Tomorrow #parliament will vote - The Labour Party must oppose. The welfare cap will #disproportionately target #benefits claimed by the least well off, the group who also spend the highest proportion of their income on the cost of living-related goods and services. Low to middle income households spend as much as 44 per cent of their income on the key categories of housing, fuel, food and transport. This leaves little for them to invest in savings or pensions and makes them #vulnerable to the types of #economic shock that the welfare cap will bring about – if short term decision-making results in cuts to benefit levels or eligibility. There are 26 benefits covered in the cap – including benefits aimed at #carers, the #sick and #disabled, the #LowPaid and those who are entitled to tax free #childcare. Switch your gaze over to the exclusions list and you’ll see it’s dominated by the state pension and #Jobseeker’s Allowance (JSA). Job seekers are excluded on a technicality. These highly cyclical benefits will provide ‘automatic stabilisers’ and, the Treasury says, help the cap become more effective. But the state pension is excluded because it’s paid to people ‘who have worked hard all their lives’. Fine, but those on #contributory benefits, such as Employment and Support Allowance (ESA) and/or in receipt of working and child tax credits, have also worked hard – although they’ll see little such protection from the medium to long term tightening of George Osbourne the #Chancellor’s belt. If the Office for Budget Responsibility (OBR) tells the Chancellor that he hasn’t set enough money aside for any of the years in the forecast (up until 2018/19), one of two things will happen. Either he’ll be standing in front of #parliament asking for more money for welfare, or he’ll be asking the Department for Work and Pensions - DWP to come up with policies that will squeeze everyone into the spending limit. Given Labour’s broad support for a similar method of controlled welfare spending, the former may be more likely whoever is in government after May next year. Perhaps the #inflation-only increase for the cap is based on the premise that David Cameron & 10 Downing Street succeeding in getting more people into #employment, and subsequent employment progression. If that happens, the amount set aside by the Chancellor may well be enough to go around. If not, it may be a difficult few years for those who claim one or more of the 26 benefits included in the cap, especially if the cost of living continues to rise.
Posted on: Wed, 26 Mar 2014 16:55:37 +0000
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