Benefit cutbacks ‘to cost families £1,600 a year’

Welfare cuts are reducing the living standards of hundreds of thousands of people who cannot find work, according to a new assessment of the reforms.

The study conducted for the Local Government Association by the Centre for Economic and Social Inclusion used existing data to predict what will happen to the 1.18 million households where no one works. It found more than three-quarters of the total will see their incomes drop.

According to the Independent, this equates to each family missing out on £1,600 a year.

Roughly one in eight (155,000 people) can reduce the impact of the cuts by finding work near their home, while another 115,000 will have the opportunity to move to more affordable housing. 

Although the effects of the cuts will be felt all over the country, the reduction in housing benefits are most likely to affect those in the south, where housing costs are higher.

"And at more plausible estimates, at least four out of every five households are likely to need further assistance in order to deal with the impacts of welfare reform – with cumulative financial impacts in excess of £1 billion per year," the report read.

The study found most families on benefits will receive £1,615 a year less than they would have done under the old system, although this figure is even higher in London, with households losing out on £1,965 a year. 

Meanwhile, in Westminster the average loss exceeds £5,000 a year.

The aim of the reforms is to encourage people to find work rather than live off state benefits. There are some cases where people are in fact better off not working and the government wishes to change this.

However, there are many families struggling to make ends meet and these cutbacks may impact their finances greatly, especially if they are lumbered with debt. In cases such as this, people could benefit from debt management to get their money in order.

By James Francis