Thursday, February 17, 2011

Welfare reform: harder than it looks

The FT has a good run down of today's welfare reform changes. Key points:

1. Spending on benefits will increase by £2.6 billion, which will give more money to 2.7 million people.

2. Incentives to work for the average claimant will decrease, particularly for people working more than 30 hours a week; receiving tax credits; and not claiming housing benefit or council tax relief.

3. The government still has no idea how the new Universal Credit will interact with childcare costs or council tax benefit. In particular, their plans for council tax benefit will make the benefits system more complicated, as every local council will be able to set its own different criteria for eligibility.

4. Some people will be hit really hard - 100,000 will lose more than £75 per week, and 1.7 million will receive less money. That's on top of the cuts to housing benefit, unemployment benefits and disability benefits which were previously announced.

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It is revealing that after all these years of studying the system, Iain Duncan Smith and chums' landmark welfare reforms have managed the feat of increasing spending on benefits, increasing marginal tax rates for the average worker, making some parts of the benefits system more complicated and taking more money away from thousands of low paid workers and disabled people.

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