Ben­e­fits freeze to cost fam­i­lies £200

The Herald - - NEWS - ALISON MEIKLE

THE con­tin­u­ing ben­e­fits freeze is likely to leave low-in­come house­holds more than £200 worse off next year, ac­cord­ing to anal­y­sis by a think-tank.

The Res­o­lu­tion Foun­da­tion said the lat­est in­fla­tion fig­ures, due out on Wed­nes­day, would il­lus­trate the on­go­ing im­pact of the freeze in work­ing age ben­e­fits.

The liv­ing stan­dards think-tank called on Chan­cel­lor Philip Ham­mond to use this month’s Bud­get to can­cel the fi­nal year of the four-year freeze an­nounced by pre­de­ces­sor Ge­orge Os­borne in 2015.

Ben­e­fits are by de­fault in­creased in April each year in line with the in­fla­tion fig­ure from the pre­vi­ous Septem­ber.

But since April 2016, work­ing age ben­e­fits – in­clud­ing Child Ben­e­fit, Tax Cred­its, Univer­sal Credit, Hous­ing Ben­e­fit and Job­seeker’s Al­lowance – have been frozen in cash terms, mean­ing their real terms value de­clines ev­ery year as a re­sult of in­fla­tion.

The CPI in­fla­tion rate was 2.7 per cent in Au­gust and if that fig­ure re­mains sta­ble then the im­pact of the freeze will see the av­er­age low-earn­ing cou­ple with chil­dren ef­fec­tively lose £210 next year, while the av­er­age sin­gle par­ent in the bot­tom half will lose £260 next year.

The av­er­age loss for house­holds in the bot­tom half of the in­come dis­tri­bu­tion will be £140 next year, with the cu­mu­la­tive im­pact of the four-year freeze amount­ing to a £410 loss next year.

It will mean the value of work­ing age ben­e­fits fall­ing by 6.4% over the last four years, com­pared to a fore­cast of 4.6%.

The Res­o­lu­tion Foun­da­tion says that more than 10 mil­lion house­holds – in­clud­ing 7.3 mil­lion chil­dren, 2.4mil­lion dis­abled peo­ple and 800,000 peo­ple look­ing for work – will be af­fected.

Based on a 2.7% in­fla­tion fig­ure, the freeze will save the Ex­che­quer £4.7 bil­lion in 2019-20, far more than the £3.9bn orig­i­nally fore­cast.

Adam Cor­lett, se­nior eco­nomic an­a­lyst at the Res­o­lu­tion Foun­da­tion, said: “While the

Prime Min­is­ter this week re­peated her claim that aus­ter­ity is over, sig­nif­i­cant cuts in sup­port for mil­lions of low-in­come fam­i­lies are set to con­tinue next year as a re­sult of the on­go­ing freeze in work­ing-age ben­e­fits.

“On Wed­nes­day we will learn the full scale of next year’s ben­e­fit freeze, with an av­er­age lower-in­come fam­ily with chil­dren on course to lose over £200 a year.

“The Bud­get rep­re­sents a last chance to cut short the ben­e­fit freeze. Scrap­ping it would send a strong sig­nal that, from the per­spec­tive of low-in­come fam­i­lies, the Govern­ment is com­mit­ted to end­ing aus­ter­ity.”

A Govern­ment spokesman said: “We’re com­mit­ted to pro­vid­ing fam­i­lies with the sup­port they need, which is why we spend £90bn a year on work­ing-age ben­e­fits, and we will be spend­ing £28bn more on all wel­fare by 2022 than we do now.

“The re­al­ity is there are now one mil­lion fewer peo­ple liv­ing in ab­so­lute poverty com­pared with 2010, in­clud­ing 300,000 fewer chil­dren.

“At the same time, we have sup­ported more peo­ple into work, in­tro­duced the Na­tional Liv­ing Wage, dou­bled free child­care and helped work­ers keep more of the money they earn at the end of ev­ery month by cut­ting taxes for 31 mil­lion peo­ple.”

Shadow work and pen­sion sec­re­tary Mar­garet Green­wood said: “This is yet more shock­ing ev­i­dence that Theresa May is fail­ing to keep her prom­ise to end aus­ter­ity.

“To­day’s re­port shows £1.6bn in cuts are yet to come from the Tories’ ben­e­fit freeze alone.

“Only Labour will end aus­ter­ity and trans­form our so­cial se­cu­rity sys­tem so that it pro­vides se­cu­rity and dig­nity for all.”

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