Benefits cap ‘will undo work to tackle child poverty'

Lauren Higgs
Monday, January 7, 2013

Government plans to cap benefit payments until 2015 will reverse efforts to reduce child poverty and plunder the income of low- to middle-earning families, charities have warned.

Plans to “uprate” the majority of benefits and tax credits by just one per cent for the next three years were announced in the Chancellor’s autumn statement last month.

According to the Institute for Fiscal Studies, the decision to limit the increase in welfare payments to one per cent, which is below the rate of inflation, equates to a four per cent cut in “real terms”.

MPs are set to discuss the introduction of the one per cent cap as part of a debate on the “Welfare Benefits Up-rating Bill” in the House of Commons tomorrow.

Ahead of the debate, The Children’s Society has published an analysis of the proposals, revealing the potential impact of the changes on families across the country.

Based on average earnings, the charity estimates that a lone-parent nurse or primary school teacher with two children will lose £424 each year by 2015, while a couple with three children in which one parent is a second lieutenant in the army will lose £552 a year.

A joint letter to government signed by Matthew Reed, chief executive of The Children’s Society and Srabani Sen, chief executive of Contact a Family, among others, argued that millions of families across the country would be hit by the plans.

“Families already struggling to pay for food, fuel, rent and other basics, will see their budgets further squeezed,” the letter warns.

“The government must make sure that increases in benefit rates at the very least reflect rises in cost of living. Otherwise this toll on Britain’s parents, workers, people seeking work, on our sick and disabled people, our homeless, and on our children, will deepen inequality and increase poverty.”
Sen called on MPs to vote against the proposals to show that they are “on the side of hard working parent carers and families with disabled children”.
“The proposed benefits squeeze would hurt already hard pressed parent carers, who are more likely to be in part-time, low paid jobs due to their caring responsibilities,” she said. “Many claim a range of benefits across the system and rely on benefits and tax credits to make ends meet.”
Meanwhile a report by the Child Poverty Action Group (CPAG) has claimed that the one per cent benefits cap will reverse progress to lift children out of poverty and damage the government’s ability to meet its target to end child poverty by 2020.

Alison Garnham, chief executive of CPAG, said the Welfare Benefits Up-rating Bill carries the “inevitable consequence” that child poverty will increase.

“This is a poverty-producing bill that does nothing to reduce the need for support. And since those on benefits have incomes so low they have no choice but to spend all their income, it also sucks money out of the economy,” she said.

“We need a secure future for Britain’s families, and that means ending poverty by making progress towards full-employment, living wages, affordable housing and affordable childcare.

“The truth is that our social security and tax credits have been left to do far too much of the heavy lifting left by labour market, housing and childcare market failures.”

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