Poorest set for 'perfect storm' on benefit cuts: the low-paid, disabled and jobless will be hit hardest


Emily Dugan,Brian Brady
Sunday 31 March 2013 02:00

Britain's poorest will be hit by a "devastating" barrage of new cuts and taxes tomorrow, as a range of government welfare changes are introduced.

Millions of households will struggle as low-paid workers, disabled people and the unemployed bear the brunt of welfare reform, according to analysis by the housing charity Crisis. It warns that homelessness will rise and queues for food banks will get longer.

The new measures coming into force tomorrow include the so-called bedroom tax, which will mean housing benefit cuts to social housing tenants deemed to have a spare room. This will affect 660,000 households at an average loss of £14 a week, according to Crisis.

The policy is provoking a bitter response, with thousands attending more than 50 bedroom tax protests in towns and cities across the country yesterday, including London, Glasgow, Leeds, Bristol and Cardiff.

Housing benefit cuts for those with spare rooms is just one of 10 welfare changes identified as creating a financial "perfect storm" for the country's poorest. These include a reduction in council tax benefit for most of the 3.7 million low-income households that receive it; the introduction of a benefit cap which will see 56,000 households losing an average of £93 a week; the abolition of crisis loans and community care grants; the replacement of the Disability Living Allowance with the Personal Independence Payment (that half a million fewer claimants will be eligible for); and the removal of legal aid for welfare advice.

Leslie Morphy, chief executive of Crisis, said: "Our poorest households face a bleak April as they struggle to budget for all these cuts coming at once. People are already cutting back on the essentials of food and heating but there is only so much they can do. The result will be misery – cold rooms, longer queues at food banks, broken families, missed rent and yet more people facing homelessness – devastating for those directly affected, but bad for us all."

A combination of tax rises and benefit cuts will leave families £891 worse off in the new financial year, according to Labour. The Shadow Chancellor, Ed Balls, said calculations from a Budget analysis by the independent Institute for Fiscal Studies (IFS) showed millions of families would lose some £17 a week "at the same time as David Cameron and George Osborne are giving millionaires an average £100,000 tax cut".

"On average families will be £891 worse off this year because of changes introduced since 2010. This comes at a time when a flat-lining economy has seen prices rise faster than wages and unemployment rise again this month. While ministers trumpet the small rise in the income tax personal allowance, they should admit that it is hugely outweighed by things like cuts to tax credits and child benefit, higher VAT, the bedroom tax and the granny tax. They are giving with one hand, but taking away much more with the other," he said.

Gillian Guy, chief executive of Citizens Advice, said: "Multiple benefit changes mean a perfect storm for families – all these changes will tighten the squeeze being felt by low-paid families in work as well as those out of work. Already, some 40 per cent of the people we see in bureaux are in work but still struggling to make ends meet... These families are teetering on a financial cliff edge, already having to spend a higher proportion of their income on essentials at a time when rent, food and heating bills are all rocketing."

A spokesman for the Department for Work and Pensions said: "The benefits system this Government inherited was broken, trapping the people it was designed to help into cycles of worklessness and welfare dependency. Our reforms will improve the lives of some of the poorest families in our communities, with the universal credit simplifying the complex myriad of benefits and making three million people better off."

London council leaders have told ministers benefit changes already force them to break the law, by moving homeless families into B&B accommodation for longer than the statutory limit of six months.

At a meeting with representatives of 18 London boroughs, the housing minister, Mark Prisk, insisted that tackling homelessness was a priority, and "breaking the law is avoidable and unacceptable". But the councils said competition in the private rental market was driving a rise in homelessness, leaving them with no option but to place families in B&Bs – and move others to cheaper areas.

The meeting's minutes show councils also warned that "some landlords were now less inclined to do business with councils or let to tenants in receipt of Local Housing Allowance as they had alternative tenants who could pay higher rents".

Case study: 'I don't know what I'd do without my neighbours. I'm really worried'

Ruth Baker, 46, from Newcastle

"I've been dreading April. I've lived in this house since 1996 and now I'm going to be taxed on the two extra bedrooms because my grown-up sons have left, which means another £25 a week. My council tax is also changing, so that will be another £8.97 initially and then my Disability Living Allowance will be reassessed under the new system.

"I worked for the council in a nursery but had a breakdown and was in psychiatric hospital for 11 weeks. I was diagnosed with severe depression and a personality disorder and I can't go back to work yet. I struggle already from month to month. Sometimes I have no money at all. On those weeks I'll eat whatever is in the freezer and skip lunch.

My son moved out in September, he was my carer because I self-harm, so I now rely on neighbours. I can't afford to stay in this house now but I don't know what I'd do without my neighbours. The one-bedroom places available are in really isolated areas or tower blocks and I'm really worried."

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