Response to the Budget announcement

In the Budget statement made on 8 July, the Chancellor introduced a number of measures which will have big effect on disabled and disadvantaged people. Stephen Springer, Policy Advisor for Livability shares his thoughts on the budget announcements.

The Welfare budget

Announcements included:

• working-age benefits, including tax credits and Local Housing Allowance, will be frozen for four years from 2016-17 (this doesn’t include Maternity Allowance, maternity pay, paternity pay and sick pay)
• the household benefit cap will be reduced to £20,000 (£23,000 in London)
• support through Child Tax Credit will be limited to 2 children for children born from April 2017
• those aged 18 to 21 who are on Universal Credit will have to apply for an apprenticeship or traineeship, gain work-based skills, or go on a work placement six months after the start of their claim
• rents for social housing will be reduced by 1% a year for four years, and tenants on higher incomes (over £40,000 in London and over £30,000 outside London) will be required to pay market rate, or near market rate, rents.

The £12 billion ‘cuts’ to the welfare expenditure is still of concern, but we are pleased that the time over which the reduction will be made has been extended from three years to four.

We also welcome the exemption for benefits paid to disabled people, notably Personal Independence Payment, Disability Living Allowance and Employment Support Allowance support groups and are pleased that these will not be frozen.

We are concerned by remarks made by the Chancellor about the Employment Support Allowance Work Related Activity Group that would seem to suggest a restriction and freeze from 2016/17.

The Health budget

On Health he confirmed:

• ‘The NHS will receive – in addition to the £2 billion we’ve already provided this year – a further £8 billion. That’s £10 billion more a year in real terms by 2020.’

We welcome this renewed commitment to “Future View” – NHS England’s five year plan. This plan sets out how the health service needs to change, bringing more engaged relationships with patients, carers and citizens in order to promote wellbeing and prevent ill-health.

Whilst this presents opportunities to bring greater choice and independence to disabled and disadvantaged people in their communities, we are concerned that there may be a shortfall in the funding available to achieve the necessary improvements around the integration of health and social care.

• The Kings Fund has warned that all NHS services in England are likely to report a deficit in the current year without additional funding. While the NHS budget has been protected, reductions in financial support for local authorities have meant real-term cuts in spending on adult social care of 8.7% between 2010/11 and 2014/15.
• This has occurred at a time when demographic pressures mean that the cost of providing care for older and disabled people is increasing by 3% a year. It is estimated that 25% fewer people are able to access publicly funded social care.
• The Association of Directors of Adult Social Services has warned that in the current year there is likely to be £420 million of service reductions for people requiring social care. The Local Government Association estimate a £4billion shortfall in social care funding overall.

It is therefore important that funding for social care is addressed in the Spending Review this autumn.

Changes in pay

We welcome the new National Living Wage which will start at £ 7.20 per hour next April for workers aged 25 years and over. This will be very important for those working in the care sector.

But while this will represent a 10% increase on the current level of the National Minimum Wage it is substantially below the current Living Wage as calculated by the Living Wage Foundation (£7.85 nationally, £9.15 in London).

With a 1% limit in Public Sector pay, this increase has the potential to have a negative impact social care provision.

We note that there will be a new welfare reform bill published in July and we will review this in detail.