Incomes have suffered much more heavily since the current economic crisis began than in the aftermath of the UK’s two previous recessions – and impending benefit cuts will make matters far worse for many of the poorest in society.
Net national income per head, taking inflation into account, has fallen by more than 13% since the start of 2008, according to figures released by the Office for National Statistics (ONS) yesterday.
According to the ONS: “The increase in prices eroded the growth of household incomes, meaning real household actual incomes fell. This means that prices were rising at a faster rate than people’s incomes, and therefore over time, people have found their income purchased a lower quantity of goods and services.”
If that wasn’t bad enough, households on the lowest incomes are facing the prospects of further cuts in real living standards over the coming few months.
‘Poll tax mark 2’
From next April large numbers of poorer households will be asked to pay council tax for the first time – a move dubbed by Conservative peer, Lord Jenkin as ‘poll tax mark 2.’
Lord Jenkin, who served in Margaret Thatcher’s cabinet as Patrick Jenkin, wanted to change the new legislation to give local authorities the discretion to lower the 25% Council Tax discount for single person households – but his amendment was rejected.
“It is quite clear that without the amendment there will be substantial sums of Council Tax, very small figures individually, that councils will have to collect from a large number of pretty vulnerable households,” he said.
Lord Jenkin said the government needed to prepare for a “backlash” when the cuts came into force.
Poorest face brunt of housing benefit cuts
This is on top of a raft of other benefit cuts due to come into force over the next 6 months, including the benefit cap I’ve previously written about, and further cuts to Housing Benefit.
- Restriction of Local Housing Allowances will affect 774,970 households across the UK, who will lose an average of £9 a week.
- New limits on the amount paid according to the size of a property, including a cap of £400 a week on a four bedroom house, will affect fewer households more dramatically. A total of 21,060 will lose on average £74 per week.
- From January 2012 single people aged between 25 and 34 will only be able to claim housing benefit based on the cost of a room in shared house, rather than a modest one bed flat. This restriction currently applies to all single people under 25-years-old. According to the Department for Works and Pensions, London will be hit hardest financially with 380 single people in Camden likely to lose £116-a-week while 720 in Brent will lose £111-a-week. Liverpool Council will have the most people affected 1,450 losing £34-a-week. Birmingham Council is next with 1,410 people losing £38-a-week and Leeds Council third with 1,270 people losing £22-a-week.
Worse is to come:
Housing benefits cuts may force young jobless to live with parents
Young unemployed people could be forced to live with their parents rather than be allowed to claim housing benefit under plans for another £10 billion of cuts to the welfare system.
According to the Daily Telegraph, George Osborne is due to announce today that he and Iain Duncan Smith have drawn up proposals for a significant reduction in benefit payments after 2015. The Chancellor will question why those who have never worked should qualify for the benefit, which can be worth thousands of pounds a year.