Benefit Cut in Real Terms, and Rising Housing Costs Squeeze to Hit Hard.
Working-age benefits including Jobseeker’s Allowance, employment and support allowance and income support are to go up by a mere 1% for each of the next three years, from April 2013.
This is lower than the 2.2% that might have been expected – the BBC states.
This ‘rise’ is a cut – that is benefits will be lose their value as inflation, – above all price rises in essentials, food and utilities – rises.
The latest figures on inflation:
The rate of inflation in the UK rose sharply last month. The Consumer Prices Index (CPI) was up from 2.2% in September from 2.7% in October.
Retail Prices Index (RPI) inflation also rose from 2.6% in August, to 3.2% last month, according to the Office for National Statistics.
Worse will be that “Payment increases to landlords to be capped at 1% from 2014, while plan to end housing benefits for under-25s is dropped”
While welcoming the latter nobody can miss the effect the former will have.
The Guardian reports,
The chancellor has signalled the breaking of the historic link between the cost of renting and housing benefit payments by announcing that welfare for housing would rise at less than the rate of inflation.
With charities already warning that “deepening benefit cuts” will have a “dramatic impact on homelessness”, George Osborne said local housing allowance, the benefit paid to landlords for poor people’s homes, would be increased by 2.2% next April but “then we will cap increases at 1% in the two years after that”.
The saving to the taxpayer is £105m in 2014, rising to £260m a year in 2018. But the move will mean that the gap between rents – which has been rise at a faster rate than inflation – and the cash benefits to the poor will grow.
Stung by criticism that already in central London councils are placing people outside of the capital because cuts have made local housing unaffordable, the government attempted to soften the blow by saying that “30% of the savings will be used to exempt from the new cap those areas with the highest rent increases”.
This will mean that high-cost areas in London are spared some of deepest cuts to housing benefits but it is unlikely to stop the poor being forced to leave.
Looking at the inflation for rents we find (from here)
According to the new five-year forecast from global real estate service provider Savills average rents are expected to rise by 2.5% in 2013 and 18.2% over the next five years.
Still not only will ‘Providers’ for the Unemployment be well cared for under plans to make the long-term unemployed work for no wages.
The Void uncovers the latest scam to profit out of those on benefits.
Up to 2.5 million claimants are estimated to need some support when the new welfare and Tax Credit system is introduced next year, which will make benefit payments monthly for the first time. Claimants will also no longer have the option to have rent payments sent direct to landlords.
The DWP has invited banks, mobile phone companies, smart card companies (ominously) and any other private sector shark who’d like a slice of the benefit bill,to bid for a whopping £145 million worth of contracts to design budgeting support. Despite this huge sum claimants are expected to be charged for any continuing support once they have been on the new benefit over 12 months.