1. Richard Exell and Nicola Smith TUC
Welfare cuts
Richard Exell and Nicola Smith
TUC

2. Where is welfare spent?
UK TCs and child benefit and GB for other benefits, all for 2009/10

3. Children and families

4. Tax Credits: current position for sample family
Sample family: Couple household, one member working 30+ hours and one 16 hours, two children in childcare (one baby)
Maximum award: around £19,000 (salary dependent)
Working Tax Credit
Basic element: £1,920
Couple element: £1,890
30 hour element: £790
Childcare: £12,480
Child Tax Credit
Family element: £545
Child element: £4,600
Baby element: £545

5. Tax Credits: Budget and CSR changes (sample family - high childcare costs)

6. Lost awards by household (sample family - high childcare costs)

7. Tax Credits: additional changes
Tax Credits for families
Cancel introduction of supplement for toddlers (planned for 2012/13)
Reduce income disregard to £5,000 from 2013/14 (presumption that real time information will overcome problem of over payment?)
Reduce backdating to one month from 2012/13 (‘real time’ system not scheduled until 2014/15)
Increase working hours requirements from 16 hours to 24 hours for couple households (far from encouraging small amounts of work, this makes it harder for work to pay for low income couples – and where do the savings come from?)
Wider benefit changes for families
Child Trust Fund abolition (including cuts for disabled children this year)
Child Benefit freeze
Child Benefit cut for households with a higher rate taxpayer
Health in Pregnancy Grant abolition
Sure Start Maternity Grant abolished for all but first child
Lone parent conditionality for those with children aged 5 and above from October 2011

8. Households receiving Housing Benefit

9. Cumulative impact is key
Budget
Move to set Local Housing Allowance at 30th percentile of local rents and index to CPI
Increase deductions for non-dependents
Limit social sector entitlements to family size
Cut entitlements by 10 per cent for those who have spent a year on JSA
Cap maximum rates and maximum property size (4 bedrooms)
Remove £15 excess payment
CSR
Benefit cap (to be administered by local authorities reducing Housing Benefit)
Shared room rate to apply to those aged (as well as to young people)
Social rents to rise (who will pay for this – Housing Benefit?)
Council Tax Benefit to be cut by 10 per cent and ‘localised’ – requiring local authorities to collect outstanding CTB from their most vulnerable residents

10. Unintended losers?
Working households who receive state help with Housing Benefit
Hostels and refuges where incomes fall as a result of Housing Benefit cuts
Homeless ex-offenders and those with severe mental health problems who cannot be accommodated in shared housing
Young children who have to move schools
Households who simply cannot find anywhere to live
Households who can no longer afford to work

11. Disabled people

12. Already announced in the Budget
“Objective medical assessments” for Disability Living Allowance
This week’s changes
One-year time limit for people who receive contributory Employment and Support Allowance and are in the Work-Related Activity Group
Removing the mobility component of Disability Living Allowance from people in residential care

13. Who loses out from the ESA change
People with employed partners.
People with other income.
People with savings totalling over £16,000.
 People who are entitled to Pension Credit.

14. Older people

15. Already announced in the Budget
Removal of 50+ Tax Credit element
This week’s changes
Savings Credit - freezing maximum award 2011 – 2014.
Raising of the pension age to 66 by 2020.

16. Additional welfare changes

17. Already announced in the Budget: Changing the way benefits are uprated
CPI (%)
RPI (%)
2000 1
3.3
2001
1.3
1.7
2002
2003
1.4
2.8
2004
1.1
3.1
2005
2.5
2.7
2006
2.4
3.6
2007
1.8
3.9
2008
5.2 5
2009
-1.4

18. What this would have meant over the past 10 years

19. This week’s changes
Abolition of Educational Maintenance Allowances - to be “replaced” by “locally managed discretionary funds to target support.”
“Real time information”

20. And Don’t forget VAT! Quintile VAT as a proportion of gross income
Poorest
9.6%
Second
7.3%
Third
6.1%
Fourth
5.7%
Richest
4.4%

21. The Chancellor and Fraud
“We estimate that £5 billion is being lost this way each year”
DWP estimates:
“overpayments due to fraud and error” in £3.1 billion
£1.1 billion due to official error
£1.1 billion due to customer error
Amount of fraud overpayments is £1 billion