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Our review of the Chancellor’s statement and the impact on benefit take up

Deven Ghelani

Deven Ghelani Published on 30th July 2024

Yesterday the Chancellor of the Exchequer, Rachel Reeves, made a statement to the House of Commons. The speech highlighted the importance of strategic fiscal planning.

Reflecting on past practices such as George Osborne’s broad cuts in 2010, Policy in Practice founder and director, Deven Ghelani, says it is evident that indiscriminate reductions, particularly in social security, can be counterproductive. Previous cuts to Universal Credit and the Work Capability Assessment’s limited capability component serve as prime examples of where short term savings led to long term costs.

The new Office for Value for Money and the establishment of the Child Poverty Unit indicate a commendable shift towards more thoughtful spending. These measures align with Deven’s recommendations made in his time with the Centre for Social Justice which can be read in their report on improving governmental spending decisions.

The Chancellor’s speech indicates a welcome shift towards more thoughtful spending, measures that align with recommendations Deven made at the Centre for Social Justice

Additionally, analysis by Policy in Practice to be published this week reveals that 12% of households with children are currently impacted by the Benefit Cap. 21% of children in low income households helped by removing the two child limit will then be hit by the benefit cap, making the total figure 33%.

The Chancellor announced in her formal statement that the government would retain the triple lock, but would remove Winter Fuel Payments from all pensioners apart from those receiving means tested benefits such as Pension Credit.

This move is estimated to save around £1.5bn, by removing payments to around 10 million pensioners. This shows how vital it is that pensioners claim all that they are eligible for. Local Authorities and other organisations play a crucial role in getting these people the help they deserve. Policy in Practice works with local authorities all over the country to help them identify people eligible for Pension Credit.

Policy in Practice found that 807,704 pensioners are eligible for Pension Credit and not claiming, with an average award of £2,677 per year. With the total of other support available for pensioners on a low income, this change means that the total value of unclaimed support could increase to over £9,500 a year.

Pension Credit take up campaigns by some local authorities have significantly grown the incomes of older people who were eligible but not claiming

The Chancellor further announced they would consider the cost of living when calculating the Minimum Wage and bring forward plans to merge Housing Benefit and Pension Credit to streamline administration and boost take up. This is expected to lead to Pension Credit having a ‘housing element’ included to support the phasing out of Housing Benefit.

As Liz Kendall, Secretary of State for Work and Pensions, navigates her role with the spending directives from the Chancellor, a strategic focus on simplicity and proactive support for individuals will be crucial for effective governance and minimising harm.

If you are interested in our upcoming research on the impact of the removal of the two child limit and the Benefit Cap, or to see how we can work together to support people to claim all they’re eligible for, please email hello@policyinpractice.co.uk.

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