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Welfare cuts are a ticking time bomb

October 26, 2012

The people of Newcastle could pay a heavy price for welfare reform.

It must have sounded like a great idea around the coalition Cabinet table. Slashing the welfare bill to force ‘workshy scroungers’ into ‘proper jobs’ so they are no longer dependent on taxpayers’ handouts would surely play well with Daily Mail reading middle England.

No matter that in some parts of the country ‘proper jobs’ are in short supply. Why worry if the people worst affected are neither workshy nor scroungers, but people experiencing genuine hardship in desperate need of help?

Of course the Government will argue that the nation’s huge benefits bill has to be slashed because public spending cuts are an essential part of their economic recovery plan.  Somehow I find it hard to see the logic of how reducing the amount of money people have to spend leads to economic growth – but then I’m not one of those fancy bankers or economists  who have so ‘expertly’ steered the economy to its current state.

What I do know is that in Newcastle benefit cuts will take over £83m out of our local economy over the next four years.  That’s £83m taken out of the pockets of people who are in greatest need, and £83m that they will no longer be able to spend with local shops and businesses.

And our research suggests that the impact of taking that amount of money from our economy will be the loss of nearly 2,000 jobs, which in turn will deprive the city of another £20m.  And so it goes on – a spiral of decline that seems as far removed from economic stimulus as I can possibly imagine.

The people at the sharp end of this are of course those people who currently receive benefits. The people who are often condemned for their idleness and indolence.

People like Linda and Gary, a couple in their 50s. Gary’s crippling arthritis means he can’t work so he receives an Employment Support Allowance and Disability Living Allowance. Linda works hard to make ends meet with a part time job paid at the minimum wage of £6 per hour. Because of their limited income they also get some help with rent and council tax. After paying the remainder of their rent and council bill they are left with £248.56p per week. Under the Government’s reforms Gary will face a tough reassessment of his medical condition. The Government intends to save over 20% of the benefit it pays to people with disabilities so many people who have serious conditions are likely to lose out. If Gary is one of the unlucky ones and is deemed not to qualify for the new Personal Independence Payment the couple’s income will fall to just £113 a week.

Or how about Susan, a hard working lone parent with two young daughters aged 5 and 7.  Susan works a full 35 hour week earning £10,920 per annum – that’s the minimum wage. To be able to work Susan has to pay for a child minder and because of her low wage she really depends on the help she gets from Child Benefit, Working Tax Credit, Child Tax Credit and Housing and Council Tax benefit that mean she can make ends meet. A new Universal Credit might simplify the system, but once the Government cuts have eaten away at Susan’s meagre income, she will be £1,729 a year worse off  – close to the breadline, unable to afford the childcare she needs to work and fighting to keep a home for her family.

Or consider people like the Jones family. Mr and Mrs Jones are both unemployed and devote their time to caring for their disabled daughter Jane. The family currently receive £56.63 Disability Living Allowance for Jane,  but when they are transferred across to Universal Credit their allowance will be reduced to £28.15. By the time Jane reaches 16 the family will have lost out on a staggering £20,000 which could have been used to help give Jane the best possible start in life. It risks robbing Jane of the opportunity to build an independent, good quality of life in adulthood – and could lead to her being more reliant on expensive care in the future.

You see the big problem with Britain’s descent below the breadline is that most of the victims are not cheats and scroungers. They are people like Gary and Linda, Susan and the Jones family  – people like our friends, our neighbours, our families. People like you and me.

Welfare cuts are insidious. There will not be a big bang change, but the cuts will creep up on us, one after the other, til one day we will we look out on broken and divided communities and wonder quite how we ended up here.

One after another the cuts will mount – a switch to the cheaper Consumer Price Index as the measure for updating benefits rather than the retail price index cuts £5.8billion at a stroke.

Reassessing everyone on invalidity and disability benefit with a target of reducing entitlement by 20%. A new lower benefit cap on how much one family or one person can claim and, as part of the introduction of the streamlined Universal Credit, every level of benefit will be reviewed and reduced and people will have to prove greater hardship before they can claim.

Nobody doubts the welfare bill is too high, nor challenges the need to cut public spending. But we all have a right to expect that such massive change is sensitive to the plight of people in real need.  Our welfare state is something of which our nation should be proud. Its dismantling is not to be taken lightly.

In this age of quantitative easing and bank bail outs a new social divide is emerging. Backhanders for bankers and business sit uncomfortably alongside cuts for the poor. Did someone say we’re all in this together?

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