Giving with one hand and
taking away with another.
How increases in benefits
leaves the disabled, elderly and vulnerable worse off.
In April 2018 James B (a retired army veteran confined to a wheelchair)
and his wife Linda (also disabled) received significant increases in their benefits
and pensions. After years of austerity and financial hardship the couple were
grateful for the additional £74.14 a month increase to their income.
Within a few weeks James and Linda’s rent and council tax costs increased
by £43.22 a month (they were entitled to housing and council tax benefits) and
the contribution to the cost of James personal care rose from £49.05 to £102.79
a month. The couple ended up £22.82 a month worse off. They were caught in the
benefits trap.
The higher their income the more rent, council tax and care costs were
imposed upon them wiping out any increases in their income. The more money they
received the more money they had to find for their rent, council tax and
personal care. The government gave with one hand and the local councils took it
all away with the other.
For every £10 increase in income (excluding disregarded and excluded
income) £8.76 is clawed back by the local council in increased rent and council
tax charges and the remaining £1.24 in increased care costs. Therefore for
every £10 increase in income as a result of annual rises in benefits and
pensions £10 is taken by increased charges levied by local government and
councils leaving struggling families worse off as inflation eats into their
remaining income.
Housing and council tax benefits calculate the amount of money that they
consider you need to live on (called the Applicable Amount). Currently this
stands at £259.05 a week and is reviewed and increased annually to take account
of the cost of living. This annual review is carried out by the Department for
Works and Pensions; it is not the responsibility of the local councils.
When County Council’s calculate an individual’s contribution to the cost
of their care they also take into account how much a person needs to live on
(the Minimum Income Guarantee). This figure is reviewed annually by the
Department of Health and Social Care. In 2018 this was £331.81 a week. However
this figure has not been increased since 2015.
If the Minimum Income Guarantee had risen in line with inflation the
Minimum Income Guarantee would now stand at £357.27 a week and James
contribution to his care would be nil. James is paying £102.79 a month towards
the cost of his care simply because the Minimum Income Guarantee has not risen
in line with inflation.
There is an inverse relationship between a person’s contribution toward
the cost of their care and the amount of rent and council tax they pay. For
every increase in a person’s rent and council tax there is a subsequent
reduction in the cost of the amount they contribute towards their care
costs. If rent and council tax increase
by say £5 a week their chargeable income decreases by the same amount meaning
they pay £5 less towards the cost of their care. If rent and council tax
decrease they pay more towards their care. Either way they end up paying more
for their rent and council tax or more towards their contribution to the cost
of their care. They simply cannot win.
When calculating housing and council tax benefits and a person’s
contribution towards the cost of their care councils only take into account
your income not your expenditure. If a family has significant additional
expenditure above the estimated Applicable Amount and Minimum Income Guarantee
this is not taken into account and this can cause significant financial
hardship.
James was providing financial support towards his son’s university
education and had taken out a loan and credit card debts which amounted to
additional expenditure of over £400 a month. James was able to cope with these
costs until his wife transferred from Disability Living Allowance (DLA) to
Personal Independence Payment (PIP) with a resulting reduction in their income of
£259.05 a month.
Because both DLA and PIP are excluded from the income calculations when
calculating housing and council tax benefits and care contribution costs this
significant loss of income was not taken into account and resulted in extreme
financial hardship for James and Linda has they struggled to pay their increased
rent, council tax and care costs on a greatly reduced budget.
Housing and council tax benefits are being replaced by Universal Credit
but the amount of Universal Credit a family receives is still dependent on
their income.
In 2015 4.8 million families received housing benefits. How many of
these families are disabled and contributing to the cost of their care is
unknown but the figure must be substantial. Many of these individuals and
families are caught in the benefits trap of rising income resulting in rising
costs which wipe out most or all of their increased income.
Cost of living
increases are just that, they are there to mitigate rising costs but if this
increase is continuously clawed back each year by local councils the most
disadvantaged families in the country will face increasing hardship and
austerity. This cannot be allowed to continue. At the very least the Department
of Health and Social Care must increase the Minimum Income Guarantee in line
with inflation.
The poor, disabled and vulnerable are being robbed by the very
organizations designed to protect them – The Department of Health and Social
Care and to a lesser extent The Department for Works and Pensions. If
consecutive rises in income and benefits are simply clawed back in increased
care and housing costs the most vulnerable people in our country will be
condemned to increasing poverty, austerity and depredation. They deserve better
than this.
We need to ascertain the affect this is having on disabled, elderly and
vulnerable families.
Has increases in your pensions
or benefits resulted in significant increases in your rent, council tax or the
amount you contribute towards your care? Did these increased costs outweigh the
increases in your benefits? How has this
affected you and your family? Please let us know by responding to this article.
Many thanks.
James S Boughey
