Shocking impact of welfare cuts revealed

Social Security Secretary Shirley-Anne Somerville has called on the UK Government to use this month’s autumn statement to announce an end to the benefits freeze that has brought misery to families and communities.

In a letter to Esther McVey, the Work and Pensions Secretary, Ms Somerville has highlighted the findings of the annual Welfare Reform Report, which estimates that the UK Government’s welfare cuts will lead to a £3.7 billion fall in social security spending by 2021 in Scotland.

The report estimates the benefit freeze has the biggest impact, reducing spending by around £190 million in the current year, rising to around £370 million by 2020/21.

Other findings include:

• Over the first year of its implementation around 3,800 Scottish families have seen their incomes reduced due to the Two Child Limit - each year more children will lose out on up to £2,780 per year because they were born after the arbitrary April 2017 cut-off date
• Around 3,500 Scottish households have been capped each month since the Benefit Cap was lowered in 2016 - 89% of families with capped legacy benefits have children, while 64% are lone parent households. 45% of these households lose out by £2,600 per year or more
• Because of the decision to reduce Universal Credit (UC) work allowances, each year sees more and more working people lose out as they move onto UC. By 2021 working UC claimants in Scotland are expected to lose around £250 million per year in total

Social Security Secretary Shirley-Anne Somerville said:

“This detailed report paints a stark picture of the reality of life for many people in Scotland. It represents damning evidence against the DWP’s current programme of welfare cuts which are only set to get worse.

“These cruel cuts are forcing more people into poverty at the very time the Scottish Government is focussed on getting children and families out of poverty.

“More and more families are finding it hard to make ends meet as prices of essentials go up and the levels of their income and benefits go down. The increased reliance on food banks is a damning indictment.

“Esther McVey cannot ignore this report. That is why I am sending her a copy and urging her to immediately end the freeze on benefits. I will also be sending a copy to the UN Special Rapporteur on extreme poverty and human rights in advance of his visit to the UK later this year.

“Scotland’s social security system is being built upon principles of dignity and respect. Today’s report – published at the start of Challenge Poverty Week - shows that the current UK system is built upon the complete opposite.”      

Director of the Poverty Alliance, Peter Kelly said:

“Scotland is a compassionate country where we all believe everyone should have a decent standard of living. The help that people receive through social security is important in helping to make that happen. This report shows that more needs to be done.

“In order to ensure everyone has a decent standard of living we need to see an end to the freeze in benefit levels. The cost of living hasn’t been frozen, so it’s right that social security payments should keep up with those costs.”

Challenge Poverty Week runs from Monday 1 until Sunday 7 October. More than 100 groups and organisations are expected to take part in the annual event to highlight the problem of poverty in Scotland, to show its impact on the whole of society and showcase solutions. A full list of activities can be found at www.challengepoverty.net/events/

Background

The Benefit Cap refers to the UK Government’s policy to limit the total benefit entitlement for working age households, with some exemptions.  From November 2016, couples with or without children (living outside London) cannot receive more that £20,000 in benefit entitlement per year. The cap is lower for single people without children (£13,400 per year).

The Benefit Freeze refers to the UK Government’s policy to not uprate with inflation the main working-age rates of Income Support, Jobseeker’s Allowance, Employment and Support Allowance (excluding the support component) and Housing Benefit, as well as most elements of Working Tax Credits and Child Tax Credit (and the corresponding element of Universal Credit) and Child Benefit. The policy is in place for four years from 2016/17 until 2019/20 inclusive.

The Two-Child Limit refers to the UK Government’s policy to restrict the Child Tax Credits (CTC) and child element of UC to two children per household. The rule applies to new births after 5 April 2017 for Child Tax Credits and new claims to Universal Credit. A number of exceptions apply, in the cases of multiple births and non-consensual conceptions.