Multiple Cuts for the Poorest Families: 1.75 million of the poorest families have seen their benefits cut to date due to welfare reform | Taxes | Welfare

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For a second year in a row, benefits values have increased below prices. At the same time, council tax support and housing benefit have been cut for 1.75 million of the poorest families in the UK. This leaves affected families with even less money to pay for essentials such as food, heating and transport. The UK government has introduced a number of changes to the benefit system in recent years. For each individual change, the government publishes an impact assessment, but it has not assessed how they overlap. This report identifies how many of the poorest families have seen their benefits cut by at least one of these changes, and how much worse off they are.
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  OXFAM RESEARCH REPORTS APRIL 2014 Oxfam Research Reports  are written to share research results, to contribute to public debate and to invite feedback on development and humanitarian policy and practice. They do not necessarily reflect Oxfam policy positions. The views expressed are those of the author and not necessarily those of Oxfam.  www.oxfam.org.uk   MULTIPLE CUTS FOR THE POOREST FAMILIES 1.75 million of the poorest families have seen their benefits cut due to welfare reform   HANNAH ALDRIDGE & TOM MACINNES New Policy Institute For a second year in a row benefits values have increased below prices. At the same time, council tax support and housing benefit has been cut for 1.75 million of the poorest families. This leaves affected families with even less money to pay for essentials such as food, heating and transport.  2 Multiple cuts for the poorest families CONTENTS Executive Summary 3   1 Introduction 5   2 The under-occupation penalty 7   3 Local housing allowance limits 8   4 Overall benefit cap 10   5 Localised council tax support 11   6 Cumulative Impacts 12    About the authors 16    Multiple cuts for the poorest families 3 EXECUTIVE SUMMARY The government has introduced a number of changes to the UK benefit system in recent years. In doing so, it has changed the shape of welfare support. Firstly, it has lowered the overall value of benefits by uprating them by less than inflation. This includes basic cash benefits which, according to the Department for Work and Pensions (DWP), are intended to cover all ‘ normal day-to-day living expenses ’ . Secondly, multiple changes to housing benefit and the localisation of council tax support mean that some families have to use some their cash benefit to pay for rent and council tax  –  costs they were previously deemed too poor to pay. This briefing looks at how many of the poorest families have been affected by one or more of these benefit cuts to date. 1  In April 2014, 780,000 of the poorest families were experiencing a shortfall in their housing benefit as a result of the welfare reforms since April 2011.  Around 410,000 (52 per cent) of these families are private renters affected by the Local Housing  Allowance (LHA) changes, 345,000 (44 per cent) are affected by the under-occupation penalty, and 28,000 (4 per cent) are affected by the overall benefit cap. More than half (440,000) of those families seeing a cut in their housing benefit entitlement are single adults without children. On average their housing benefit has been cut by £10.48 per week. These individuals now have to manage on an income of £61.92 per week after housing costs  –  a cut of nine per cent. Couples with children have lost on average £20.71 per week. They only account for 65,000 (eight per cent) of the poorest families affected. This compares with 200,000 lone parents who have also experienced an above average cut of £15.96 per week.  As of April 2014, 1.4 million families have to pay on average £154 per year (£2.96 per week) in council tax, an amount they were previously deemed too poor to pay.  As a result of these cuts in housing benefit and changes to council tax support, around 1.75 million or the poorest families have seen an absolute cut in their income. Of these, 480,000 families are seeing their benefits being cut twice as they are affected by more than one of the changes. Whether a family is affected and by how much varies based on a range of factors which are largely out of the control of the individual. They depend on council tax band, the cost of local housing, family size and property size. But they all apply irrespective of income. The government needs to instate an ‘ absolute minimum ’  level of support. It should apply regardless of local authority or tenure and it should be high enough to prevent people from having to walk the breadline. 1 ‘ Family ’  refers to the DWP definition used to calculate income and benefit entitlement. A ‘ family ’  is a single adult or a couple (either married or cohabiting) and all their dependent children.  4 Multiple cuts for the poorest families Figure 1: 1.75 million of the poorest families have seen their incomes cut as a result of welfare reform *OBC: Overall Benefit cap, 28,000 families, cut by £70 per week on average; UOP: Under-occupation penalty, LHA: Local Housing Allowance, CTS: Council Tax Support.
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