Poor households are getting slammed as Osborne-era cuts come into effect this week
A drastic cut to working-age employment and support allowance (ESA) is coming into effect today, part of George Osborne’s legacy of austerity.
From today, new benefits applicants who are deemed ‘unfit for work’ due to health conditions, but capable of ‘work-related activities’ (such as CV preparation or skills training) will see their weekly payments fall from £102.15 a week to £73.10 a week — the same amount as those receiving job seekers allowance (JSA).
Although the change will only affect new applicants for now, it is expected to hit 60,000 people over the next year, and around 500,000 a year in the long-term. Each of these recipients will be about £1,400 a year worse off than they would otherwise have been.
The government claims that people in this category are likely to be in a position to work in the future, but claimants in the ‘work-related activities group’ tend to receive ESA for protracted periods. Four-in-five current claimants have been receiving ESA for more than two years.
The change is expected to save the exchequer £650m per year.
According to the IFS, this may cause some ESA claimants to shift their behaviour, whether by moving from ESA to JSA, appealing the decision to place them in the ‘work-related activities’ group rather than the support group, or applying for other forms of disability benefits.
However, economists also forsee that ‘many – perhaps the majority – will not respond in any of these ways and will therefore have to make do with an average of £1,400 a year less than they would otherwise have got.’
Later in the week, changes to tax credits and universal credit are due to hit families with children, some by up to £7,000 a year.
Additionally, because many state benefits are being frozen for the second year running while inflation is running at 2.3 per cent, tens of millions of people are undergoing a real-terms cut to their incomes.The freeze is due to last for another three years.
Meanwhile, increases in tax thresholds remain inflation-linked, meaning that wealthier households are reaping the rewards of a £1bn tax giveaway.
As David Finch of the Resolution Foundation puts it, ‘those who gain the most from tax cuts are precisely those who are least affected by benefit cuts.’
These are Osborne-era policies which are continuing to hammer the poorest families in Britain. However, Philip Hammond should not be let off the hook.
He could have altered or abandoned some of these cuts — as his government’s rhetoric on helping the ‘left behind’ surely demands — but he chose not to.
Niamh Ní Mhaoileoin is editor of Left Foot Forward. Follow her on Twitter.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.