Welfare Cuts Will Hit Low Income Families Both in And Out Of Work

Policy in Practise

New analysis finds the cumulative impact of welfare cuts will hit low income families both in and out of work on average by £41.45 per week by 2020.

Working households are hit hardest at £48.90 per week, with families and local authorities left struggling to plug the gap. Fresh analysis on the cumulative impacts of reforms announced by the Cameron and Osborne administrations on over 180,000 low income households shows exactly how hard these families will be hit.

Policy in Practice analysis shows how the freezing of benefit rates from 2015 will hit the pockets of low-income households hardest by 2020, even more if inflation increases as expected due to Brexit. Low income households in work - those 'Just About Managing' - will lose even more on average - £48.90. This is mainly due to cuts in Universal Credit and the rising cost of private rents. Out of work households are £33.54 per week worse off on average, and are impacted by the benefits freeze, alongside the other changes to benefits. The averages hide the impact on some individual households losing many hundreds of pounds per week.

• 2.9% of households have income lower than their reported housing costs.

• One in ten of these are in temporary accommodation already, with the remainder in the private rented sector

• The average cost of housing a family in temporary accommodation to the local authority (in addition to Housing Benefit) is £3,510 on average.

The loss from welfare reforms across the households in the sample is £381m, while the amount provided by central government through Discretionary Housing Payments is £10m. This leaves local authorities and other local services, as well as the families themselves, struggling to plug the gap. Deven Ghelani, one of the architects of Universal Credit and Director of Policy in Practice said: "The Government has announced no new Benefit cuts over the course of this parliament. "However, our analysis shows that the cumulative impact of reforms already announced will continue to hit the pockets of low earning households through to 2020. "Policy in Practice is being asked to help Local authorities to be smarter and ever more targeted about who gets what support, but their resources are limited. "Central Government should help by taking action to lower rents, look again at the benefits freeze, and invest in work incentives under Universal Credit to ensure work pays as well as under the current system. "Without mitigation, low income households that are already struggling will be pushed further into debt, with knock on consequences for society and the public finances