TUC Where is welfare spent Children and families Tax Credits current position for sample family Sample family Couple household one member working 30 hours and one 16 hours two children in childcare one baby ID: 1028541
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1. Welfare cutsRichard Exell and Nicola SmithTUC
2. Where is welfare spent?
3. Children and families
4. Tax Credits: current position for sample familySample family: Couple household, one member working 30+ hours and one 16 hours, two children in childcare (one baby)Maximum award: around £19,000 (salary dependent)Working Tax CreditBasic element: £1,920Couple element: £1,89030 hour element: £790Childcare: £12,480Child Tax CreditFamily element: £545Child element: £4,600Baby element: £545
5. Tax Credits: Budget and CSR changes (sample family - high childcare costs)
6. Lost awards by household (sample family - high childcare costs)
7. Tax Credits: additional changesTax Credits for familiesCancel introduction of supplement for toddlers (planned for 2012/13)Reduce income disregard to £5,000 from 2013/14 (presumption that real time information will overcome problem of over payment?)Reduce backdating to one month from 2012/13 (‘real time’ system not scheduled until 2014/15)Increase working hours requirements from 16 hours to 24 hours for couple households (far from encouraging small amounts of work, this makes it harder for work to pay for low income couples – and where do the savings come from?)Wider benefit changes for familiesChild Trust Fund abolition (including cuts for disabled children this year)Child Benefit freezeChild Benefit cut for households with a higher rate taxpayerHealth in Pregnancy Grant abolition Sure Start Maternity Grant abolished for all but first childLone parent conditionality for those with children aged 5 and above from October 2011
8. Households receiving Housing Benefit
9. Cumulative impact is key BudgetMove to set Local Housing Allowance at 30th percentile of local rents and index to CPIIncrease deductions for non-dependentsLimit social sector entitlements to family sizeCut entitlements by 10 per cent for those who have spent a year on JSACap maximum rates and maximum property size (4 bedrooms)Remove £15 excess paymentCSRBenefit cap (to be administered by local authorities reducing Housing Benefit)Shared room rate to apply to those aged 25-34 (as well as to young people)Social rents to rise (who will pay for this – Housing Benefit?)Council Tax Benefit to be cut by 10 per cent and ‘localised’ – requiring local authorities to collect outstanding CTB from their most vulnerable residents
10. Unintended losers? Working households who receive state help with Housing BenefitHostels and refuges where incomes fall as a result of Housing Benefit cutsHomeless ex-offenders and those with severe mental health problems who cannot be accommodated in shared housingYoung children who have to move schools Households who simply cannot find anywhere to liveHouseholds who can no longer afford to work
11. Disabled people
12. Already announced in the Budget“Objective medical assessments” for Disability Living Allowance This week’s changesOne-year time limit for people who receive contributory Employment and Support Allowance and are in the Work-Related Activity GroupRemoving the mobility component of Disability Living Allowance from people in residential care
13. Who loses out from the ESA changePeople with employed partners. People with other income.People with savings totalling over £16,000. People who are entitled to Pension Credit.
14. Older people
15. Already announced in the BudgetRemoval of 50+ Tax Credit elementThis week’s changesSavings Credit - freezing maximum award 2011 – 2014.Raising of the pension age to 66 by 2020.
16. Additional welfare changes
17. Already announced in the Budget:Changing the way benefits are upratedCPI (%)RPI (%)200013.320011.31.7200211.720031.42.820041.13.120052.52.720062.43.620071.83.920085.2520091.1-1.4
18. What this would have meant over the past 10 years
19. This week’s changesAbolition of Educational Maintenance Allowances - to be “replaced” by “locally managed discretionary funds to target support.”“Real time information”
20. And Don’t forget VAT!QuintileVAT as a proportion of gross incomePoorest9.6%Second7.3%Third6.1%Fourth5.7%Richest4.4%
21. The Chancellor and Fraud“We estimate that £5 billion is being lost this way each year”DWP estimates:“overpayments due to fraud and error” in 2009-10 - £3.1 billion£1.1 billion due to official error£1.1 billion due to customer errorAmount of fraud overpayments is £1 billion