Welfare cap will drive short-term decision-making and arbitrary benefit cuts, say charities

A group of leading charities have warned the government that the new overall cap on welfare spending – the Annually Managed Expenditure cap – could drive short-term decisions about social security.

Longer-term measures would be more effective in reducing demand for benefits, the charities argue. In a letter ahead of the Budget the charities – Age UK, Barnardo’s, Crisis, Child Poverty Action Group, Mind, NCVO, Oxfam, Shelter and Scope – say:

‘Our main concern about the AME cap is that it is a blunt measure, which is likely to drive short-term decision-making and arbitrary cuts to benefit levels or eligibility. We are concerned that unless complementary action is taken to address underlying drivers of social security spending - unemployment, low pay, housing and childcare costs – then the cap will compound hardship for many individuals and families. In particular, we are concerned that disabled people will bear the burden of a failure to address these and other drivers of social security spending. Charities are not alone in their analysis about how the cap will work. The Institute for Fiscal Studies last week highlighted that the cap would not, in itself, make for ‘better policymaking’; it would depend on how expenditure was managed as a result of the cap.’

The charities recommend measures help to reduce demand for benefits over the longer term, such as supporting older workers and people who face barriers in the labour market to find work, increasing targeted support for families and children, building more affordable housing, and investing in assistive technology and adapted housing for disabled people.

For more information please contact Charlotte Ravenscroft, head of policy and research at the National Council for Voluntary Organisations – 020 7520 2475, or Aidan Warner, external relations manager, on 020 7520 2413.

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