IFS analysis sets out what welfare users can expect now the Tories are back in - and it's not good
We all know by now that we can expect some pretty deep cuts with the Conservatives back in power. Last month, the independent Institute for Fiscal Studies (IFS) predicted that the pace of cuts in a second Tory government would be faster than in the last government; sadly we will now be able to see if that prediction becomes a reality.
Welfare cuts have been a major concern for many people, seeming to characterise a party-wide disregard for the vulnerable. But until last Friday, even senior Tories were not expecting to have free reign with cuts, as it was assumed that they could only return to power with the tempering influence of the Lib Dems (Nick Clegg said he would not enter a coalition if the planned £12bn cut in welfare went ahead.)
Now David Cameron’s new government is free to make those cuts in full, and free to implement the controversial universal credit scheme. This will all continue to take place, it was announced today, under the leadership of Iain Duncan Smith. The Mirror has described new plans as ‘pure evil’ – but at this depressing time it is important to stay clear-headed. So let’s reject the hyperbole for a second and look at what the Tories will actually need to do to welfare if they are to balance the books as planned.
The exact shape of the cuts has yet to be confirmed, but we do have a number: £12bn. Total government spending on social security is around £220 billion in 2015/16, meaning that £12bn would represent a cut of five per cent from the overall spend.
The IFS suggests that the Tories could meet this target by some combination of the following:
- Abolishing child benefit and compensating low-income families through universal credit – this would reduce spending by around £5bn
- Reducing the child element of universal credit by 30 per cent to reach its 2003/4 level in real terms would also cut spending by around £5bn
- Taxing disability living allowance (DLA), personal independence payment (PIP) and attendance allowance could raise around £1½bn
- Making all housing benefit recipients pay at least 10 per cent of their rent could cut by around £2½bn
All of these proposals will be extremely unwelcome to anybody who depends on welfare – not just the most vulnerable but also all low-income families with children. They are, however, suggestions from the IFS and have not been confirmed or ruled out by anyone from the Conservative party.
But DWP documents seen by The Guardian last week outlined a number of even more draconian alternatives suggested by Department staff themselves. These include increasing the Bedroom Tax, abolishing or reducing state-subsidised maternity pay, and reducing the time period for which a single parent can claim income support. The documents describe how colleagues consulted about these proposals found them to be ‘extremely controversial’.
Speculation aside, we do know that working-age benefits will be frozen in nominal terms until April 2018, affecting over 11 million families. The IFS says that ‘given current inflation expectations, the result would be relatively small falls in the real benefit entitlements of a large number of families’ and that this freeze will reduce spending in 2017-18 by around £1bn in today’s terms.
However, if inflation is higher than projected then real-terms cuts would be larger. The IFS recommends that when planning freezes the government make them sensitive to inflation risks; so far there has been no comment on this from the DWP.
On Friday, just hours after Conservative victory was sealed, the first step towards implementing reforms was taken when the DWP released an impact assessment of plans, announced in March, to cut the Access to Work scheme. In 2013/14 over 35,000 people received just over £3,000 each in support helping them stay in work; the DWP asks whether this could be done more cheaply, acknowledging the need to strike a balance between supporting as many disabled people as possible and ensuring individual users are given what is ‘reasonable’. The document sets out options for how to make the scheme more cost effective – the first is to ‘set a cap on the maximum value of support per user’.
The report finds that for any kind of cap, ‘the majority of users affected would be Deaf or hearing loss customers, rather than belonging to any other impairment group. There would also be a greater impact upon visually impaired users.’
But this is not just a suggestion – searing cuts to support at work for deaf users of British Sign language are already a reality. An inquiry last year found that the changes ‘threatened the employability’ of BSL users – and yet they are going ahead. Interestingly, the policy document outlining these measures was called ‘New measures to support more disabled people into work’.
Ruby Stockham is a staff writer at Left Foot Forward. Follow her on TwitterLike this article? Sign up to Left Foot Forward's weekday email for the latest progressive news and comment - and support campaigning journalism by making a donation today.