A cut in the benefits cap - a limit
on the income working age households can receive in certain benefits -
has now come into force.
The cap has been reduced from £26,000 a
year to £20,000 a year in the UK - except in Greater London where the
limit is £23,000 a year.
This was part of £12bn in welfare cuts announced in former chancellor George Osborne's Budget in July last year.
The move was criticised by campaigners, unions and one former minister.
The
GMB union described the lower cap as "a monstrous new assault on 40,000
single mothers, which risks shattering the life chances of children up
and down our country".
'Incentive'
Speaking
to the BBC shortly after resigning as work and pensions secretary in
March, Iain Duncan Smith hit out at the "arbitrary" decision to lower
the welfare cap after the general election. He questioned why
working-age benefits were hit while pensioner benefits were protected.
The
benefits cap - which, in total, is now set to affect an estimated
88,000 households primarily with high rents or large families - was
described by the Department for Work and Pensions as "a clear incentive
to move into a job".
Ministers say the level of the cap is fair because it is close to the average salary after tax.
Current
Work and Pensions Secretary Damian Green said: "By making sure that
those people who are out of work are faced with the same choices as
those who are in work, the benefit cap has been a real success.
"By
lowering the cap today, we are ensuring the values of this government
continue to chime with those of ordinary working people and delivering
on our commitment to make sure work pays more than welfare."
The cap relates to a string of benefits for those aged 16 to 64 including child tax credit, housing benefit, jobseeker's allowance and income support, but excludes some others such as disability living allowance.
Households where someone works more than 16 hours a week are exempt.
As
of Monday, the cap is falling from a limit set three years ago in
England, Wales and Scotland of £500 a week for couples or those who have
children. The limit for single people with no children was £350 per
week. The benefit cap was introduced in Northern Ireland at the end of
May.
Under the new cap, those living in the UK outside of Greater London will receive a maximum of:
- £384.62 per week (£20,000 a year) for a couple
- £384.62 per week (£20,000 a year) for single people whose children live with them
- £257.69 per week (£13,400 a year) for single people who do not have children or whose children do not live with them
The limits are higher for those living in Greater London boroughs. The new cap is:
- £442.31 per week (£23,000 a year) for a couple
- £442.31 per week (£23,000 a year) for single people whose children live with them
- £296.35 per week (£15,410 a year) for single people who do not have children or whose children do not live with them
Those affected will most likely see their housing benefit amount
being cut, but the changes are expected to take a few weeks to be fully
implemented.
The cap will save the Treasury an estimated £100m a
year in the long run, according to the Institute for Fiscal Studies
(IFS) - only a fraction of the total £12bn cuts to welfare spending over
this parliament.
'Challenging'
Various
charities and think tanks have commented on the effect of the change on
lower income families, particularly in addition to other welfare
policies such as a four-year freeze on working age benefits since April.
The
IFS questioned whether the policy would actually have the desired
effect. The lower cap would fail to move the majority of those affected
into work or prompt them to downsize their home, it said.
"For that majority it is an open question how they will
adjust to the loss of income," said Andrew Hood and Robert Joyce, of
the IFS.
They estimate that 22% of the total of 88,000 households
affected by the cap live in London. Owing to the lower cap, a rising
proportion of those affected will be from outside of London, primarily
the South East of England, the East Midlands, and the North West of
England.
Research by the Chartered Institute of Housing suggests
320,000 children will be affected (estimating 115,000 households are
impacted) with families losing up to £100 a week.
The Resolution
Foundation, a not-for-profit research and policy organisation
campaigning for people on low and modest incomes, said that a
"challenging outlook for living standards will be worsened further still
by the £12bn social security cuts scheduled for this parliament".
It
calculated the planned cuts to social welfare, higher inflation as well
as weaker wage growth would drive down earnings for average earners by
around £1,000 a year by 2020 - compared to its pre-referendum
projections.
"The chancellor inherits a tough legacy on living standards." said David Finch, the Foundation's senior economic analyst.
"The
combination of long-term productivity failings, higher inflation, lower
than expected wage growth and more immediate welfare cuts mean that
millions of low and middle income households could face a parliament of
flat or falling living standards,"
The Gingerbread group, which
campaigns for single parents, said 43,700 single parents with a child
under the age of five would be hit by the cap.
"The new benefit
cap is likely to drive more single parents into poverty. Many will have
to choose between the roof over their children's heads and other
essentials such as food and heating," said Gingerbread policy officer
Laura Dewar.
'Route out of poverty'
But
a Department for Work and Pensions spokesman said: "We are committed to
helping lone parents into a job which fits in around their caring
responsibilities, which is why we are doubling the amount of free
childcare available.
"We know that work is the best route out of poverty, and there are now record numbers of lone parents in work.
"The
benefit cap provides a clear incentive to move into a job, even if it
is part time, as anyone eligible for working tax credits is exempt.
"Even with the new cap, lone parents can still receive benefits up to the equivalent salary of £25,000, or £29,000 in London."
Some discretionary funds are available for people struggling to pay their rent.
No comments:
Post a Comment