Councils braced for impact of benefit cuts

Fewer than one out of every four people receiving benefits will be in a position to offset cuts in their income by finding work or moving to cheaper accommodation, a new study has concluded.

The report was produced by the Centre for Economic and Social Inclusion on behalf of the Local Government Association. It describes the cumulative impact of all the main benefit changes announced by the coalition government since May 2010, and apportions them to each English local authority area. It then considers what action is available to offset their effects – either by the individuals and families affected or by local council support services.

Key points

  • By 2015-16, the income of households receiving benefits will be lower by £1,615 a year on average – or £31 a week – as a result of benefit reforms, excluding the impact of universal credit. This is equivalent to around £1 in every £7 of household income for the households concerned.
  • At local authority level, the impacts on households will be relatively evenly spread, with all regions except London seeing average losses between £1,500 and £1,650 a year. In London – with high benefit receipt and high housing costs – average incomes for households receiving benefits will be lower by as much as £1,965 a year.
  • Three fifths (59 per cent) of all benefit cuts will fall on households in which somebody works. Indeed the reductions for working households are greater than the reductions for households where no one works in 314 of the 325 local authorities in the analysis.
  • It is estimated that housing benefit cuts for households out of work are unlikely to be offset through claimants finding work or moving home. At least four out of every five households are likely to need further assistance in order to deal with the impact of the cuts – cumulatively in excess of £1 billion a year.
  • Overall, universal credit will result in a modest increase in average household incomes, reducing the losses from benefit cuts by an equivalent of just £190 a year on average (£4 a week). Within this overall average, the impacts are likely to vary significantly for different groups – with disabled people in particular likely to suffer a loss of income.

The report's authors conclude with a series of recommendations for central and local government, including the suggestion that the government should publish its own estimates of the impact of individual measures at local authority level, and of the cumulative impact of benefit cuts on particular groups such as disabled people.

Source
: Tony Wilson, Gareth Morgan, Afzal Rahman and Lovedeep Vaid, The Local Impacts of Welfare Reform: An Assessment of Cumulative Impacts and Mitigations, Local Government Association
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Publication date: 
Aug 12 2013