Planned new benefit cuts stoke social insecurity

By Savi Hensman
March 29, 2015

Many carers, disabled and unemployed people are likely to have their benefits slashed if the Conservatives return to power, leaked plans suggest.

When UK chancellor George Osborne announced, in his March 2015 Budget, £12 billion worth of further cuts to ‘welfare’ by 2017/18, he refused to spell out how this would be achieved. But a whistleblower has passed details to the BBC of proposals drawn up by civil servants at Conservative Party officials’ request.

In the past, attacks on social security have been largely disguised as attempts to deter ‘scroungers’ and get more people back to work. It is now clear that even the most obviously deserving are being targeted.

If these changes take effect, people who have paid national insurance and other taxes for decades, or provided thousands of pounds’ worth of care unpaid, will get nothing when they need support. Yet money has been pouring out of public coffers as a result of tax cuts and loopholes and subsidies mainly benefiting large corporations and the wealthy.

The Labour Party has asked for plans to be made public, though its own record on social security is unimpressive. When BBC journalist Andrew Marr spoke with work and pensions secretary Iain Duncan Smith, he insisted that £12 billion would be cut but claimed that no decision had been made on how, except by extending the benefit freeze and lowering the household cap from £26,000 to £23,000.

He indicated that no details might be announced until after the May election. However he did intend to bring about “life-changing, dramatic effects. That is about getting people back to work and improving their life chances."

It has long been pointed out that carer’s allowance is meagre – but many full-time carers will stop getting it altogether if the leaked proposals are taken forward. Likewise, jobseeker’s allowance (JSA) and employment and support allowance (ESA) will be axed for numerous people.

Disability living allowance (DLA), personal independence payments (PIP) and attendance allowance (AA), which partly cover the extra costs of being sick or disabled, will be taxed. This will leave numerous households struggling to meet essential costs.

The Industrial Injuries Compensation Scheme may be replaced by companies arranging industrial injury insurance for employees, while others may become members of a default national industrial injuries scheme. Child benefit will be limited to the first two children and council tax support become part of universal credit.

Benefits have been increasingly restricted to the poorest through means-testing, which can be humiliating and unjust. The next round of planned cuts will take this still further, as well as making basic care and everyday activities unaffordable for some people.

All but the rich are at risk of finding themselves struggling financially, if the plans go ahead. The measures may also intensify social problems and result in a range of costs to the public which may outweigh savings.

Carer’s allowance “could be restricted to those eligible for Universal Credit. Leaked documents suggest about 40 per cent of claimants would lose out,” the BBC reports, and the Department for Work and Pensions predicts a saving of £1 billion.

“Entitlement to contributory JSA and ESA depends not on income but on one’s history of National Insurance contributions. They are remnants of Beveridge’s vision of social insurance, in a working-age social security system in which 80 per cent of spending is now means-tested. This is an area where the coalition has made cuts, limiting the duration of contributory ESA claims (except for the most disabled claimants) to a year from April 2012”, Institute for Fiscal Studies researchers state. “This reform would represent another stage in the slow death of the contributory principle in the working-age benefits system.”

According to the BBC, the DWP analysis of drastically restricting JSA and ESA “suggests 30 per cent of claimants, over 300,000 families, would lose about £80 per week. DWP predicted saving – £1.3 billion in 2018/19.”

The taxation of key disability benefits would mean that “the individuals with the lowest incomes were protected and the highest-income recipients lost the most”, IFS suggests, while bringing in an estimated £900 million a year for DLA and PIP and £550 million a year for AA.

Those with high needs but who are in paid work (and already paying taxes) or have more than minimal savings (e.g. because they have been saving up to adapt their homes to be more accessible) might lose a sizeable sum. In some cases this would probably lead to loss of employment or ability to carry out key tasks as a parent or in the service of the local community.

According to IFS, these and other proposed cuts leaked to the BBC will not bring in £12 billion, so reductions bringing still more hardship may follow. And even if some details are altered, the overall impact will be harsh.

In addition, as well as bringing misery to many, the changes may prove expensive to society. Some carers are likely to stop, and some of those they cared for may end up in hospital or care homes at public expense. To avoid plunging their children into poverty, more couples may split up when one partner loses a job or becomes too sick to earn, increasing housing and other costs. Certain employers may pay less if workers feel less secure, pushing up housing benefit and other costs. Where disabled people are forced to quit jobs or stop providing childcare to allow other family members to work, this too will prove costly.

In general, greater means-testing will probably deter some people from saving money. Deepening poverty will harm public health, increase social divisions and affect local economies. This further assault on social security and the values of justice, wisdom and compassion poses a challenge to people of all faiths and none.

* More on the issues in the 2015 General Election from Ekklesia:

© Savitri Hensman is a widely published Christian commentator on politics, welfare, religion and more. An Ekklesia associate, she works in the equalities and care sector.

Although the views expressed in this article do not necessarily represent the views of Ekklesia, the article may reflect Ekklesia's values. If you use Ekklesia's news briefings please consider making a donation to sponsor Ekklesia's work here.