Cap on over £100 billion of welfare further threatens disabled people’s living standards

Today, The Chancellor announced details of the planned cap on Annually Managed Expenditure (AME). Currently, the social security budget has the flexibility to respond to the needs of the economy and the people within it. In the Autumn Statement today we learnt this may no longer be the case.

At the beginning of each Parliament the Chancellor- with support from the House of Commons – will place limits on social security spend. Set in 2014 for the four years following, the cap will cover more than £100 billion welfare spending.

The basic state pension, Job Seekers Allowance (JSA) and JSA-pass ported benefits will be excluded from the cap. But all other benefits – including Disability Living Allowance (DLA), Personal Independence Payments (PIP), Tax Credits and the majority of Housing Benefit – will still be in the cap.

What does the cap mean?

Raising the stakes

A breach of the cap will trigger a debate and vote in the House of Commons. This will further raise the stakes for policy-makers who want to ensure they can provide the right support for disabled people.

Welfare trade-offs

Housing Benefit and tax credits are counter-cyclical –they may rise sharply if the economy falters. If the economy takes a downward turn, ministers bound by the cap will be forced to pitch them against disability benefits in their decisions to bring down social security spending.

Today Osborne argued that including state pensions within the cap would mean “cutting pensions for those who’ve worked hard all their lives because the costs on, say, housing benefit for young people had got out of control.” Meanwhile, disability benefits which help many disabled people work and live independently – appear to be fair game.

Short-termism

The cap installs yearly limits to social security spending. Instead of tackling the drivers of it, ministers will be compelled to make quick, top-down cuts wherever they can.

Scope have long-argued that continued investment in social care, better employment support and proper support to cover the extra costs of being disabled would all be more effective in meeting disabled people’s needs and driving down costs than any cap on AME.

This autumn, the Chancellor has celebrated growth and responsible recovery. But it is a recovery that will not benefit disabled people. Instead disabled people will face yet another squeeze on living standards, and further exclusion from local communities and the wider economy.

3 thoughts on “Cap on over £100 billion of welfare further threatens disabled people’s living standards”

  1. No on has seemed to notice that while The State Pension will be exempt, there was not a mention of Pension Credit, which brings the poorest pensioners income upto £145.40 (for single people) or £222.05 (for couples). This could mean that once again the poorest in society takes a hit.

  2. Although the State Pension has been excluded, there was no mention of Pension Credit, which tops up the State Pension for the poorest pensioners to £145.40 (for single people) or £222.05 (for couples). This is a means tested benefit with allows pensioners to have their savings treated a lot more generously than working age benefits (Capital limits). If these savings are capped/lowered/limited then many pensioners will not be entitled to a top up of Pension Credit.
    By Pension Credit not being excluded it could also open the door to limiting the benefit to the same annual uprating of 1% as it is for working age benefits

    Pension Credit needs to be in the excluded group or we may see the improvements for our poorest pensioners reversed.

    1. Thank you for your comment mzolobajluk. You’re right that Pensions Credit will not be excluded from the cap. In fact this blog only highlights a few benefits that will be included in the cap on over £100bn benefits. The Autumn Statement 2013 documents state that the cap will not apply to basic and additional State Pension; JSA; JSA-pass ported Housing Benefit expenditure and, following the introduction of Universal Credit, jobseekers within the Full Conditionality group of Universal Credit with no net earnings. It will apply to all other social security spending.

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