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Making poor people poorer is no way to economic growth

This post is by Andrew Kaye, the Royal National Institute of Blind People’s Policy Analysis Officer. There are other links to further analysis and views of Osborne's statement at the end of this page.

The Chancellor’s statement means many poor people and particularly those out of work will be poorer from 2013/14.

The creation of additional private sector jobs and a lower unemployment rate than that recorded elsewhere in the Eurozone are of course positive, but none of this should mask the fact that disabled people and many others who need working age benefits like Jobseeker’s Allowance (JSA) will experience a real terms cash cut, the key measure on which they’ll judge the Government’s record.

The Chancellor’s plans for Annually Managed Expenditure (AME) are bruising: a below inflation rise or better put, a real terms cut, across many vital benefits for jobseekers, parents and people who need support with housing. The Chancellor talked about people living lives on benefits as though this were a lifestyle choice. We learned from last week’s set of Work Programme statistics that only 1,000 disabled people out of the 79,000 referred to the flagship scheme have secured a job outcome that sees them employed for six months or more.

This 1.3% portion of Employment and Support Allowance (ESA) claimants securing work through the Work Programme is a risible return and reflects, not a desire on these claimants’ part to stay in bed, but huge inefficiency in Work Programme contracts.

The one per cent increase to Jobseeker’s Allowance (JSA) and people in the Work Related Activity Group of ESA plus the same growth rate in the local housing allowance and certain tax credits are all intended to help drive down the deficit but there can be no doubt they will also drive down the disposable income of some of the poorest in our society.

Whilst of course we welcome Disability Living Allowance and Carer’s Allowance being kept exempt from the Chancellor’s decision to freeze or slow down the growth rate of benefits, disabled people, like so many of the UK’s population, rely on a range of benefits including ESA, child tax credit and working tax credits.

The decision to up-rate ESA for people in the Work-Related Activity Group (those who are deemed able to prepare for or return to work in the longer-term) by just one per cent translates into an annual loss of over £60 or £180 over three years compared with what these claimants could have expected had ESA been up-rated in line with inflation. This is bad news for disabled people, bad news for people already struggling to make ends meet and makes a mockery of the claim we are all in this together.

A final note: we are concerned the mooted Welfare Uprating Bill will make welfare reform a political football in the next Parliamentary session. We need to recognise the damage and fear already caused by the previous Welfare Reform Act and not see further legislation cause further anxiety to disabled people.

This post first appeared at Touchstone

Other posts:

Joe Halewood: a 24% increase in rents in real terms? No -  its a 27.4% increase in real terms by the end of the next parliament.

Richard Exell: The implications of 1% uprating: Nicola has explained why getting rid of benefit uprating requires new legislation. As she says, this could easily have a huge impact on living standards, bigger than anything else in the Autumn Statement. I’ve tried to work out what this is likely to mean in practice and it looks as  though, in just three years, single unemployed  people will lose £2.85 a week compared with the uprating policy we have now and £3.85 compared with the policy we had before 2010.

Johnny Void: Dribbling toff George Osborne once again raised the example of working people getting up in the morning whilst their neighbours laze around on benefits as an excuse for yet another raid on welfare spending. And once again, despite his rhetoric, he used this attack on unemployed and disabled people as an attack on benefit claimants and low income workers alike. The 1% annual freeze on Tax Credits will largely wipe out any gains for low income workers due to raising the personal tax threshold.  If that doesn’t finish them off, then yet more real term cuts to Housing Benefits will further impoverish those who earn least.

Chief executive of the Child Poverty Action Group Alison Garnham at Left Foot Forward: Osborne's silence on child poverty speaks volumes: One might think it is strange for a government legally required by an act of parliament to take steps to end child poverty by 2020 not to spell out how it plans to progress this agenda. But a look at the details of the autumn statement makes clear why the chancellor would want to keep quiet about his contribution to the fight against child poverty.


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