20th October 2010
IncomeMAX were shocked today as the Chancellor continued to cut benefit and tax credit payments, this time as part of the Comprehensive Spending Review.
This was the fourth round of announced cuts, coming on top of the emergency budget, the subsequent extra welfare savings announcement and the recent child benefit and mortgage interest help cuts.
The announcements included:
* Limiting Contributory Employment and Support Allowance claims for those in the Work Related Activity Group (over 90% of claimants) to one year.
* Increasing the age threshold for the shared room rate in housing benefit from 25 to 35
* A reduced Council Tax budget of 10% from April 2013.
* Alignment of the rules for the mobility and care elements of Disability Living Allowance paid to people in residential care, basically meaning that the payment of the mobility component of DLA will end for those in residential care, except for those who are fully self-funding
* Freezing the basic and 30 hour elements of Working Tax Credit for three years;
* Changing of the Working Tax Credit eligibility rules so that couples with children must work 24 hours per week between them (with at least one working 16 hours)
* Returning the childcare element of the Working Tax Credit to its previous 70% level (from 80% currently)
* There will be a new cap on benefits to ensure that a family that doesn’t work will NOT receive more in benefits than the average family that does go out to work. Those in receipt of Disability Living Allowance, Working Tax Credit or the War Widows Pension will be excluded from this change.
"Taken together, all of the welfare measures outlined will save the country £7 billion a year" said the Chancellor.
* The Government also claimed to be committed to ending child poverty and announced that they would be increasing the child element of the Child Tax Credit by a further £30 in 2011-12 and £50 in 2012-13 above indexation.
* Child benefit will be removed from families with a higher rate taxpayer
* Universal benefits for pensioners are saved from the axe, including free eye tests, free prescription charges, free bus passes and free TV licenses for the over 75s. Winter Fuel Payments will remain exactly as budgeted for by the previous Government. The temporary increase in the Cold Weather Payments, introduced by the last government, will become a permanent increase, the Chancellor claiming that in his view "higher Cold Weather Payments should be for life, not just for elections."
* The equalisation of state pension age at 65 will be brought forward to November 2018, and both the male and female pension age will increase to 66 by April 2020
* On a brighter note, the temporary measures introduced for support for mortgage interest, which reduced the waiting period for new working age claimants to 13 weeks and increased the limit on eligible mortgage capital to £200,000 ( that had been due to expire in January 2010) will be extended by a further year. Unfortunately, the amount of eligble interest has recently been cut from 6.08% to 3.63% from October 2010.
IncomeMAX are shocked at the depth of the cuts, many of which will affect vulnerable customers. In particular, the fact that the working tax credit childcare element will be reduced to just 70% of eligible costs and also the groundbreaking change to Contribution based Employment & Support Allowance, limiting it to just one year.
The truth is that the help available to low income families will be severely reduced from April 2011 onwards by the coalition Government.
Tax Credits, help with Childcare, Housing Benefit, Mortgage Interest help within means-tested benefits and sickness/disability benefits will be less generous and more stringent than ever before and many vulnerable groups including lone parents, carers, disabled people and low income workers, many of whom are on low income means-tested benefits, will need to budget carefully in order to make ends meet.
As we look to the future, the Government are going to introduce a Universal Credit over the next two Parliaments, meaning that the current system of means-tested working-age benefits and tax credits will gradually be replaced by Universal Credits.
The issues affecting real people
Sign up and join our community