If the Government is serious about ending austerity the Chancellor should reverse planned the freeze on benefits which could cost low-income families an average of £210 next year, according to a report from the Resolution Foundation.
Benefits are by default uprated in April each year in line with the inflation figure from the previous September. The latest figures are due out this Wednesday. However, since April 2016, working age benefits – including Child Benefit, Tax Credits, Universal Credit, Housing Benefit and Jobseeker’s Allowance – have been frozen in cash terms as a result of the four-year freeze announced in July 2015 by the then Chancellor George Osborne.
The analysis, based on CPI inflation coming in at 2.7 per cent again next week, finds that the four-year benefit freeze is expected to save £4.7bn next year (2019-20), far more than the £3.9bn it was originally forecast to save.
The Foundation says that higher than expected saving means greater losses to low-income families, with the value of working age benefits falling by 6.4 per cent over the last four years (compared to a forecast of 4.6 per cent). The Foundation says that over 10 million households – including 7.3 million children, 2.4 million disabled people and 800,000 people looking for work – will be affected.
The Foundation notes that the bulk of the savings from the benefit freeze will fall on households in the bottom half of the income distribution. The average loss for these households will be £140 next year, with the cumulative impact of the four-year freeze amounting to a £410 loss next year.
It calculates that the average couple with children in the bottom half of the income distribution will lose £210 next year as a result of the benefit freeze, (with a cumulative loss from the four-year freeze of £620), while the average single parent in the bottom half will lose £260 next year (with a cumulative loss of £720).
The Foundation says that should the Chancellor cancel the final year of the benefit freeze in his Budget later this month, it would send a clear signal that, when it comes to boosting living standards for low-income families, the government is serious about ending austerity.