‘Just About Managing’ families hardest hit by welfare reforms in 2020

| posted in: Blog, Media, Policy analysis, poverty, Uncategorized | 6 Comments

img_4145On Wednesday 23 November the Chancellor will unveil a new budget plan for Britain until the end of this parliament in the traditional Autumn Statement.

Download press release

We don’t yet know what measures he will announce in the first official economic statement since the Brexit vote.

The Government, however, has announced no new benefit cuts over the course of this parliament and the Prime Minister has repeatedly expressed her commitment to support the group of ‘just about managing’ families.

Policy in Practice analysis featured on the front page of The Guardian today shows that the cumulative impact of welfare reforms already announced will continue to hit the pockets of low earning households through to 2020.

A unique approach to analysis: 187,000 real households

Policy in Practice has been working with over 30 local authorities across the country over the past two year, helping them to assess the impact of welfare reform on each individual low income family through our software and consultancy services.

This household level approach, combined with our policy modelling software, shows the cumulative impact of each single policy change policy change announced across four different government departments from 2013 to 2020.

Our analysis focuses on a cohort of 187,475 real working-age households and is based on Housing Benefits and council tax support data shared with us on an anonymised and aggregate basis by 17 local authorities across England, Scotland and Wales.

cumulative-impact-of-welfare-reforms-to-2020-policy-in-practice
The cumulative impact of welfare reforms on 187,000 households across a spread of seventeen local authorities across the UK.

Key Findings

  • Working households are hit hardest at £48.90 per week due to cuts to Universal Credit, rising private rents and the benefits freeze.
  • Out of work households are £33.54 per week worse off on average, impacted mainly by the benefits freeze.
  • The average hide the fact that some individual households are losing much more due to specific welfare reforms such as the benefit cap, or the combined impact of multiple reforms hitting the same family.
  • The loss from welfare reforms across the households in the sample is £381m, while the amount provided by central government through Discretionary Housing Payments is £10m.

This means that the families affected, along with limited support from local authorities and other local services, will be left struggling to plug the gap.

Director of Policy in Practice, Deven Ghelani said:

“The Government has announced no new Benefit cuts over the course of this parliament.

“However, our analysis shows that the cumulative impact of reforms already announced will continue to hit the pockets of low earning households through to 2020.

“Policy in Practice is being asked to help Local authorities to be smarter and ever more targeted about who gets what support, but their resources are limited.

“Central Government should help by taking action to lower rents, look again at the benefits freeze, and invest in work incentives under Universal Credit to ensure work pays as well as under the current system.

“Without mitigation, low income households that are already struggling will be pushed further into debt, with knock on consequences for society and the public finances.”

Find out more

  • Sign up to read more analysis on which families will be hit hardest in following the Autumn Statement in a new post from senior analyst, Giovanni Tonutti
  • Learn more about how our household level analysis is helping local authorities to identify and engage households affected by welfare reforms by viewing our case studies and other resources, events and past webinars
  • Contact us to learn more

6 Responses

  1. Peter Williams

    where do i find the underlying report? The press release is insufficient

    • Deven Ghelani

      Hi Peter,
      Thanks for the feedback. The analysis was carried our specifically for this article, as such there is no formal report although the press release has been updated to includes additional information on the methodology. We will be releasing additional analysis and the basis for our findings tomorrow, and throughout this week.
      Best wishes,
      Policy in Practice.

  2. Sarah Lyall

    Hi Deven,
    Looks like really interesting research. What is your methodology for calculating real incomes, in terms of estimating inflation 2016-2020? If you could let us know, I’d be very grateful. We would like to be able to quote your research but difficult to do so without this information.
    Best wishes,
    Sarah
    New Economics Foundation

    • Giovanni Tonutti

      Hi Sarah,

      Our methodology accounted for:
      – Inflation rate based on the latest OBR estimates (March 2016), with a yearly average inflation rate of 2.3% up to 2020.
      – Increase in private rent prices was modelled using regional or borough-level (for London authorities) historical data as provided by the VOA.
      – Social rents were reduced by 1% p.a.
      – National Living Wage and Personal Tax Allowance raised respectively to (£9 p/h and £12,500).

      Should you need any furhter info on our approach, feel free to send me an e-mail at giovanni@policyinpractice.co.uk

      Best,

      Giovanni

  3. Your figures seem very conservative. Using your UC calculator we are going to be £400pm worse off / loose a quarter of our income just from the move from Working Tax Credits to Universal Credit even before all the other factorsyou mention!!

    • Jethro Martin

      Hi Rob,

      Thank you for your comment.

      Those with certain circumstances may be worse off under Universal Credit (UC). For example if you are working you might lose some of your work allowance and if you are disabled you may receive a lower amount of benefit.

      Without knowing more about your circumstances I can’t give you much advice, though if you are struggling you may be able to apply for a ‘budgeting advance’ – you can find more information on that here.

      If there is anything else we can do to help please post here.

Leave a Reply