1 Apr 2013

Benefits shake-up kicks in

As a raft of benefit changes finally come into play today, MPs brush off criticism from churches and charities to insist the new system will be “fairer”.

Chancellor George Osborne and Work and Pensions Secretary Iain Duncan Smith dismissed “shrill” criticism that made the shake-up sound like “the beginning of the end of the world”.

They launched a fight back as 660,000 social housing tenants with spare rooms are poised to lose an average £14 a week in what Labour critics have dubbed a “bedroom tax”.

It is part of a package of significant welfare and tax changes coming into force this month which critics claim will hit poor families and the disabled especially hard.

Changes to council tax benefit will see bills for an estimated 2.4 million households rise an average £138 a year, with two million paying for the first time, an anti-poverty group said.

The system has been handed to town halls to operate from today but with 10 per cent less funding.

On April 6, working-age benefits and tax credits will be cut in real terms with the first of three years of maximum 1 per cent rises – well below the present rate of inflation.

Two days later, disability living allowance (DLA) begins to be replaced by the personal independence payment (PIP), which charities say will remove support from many in real need.

Later this month, trials begin in four London boroughs of a £500-a-week cap on any household’s benefits and of the new Universal Credit system.

Pilot schemes for the flagship scheme have been scaled back amid reports – denied by welfare officials – that IT problems have derailed preparations for its rollout from October.

Labour claims the impact of the measures and other coalition policies have left the average family almost £900 a year worse off.

Shadow chancellor Ed Balls said that, according to the Institute of Fiscal Studies, the poorest 10 per cent of households will lose an average of £127 under this year’s changes, while the richest 10 per cent will gain almost ten times that, or £1,265.

And families with children would be hit harder, Mr Balls said, with the poorest 10 per cent losing £236 a year and the richest 10 per cent gaining £3,654 a year.

Church critics

A coalition of churches yesterday said vulnerable people were paying a “disproportionate price” for the government’s austerity drive and attacked its whole approach.

The Baptist Union of Great Britain, the Methodist Church, the United Reformed Church and the Church of Scotland accused ministers of manipulating figures to vilify the poor.

Writing in The Telegraph, the two Cabinet ministers said: “Our changes will ensure that the welfare state offers the right help to those who need it, and is fair to those who pay for it.

“Of course, if you listened to the shrill voices of the Left you’d think that every change to the welfare system, and any attempt to save money, marks the beginning of the end of the world.

“In reality, we are just restoring the original principles of the welfare state: that those who can work must work, and a life on benefits must not be more attractive than working.”

Ending what ministers call a “spare room subsidy” would address the “scandal” of a million people living in overcrowded conditions and millions more on waiting lists, they said.

The three-year, real-terms cut was a hard but “necessary” decision to save the taxpayer £2 billion a year as part of austerity deficit-reduction measures, they wrote.

And raising the personal income tax allowance to £10,000 in two phases starting at the start of the financial year on Saturday was “the biggest tax cut in a generation”.

“What we’re doing this coming week is making welfare fairer, helping to create jobs, and making sure you can keep more of what you earn.”

‘Bedroom tax’

Labour has concentrated its fire on the so-called “bedroom tax” – and today produced figures showing there was suitable alternative housing for fewer than one in 20 of those affected.

Shadow work and pensions secretary Liam Byrne said answers to freedom of information requests from 37 local authorities showed a huge shortfall in smaller properties.

In total 96,041 households faced losing benefit in the areas but there were only 3,688 one and two-bed homes available, they suggested.

The National Housing Federation – which represents housing associations – has warned the cut could actually increase the cost to the taxpayer if people are forced into private rented homes.

Conservative Party chairman Grant Shapps faced scorn yesterday after using the fact that his own two sons shared a room in justifying the “common sense” spare room crackdown.

It later emerged that his house is large enough for each of his three children to have their own room if one was not used as a study.

Under the new rules, one room is deemed sufficient for two children under 10 – or 16 if they are the same sex.