The BBC reports that leaked documents from the Department for Work and Pensions suggest the government is planning a regional benefits cap, reducing child benefit, taxing disability benefits and reducing eligibility for the carers’ allowance. The proposals are aimed at helping to save £12 billion from the welfare budget by 2017/18. The Conservatives have of course insisted that the proposals were “not party policy.” Yet. They dismissed the leaked report as “ill-informed and inaccurate speculation.”
However, the documents were prepared by civil servants and commissioned by Conservative Party officials. These are the key proposals in the report:
- Industrial Injuries Compensation Scheme – could be replaced by companies providing industrial injury insurance policy for employees. Any that did not would become members of a default national industrial injuries scheme, similar to the programme for asbestos sufferers. DWP predicted saving – £1bn
- Carer’s Allowance – this could be restricted to those eligible for Universal Credit. Leaked documents suggest about 40% of claimants would lose out. DWP predicted saving – £1bn
- The contributory element of Employment and Support Allowance and Job Seekers Allowance – currently claimants who have paid enough National Insurance contributions can get the benefits with little means testing; DWP analysis suggests 30% of claimants, over 300,000 families, would lose about £80 per week. DWP predicted saving – £1.3bn in 2018/19
- Disability benefits – Disability Living Allowance, Personal Independence Payments and Attendance Allowance (for over 65s who have personal care needs) would no longer be paid tax free. Possible saving – £1.5bn per annum (based on IFS Green Budget calculation )
- Council Tax Support – to be incorporated into Universal Credit. Possible saving – not known
- Child Benefit – Limiting the benefit to the first two children. Possible saving IFS estimates £1bn saving per annum in the long run but little initially
- Regional Benefit Caps – The £23,000 limit would vary in different parts of the country, with for instance Londoners receiving the top amount due to the higher cost of living. Possible saving – not known and dependent on where levels were set
Meetings about these options have taken place in recent weeks between the chancellor and Iain Duncan Smith. It is also understood that the permanent secretary, Sir Jeremy Heywood, has been coordinating some of the efforts to find savings.
The government has cut around £20bn from projected welfare spending over the course of the past five years, through a range of measures from freezing payments rates to cutting housing benefit. But Robert Joyce, a senior economist with the IFS, says finding another £12bn over the next two years will not be easy.
“The easier benefit cuts are the ones that will have been done first, so what’s left will be harder.
“In addition, the Conservatives want to do this by 2017-18, in the next two years. It means they have to be looking at less palatable options that would involve overnight takeaways from certain families.”
Shadow work and pensions secretary, Rachel Reeves, said the Conservatives now needed to explain how they would achieve the welfare savings they needed to make.
She said: “These plans to hit the disabled and carers were drawn up for Conservative ministers to deliver their extreme cuts plan.” “The Tories now need to come clean about what cuts they plan to make and who will pay the price. If they are ruling out these extreme cuts for the most disabled and carers, then it is clear they will be hitting the tax credits, and support for children, for millions of working families.”
Rosanna Trudgian, policy officer at the charity Mencap, said the proposed changes were unfair. “Disabled people don’t choose to have their disability. They don’t choose to pay for these additional costs related to that disability,” she told BBC News.
“For example, if you have to go to hospital on a regular basis and you are paying for those huge car parking fees. Therefore, it’s just unfair if this is treated as taxable income.”
These cuts would hit the elderly, disabled people, poor people, especially those with large families, and those injured at work – and would devastate many communities.
Earlier this week, the Institute for Fiscal Studies (IFS) has asked Osborne to specify how he will reach targets announced in the budget, given that the poorest had been the hardest hit by draconian benefit cuts already. The IFS say the worst of the UK’s spending cuts are still to come.
I proposed that, as a society, we cannot possibly accommodate a further 12 billion cut from welfare spending. It’s not that Osborne can’t answer the IFS challenge: he won’t. He’s being conservative with the truth – which is that we cannot afford to reduce any more from welfare without ending welfare provision as we know it.