A report by the think tank Resolution Foundation has outlined the effects the benefit freeze has had on claimants and warned the government that the budget is the last change to stop further damaging cuts.
The damning report lays bare how the benefit freeze implemented under the Coalition government in 2015 has damaged finances. When George Osborne announced the freeze he did so on the assumption the inflation would be at or below 2%. However, the Consumer Price Index (CPI) reached 3% in September 2017 and is on track to be 2.7 this year.
Why is this important? Before the benefit freeze came into effect CPI was used each september to calculate the rate at which benefits would rise.
As you can see from the table above the real time cut to benefits was the estimated to be 4.6% but due to far higher inflation claimants have actually lost 6.45%.
How much is that though?
OK so enough of the jargon what you really want to know is how much do these percentages add up to?
Luckily the Resolution Foundation have a graph for that too and it is bleak reading. It shows that by 2019/20 across all household the poorest in society, yes the poorest, will be on average nearly £500 a year (8.1%) worse off had the freeze not occured.
Now this may not sound like a lot to some people but mark my words it is.
The Joseph Rowntree Foundation (JrF) reported earlier this year that 1.5 million people in the UK were destitute in 2017. Looking at these figures and it’s not hard to see why.
Single parents hit hard
Single parents they have seen some of the worst cuts to their income so far. So far they have lost just over £500 but as the biggest cuts come in April 2019 that is set to jump to nearly £800. Add on top of that the £200 per month single parents and families look to lose when transferred to Universal Credit in 2019, and it is starting to mount up to numbers that matter.
Basically everything has gone up in price by at least 6.9% but their income hasn’t.
Report calls for an early end to the benefit freeze.
The report’s conclusion throws down a challenge to the government saying “the Budget is probably its last chance to avert these impacts (cuts).”
They also question would any of the opposition parties undo the real time cuts should they come to power or just accept them as done. To undo the cuts and increase benefits to levels had the freeze not occured would cost £5 billion.
With Universal Credit failing, more money may need to be ploughed into designing a whole new system. Would they be able to afford another £5bn on top of that?
The report ends with a warning and sure enough fledgling Universal Credit gets a mention.
“The talk of the town may be of ‘the end of austerity’ and ‘Brexit dividends’, but for low to middle income working-age families – particularly parents – the outlook is quite different. On top of weak pay growth, their outlook includes a further benefits freeze, the transition to Universal Credit with its slashed work allowances, the phasing out of the valuable ‘family element’ and phasing in of a two-child limit. Ending the freeze one year early, with benefits rising just after Brexit day, would help to turn that outlook around.”
Margaret Greenwood MP, Labour’s Shadow Work and Pensions Secretary, responding to the Resolution Foundation report, said:
“This is yet more shocking evidence that Theresa May is failing to keep her promise to end austerity.
“Today’s report shows that £1.6 billion 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.
“Labour will end the benefit freeze, introduce a Real Living Wage of £10 an hour and put tackling poverty at the heart of government policy again.”
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