£3.7 billion cuts in benefits

The Autumn Statement is out. The figures for public expenditure on benefits are liable to confuse, because there are so many totals drifting around: some refer only to DWP benefits, some include Child Benefit and Tax Credits managed by HMRC, some include the Departmental management budget (which isn’t paid to claimants, of course), and some do not. As a general proposition, if Tax Credits and Child Benefit are included, about half the payments go to working age claimants; if they are not included, only a third does. Table 2.5 puts working age benefits at 3.7% of GDP, payments to pensioners at 6.3% and Tax Credits at 1.8%.

There had been reports that the Chancellor wanted to cut £10 billion from benefits, focused entirely on claimants of working age. Among the threatened changes were cuts to families with three children, young people under 25 and Housing Benefit – but that would still not have come to £10 billion. The announcement that has actually been made is for £3.7 billion cuts in 2015-16 (para 1.152). The biggest cut takes the form of a reduced annual uprating, set below the rate of inflation, and the rates used to set Housing Benefit and Tax Credits. There will be some further reduction of basic income benefits in the longer term, because the plan is to do the same with the Universal Credit rates.

Some of the projected savings, however, seem implausible. The government thinks it can save £520 billion from an estimated £2.2 billion (page 57, table lines 28 and 29) by requiring evidence of high child care costs, getting evidence that children over 16 are still at school, and recovering overpayments from the legacy of Tax Credits (para 1.169). Unless the purpose of these rules is to deter people from claiming at all, entitled or not, that final figure looks like another castle in the air.

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