PATHWAYS INTO POVERTY

The Government have made much of the importance of ensuring sufficient financial support is provided to low income working households. In the first paragraph of the recent “21st century welfare” paper, the Government stated:

“We want to support people to move into and progress in work, while still supporting those in greatest need.”

But the reality is very different. In truth the Tories haven’t changed and the Liberal Democrats are utterly duplicitous. A wide range of welfare reform announcements have been made across the emergency budget in June, and the Comprehensive Spending Review, which will substantially cut many benefits paid to low income working families.

Analysis by Family Action indicates that at least 8 welfare cuts announced in the comprehensive spending review directly hurt low income working families. When combined with cuts announced in the budget, the analysis identifies 21 key welfare cuts will hurt the finances of low income working families.

Changes to eligibility rules for working tax credits could lead to some couples with one person working 16 hours per week losing up to £3810 per year in Tax Credit entitlement. Indications suggest that the changes could leave them worse off in than out of work – and push these families into poverty.

Changes to the eligibility rules for Working Tax Credit also penalise couples, and could discourage stable families.

Reductions in help with childcare costs through the childcare element of working tax credit could cost working families up to £30 per week - £1560 per year.

Freezing entitlements to Working Tax Credits, could lose low income working households £153 from their Working Tax Credit entitlement next year relative to uprating WTC elements with current RPI. By 2013/14 this could increase to £483.

Making Education Maintenance Allowance and (potentially) Council Tax Benefit discretionary locally managed funds, could lead to low income working households losing eligibility to these important benefits.

Changes to the contributory Employment and Support Allowance could lead to income losses of up to £91.40 per week for couple households where one member is working, and where the other is too ill to work. The changes could lead to households such as this being pushed into poverty.

Extending the age threshold for the shared room rate for Housing Benefit will push many low income working households into severe low income poverty. One example shows that single person aged 30, working 30 hours per week and living in an average price privately rented studio flat (£107 per week), could see their income after housing costs fall from £111 per week, to just £75 per week.