New analysis of Chancellor George Osborne’s Autumn Statement suggest that families will be hit hard by “stealth” changes to welfare in the statement. The amount that people can earn before benefit is withdrawn is likely to be reduced as a result of the changes.
The coalition government has reformed the welfare system to introduce Universal Credit instead of a myriad of different welfare payments which make up the benefits system. Weekly benefit payments are now capped at £500, including Jobseeker’s Allowance, Housing Benefit and Child Benefit.
However, analysts claim that changes to tax credits and other benefits could hit parents the hardest, with single parents ending up £420 worse off per year – and a couple with children finding themselves £230 worse off every year.
The Treasury aims to save £600 million by introducing changes to Universal Credit, with most of this coming from changes to work allowance – the amount of money a claimant can earn before losing their benefits.
Some of the changes – including changes to the way in which working-age benefits and tax credits are uprated to keep pace with inflation – could hit families with children the hardest, however.
The Resolution Foundation says that reducing working allowances will also hit the poorest hardest:
“Universal Credit was originally conceived as an attempt to simplify a number of benefits with the principle of supporting work at its heart,” said Chief Executive Gavin Kelly.
“Over time, this is being chiselled away by a series of cuts that are altering the policy's character well in advance of it coming to fruition."
Health and Pensions Secretary Iain Duncan Smith is keen to ensure work pays more than benefits – last week it was announced that 351 families had seen a reduction in their benefits as a result of government changes in welfare. Some families have had their weekly benefit entitlement cut by £400 in accordance with the £500 cap, suggesting they were receiving £900 per week in benefits.
However, low-paid workers can rely on benefit to give them a living wage.
Gavin Kelly said:
“Reducing work incentives and family incomes in this way is bad policy – it's also directly at odds with the government's stated and laudable objective of making work pay.
“The decision to reduce the work allowance in Universal Credit by not uprating it with inflation will be a real blow to the working poor.
“It's the sort of stealthy measure that often attracts little attention, but still has a real impact.”
The Department for Work and Pensions has said, however, that Universal Credit is “much more generous” than the previous system of benefits:
"The changes included in the Autumn Statement will help ensure that overall benefit expenditure is sustainable, whilst still maintaining a better targeted and more generous system under Universal Credit,“ said a spokesman.
“Under Universal Credit, the amount someone can earn in work before their benefits are reduced is much more generous than under the existing system – where people can be effectively penalised for moving into work.”
Duncan Lewis Family Solicitors
Duncan Lewis family solicitors can advise on a wide range of matters relating to family and childcare law, including housing benefit and children taken into Local Authority care.
Duncan Lewis family solicitors can also advise on divorce, ancillary payments, child contact, child abduction and child abuse.
Duncan Lewis are also leading Legal Aid solicitors.
For expert legal advice on family law, contact Duncan Lewis family solicitors on 020 7923 4020.