The Labour Party chancellor confirmed welfare cuts of £4.8bn, but insisted the government’s priority was to restore stability to the public finances in the face of rising global borrowing costs
The Department for Work and Pensions (DWP) has laid out the winners and losers in its latest round of cuts, with stark figures showing that up to three million households could be down £1,720 a year in benefits.
Labour’s money man has confirmed a whopping £4.8bn slash in welfare but stands firm on the government’s commitment to stabilising public finances amidst skyrocketing global borrowing costs. Last week’s benefits chop, coupled with the spring statement, is set to hit the wallets of 3.2 million families – those currently claiming and those who might have in the future.
A deep dive into the official stats reveals that those eligible for disability payments will bear the brunt of the cuts. Consequently, the number of folks living in relative poverty is expected to jump to a staggering 14.5 million, dragging an additional 50,000 children below the breadline.
Debbie Abrahams, Labour’s head honcho on the work and pensions select committee, didn’t mince her words in the Commons: “All the evidence points to the fact that the cuts to health and disability benefits will lead to increased poverty, including severe poverty, and worsened health conditions. How will making people sicker and poorer help to drive our economy up and get people into jobs?”, reports Birmingham Live.
Neil Duncan-Jordan, the MP for Poole, didn’t hold back when he said: “We are talking about people’s lives here – my constituents are frightened. This policy will fuel the social determinants of poverty that ultimately create further pressure on the services the chancellor is trying to cut. And we know cuts won’t bring growth, they won’t create jobs – they will only create poverty.”
When it comes to the cash in people’s pockets, the forecast is looking grim. By 2029/30, there’ll be a whopping 3.2 million families – a mix of current and future claimants – who’ll be feeling the pinch, losing an average of £1,720 annually due to this policy, all while battling inflation.
And let’s talk about PIP claimants – those relying on personal independence payment are in for a rough ride. About 370,000 folks currently getting PIP and another 430,000 who would have been eligible in the next five years are set to lose an average of £4,500 each year.
The knock-on effect? A staggering quarter of a million more people will be plunged into relative poverty by 2029-30.
Universal Credit is set to undergo a rebalancing of support in an effort to eliminate counterproductive incentives and motivate more individuals to seek employment. The Department for Work and Pensions (DWP) anticipates that the freeze will affect approximately 2.25 million current recipients of UC Health, resulting in an average annual loss of £500 – although they will also experience a rise in cash terms from the standard allowance.
Future beneficiaries of UC Health, estimated at around 730,000, are projected to suffer an average yearly loss of £3,000. Paul Johnson, Director of the Institute for Fiscal Studies thinktank, earlier suggested that this would lead to “six or seven months of speculation about what taxes might or might not be increased in the autumn”.
He warned of the economic and political costs associated with such uncertainty. Meanwhile, Paul Kissack, Chief Executive of the Joseph Rowntree Foundation, criticised the Chancellor for “putting the burden of the changing world on the shoulders of those least able to bear the load”.
He urged the government to shield people from harm with the same fervour it uses to bolster its reputation for fiscal competence.
The government also has plans to consider delaying access to the health component of Universal Credit for individuals under the age of 22. Instead, these young people will be encouraged to participate in the Youth Guarantee scheme, designed to assist them in finding work or training opportunities.
Helen Barnard, the director of policy at the food bank charity Trussell, said: “The insistence by the Treasury on driving through record cuts to disabled people’s social security to balance the books is both shocking and appalling. People at food banks are telling us they are terrified how they’ll survive.”
People with a disability in the household
The DWP warns: “As the package of measures rebalances the system to address perverse incentives and therefore redistributes spend from disability benefits to wider working age benefits, the vast majority (96%) of families that lose financially have someone with a disability in the household. These families losing out are also estimated to represent 20% of all families that report having someone with a disability in the household. This analysis does not account for additional protections for those with severe and lifelong conditions which the government intends to bring forward.”
Families
The assessment explains: “There are also estimated to be 3.8 million families – some current recipients and some future recipients – who will financially gain from this package, with an average gain of £420 per year compared to inflation. This estimate does not include the impact of the £1 billion a year, by 2029/30, funding for measures to support those with disabilities and long-term health conditions into employment, which we expect to mitigate the poverty impact among people it supports into work”.
The government has stated that these estimates do not take into account the £1bn per annum, by 2029-30, allocated for initiatives to assist individuals in returning to work, which it anticipates will mitigate some of the poverty impact.
Standard UC Allowance Recipients
An estimated 3.9 million households not receiving the UC Health element are projected to benefit from the increase in the standard allowance (an average gain of £265 annually).
Ruth Curtice, the director of the Resolution Foundation thinktank, expressed that while Reeves was correct in her efforts to balance the books, she was “wrong to do so on the backs of low- to middle-income families, on whom two-thirds of the welfare cuts will fall”.
Those Undergoing Work Capability Assessment
The decision not to implement the previous Government’s changes to the Work Capability Assessment means that 370,000 individuals will now qualify for the new UC health element at £50 per week, resulting in an annual gain of £2,600.
Peter Lamb, one of the critics of the cuts, expressed his concerns to the Guardian about ministers underestimating the impact of the change. “Frontbenchers genuinely do not appear to be aware that the changes to Pip will mean there are those with a high level of need who will no longer be able to access the support they need for daily living,” said the MP for Crawley.
People with Children
The DWP has made a statement: “The potential impact of these reforms on poverty projections has been estimated using a static microsimulation model. Using this model, we estimate there will be an additional 250,000 people (including 50,000 children) in relative poverty after housing costs in 2029/30 as a result of modelled changes to social security, compared to the baseline projections.”
Labour MP for York Central, Rachael Maskell, expressed her concerns, saying: “The devastating impact of people losing essential income will fall on disabled people. I will not accept or vote for measures that will put people at risk or push deeper into poverty.”
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