Government underestimates welfare reform impact

The government has underestimated the combined impact of three different benefit cuts coming into effect at once, a think tank has claimed.

The New Policy Institute today publishes a report looking at the impact of the bedroom tax, council tax benefit changes and the overall benefit cap.

The research finds 2.6 million will be hit by at least one of the three cuts while just under 500,000 will be hit by at least two of the three changes.

Of the estimated 660,000 people hit by the bedroom tax, two-thirds are also hit by cuts to council tax benefit as well. Those affected by both measures will lose £16.90 of income a week - 20 per cent higher than the government’s estimate for the impact of the bedroom tax alone.

The NPI also estimates that 1.6 million households affected by the cuts are already in poverty and more than half contain a disabled adult.

Peter Kenway, director at NPI, said: ‘It is a major failing of the government that it has not looked at the overlap between their many benefit changes that all come into effect at the same time. As a result, the extent of hardship caused has been underestimated.’

A Department for Work and Pensions spokesperson said: ‘We carefully monitor policies and how they interact with other policies to ensure there are no unintended consequences.’

The bedroom tax, under which working-age social tenants have their benefit cut if they have spare rooms, came into effect on Monday. The new council tax support, which replaces councicl tax benefit but with an average 10 per cent cut for working age tenants, also came into effect this week. A £26,000 total annual household benefit cap is due to be rolled out in four London boroughs from 15 April and everywhere else in the country by the summer.