Nearly a week on from the Spending Round, there has been time to think about what a welfare cap might mean for disabled people.
In last week’s Spending Round, the government announced that – for the first time ever – there will be a cap in the UK’s welfare spending through changes to Annually Managed Expenditure (AME). This part of the budget responds to the needs of the economy, and the people within it. So if one year more people need benefits, pensions or tax credits – AME makes sure they get them.
But all of this is about to change. In 2015 the government will put a limit on how much it will pay out in social security.
And disabled people aren’t protected.
State pensions will be excluded from the cap, as will Job Seekers Allowance (JSA), but disability benefits, housing benefit, tax credits, and pensioner benefits will all be included.
How will the cap work?
It will be set as a limit each year at the time of the budget statement, starting in April 2015.
After that, if the government looks like it is about to spend beyond the cap, a public warning will be issued by the Office for Budget Responsibility (OBR) .
Ministers will then be faced with a difficult decision; refuse to meet the needs of those in the worst situations in our society, or publicly breach the cap.
What does it mean for disabled people?
Disability benefits such as Disability Living Allowance and Personal Independence Payments – which go towards covering the extra costs of being disabled – will be vulnerable to the cap. The amounts spent on Employment Support Allowance, too, will be subject to these limits. Universal Credit will subject to the cap as well.
The Chancellor wants to exclude the “most counter-cyclical elements” from the cap – those which rise most sharply when the economy falters. But the need for Housing Benefit -which is included in the cap – increases during recession. If the economy takes a downward turn, the cap will pitch disability benefits against Housing Benefits in an innappropriate trade-off.
Disabled people are already set to lose over £28bn through welfare changes. The cap on AME comes as yet another blow to the their living standards.
Yesterday the Chancellor announced a £3.8 billion investment in social care – the support disabled people get from their council to get up, get washed and dressed, and live independently. But by placing arbitrary limits on the amount spent on welfare, without the right safeguards, the government risks wasting these investments, and disempowering disabled people completely.
The chancellor promised that “those with the broadest shoulders [will] continue to make the biggest contribution to fiscal consolidation”. But in reality it is those most in need of support who will bear the burden once again.
Most of all, introducing a cap will radically change the meaning of social security. Without budgetary flexibility, which responds to the needs of the society, the government will risk punching yet more, deeper holes in the UK’s social safety net.