Citizens Advice response to the Budget 22/06/2010
Budget Response: A budget of benefit cuts could leave many vulnerable people worse off
Director of Policy Teresa Perchard said:
“We recognise that the Chancellor has tried to help the most vulnerable in society, but regret that he has not targeted the measures as well as he might have done.
“This makes the Budget very much a missed opportunity. Households on the lowest incomes, including many in low paid work, will be worse off, despite today’s announcements.
“The reality is that the proposed changes to personal allowances will be of little benefit, for example, to working families on the lowest incomes who live in rented accommodation. Although these families are in work, they are also likely to be in receipt of housing and council tax benefits and since both are means tested, any rise in take-home pay will result in a loss of entitlement to these benefits.
“Single people and couples who are working but earning less than £10,000 a year and with no children will gain very little from the increased tax threshold because an increase in their income will lead to a lowering of their housing benefit and council tax benefit. At the same time they will have to bear the rise in VAT.
“Many working families with children and earning under £25,000 will also gain little from the change in the threshold, though for those with the lowest incomes, the increases in Child Tax Credit will mitigate for some, though not for all.
“We welcome the decision that housing benefit rates will allow disabled people to have an extra bedroom for a carer. However, the cap on local housing allowance rates will mean that many people on housing benefit will be unable to afford to live in certain parts of the country or will be limited to certain areas of a city, perhaps far from their place of work or job opportunities. We predict more debt and homelessness, as people try to make up the difference between the rent they must pay and the benefit they receive. Larger families in particular may be forced into poorer quality or overcrowded housing.
“We also welcome the measures designed to protect pensioners, and the decision to maintain universal child benefit, even though it is to be frozen, as we recognise the balancing effect of the increase in child tax credit for some families on the lowest incomes.”