up and population rising—and will make inequality harder to tackle.
There are ways to cut welfare. We could put people back to work, introduce a national living wage, build affordable homes and have our compulsory jobs guarantee. An arbitrary cap is the wrong way in which to go and sends out the wrong message.
The Chancellor does not say many things that I think are correct, but he is correct to say that voting for this cap locks us into the coalition’s cuts. I say to the House that the issue of social security should not be about political positioning.
As the months turn into years, people will be coming to our advice surgeries wanting explanations for totally arbitrary and counter-productive cuts. Will we say that it was a game we were playing with the Chancellor one afternoon in March?
Our welfare system should be based on the facts and on need. Whatever short-term political advantage people think is gained by voting for this cap, it is far outweighed by what is problematic, so, no, I will not be voting for this cap in the Lobby tonight.

Budget: Social security cap will be ‘disastrous’

Government plans to cap the annual amount spent on social security – including key disability benefits – have been criticised by disabled campaigners.

The Conservative chancellor, George Osborne, announced in this week’s budget that the spending cap would be set at £119.5 billion in 2015-16, and would then rise with inflation to reach an expected £126.7 billion in 2018-19.

read the rest of this article by John Pring on the Welfare News Service (21st March 2013) here: http://disabilitynewsservice.com/2014/03/budget-social-security-cap-will-be-disastrous/