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Spending Review: 2.6 million families 'will be £1,600 a year worse off' after benefit changes

Up to 2.6 million working families could be an average of £1,600 worse off a year as a result of benefit changes announced in Chancellor George Osborne's Spending Review, according to independent economic experts.

Despite Mr Osborne's decision to scrap proposed cuts to tax credits due to come in next April, the Institute of Fiscal Studies says the introduction of the new Universal Credit, which consolidates a number of existing benefits, will result in the cut in cash for affected households.

The IFS also says Mr Osborne was "lucky" to receive a £27 billion windfall which allowed him to perform his U-turn on tax credits, adding the Chancellor will "need his luck to hold out" if he is to meet his target of a surplus by 2019/20 without raising taxes or imposing further spending reductions.

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  1. Penny Marshall

More money for social care - but why aren't carers cheering?

I'm watching the Autumn Statement with carers, care managers and elderly residents in a care home in Leeds.

The Chancellor claims the council tax "precept" (or to call a spade a spade, the council tax rise) will raise £2 billion and brink this sector back from the brink of crisis.

He also announced more money will be put into the Better Care Fund as health and social care budgets are increasingly merged.

So why aren't the people I'm with cheering?

There are limits to this solution:

  • Those councils most in need of providing state funded social care will be able to raise less money from a hike in council taxes. So up here in the North there is still a funding crisis. The leader of Bradford Council told me the figures don't work. "The Chancellor is just making this funding crisis a local authority funding crisis - he's passing the buck", Councillor David Green, Labour Leader of the council told me.
  • The Chancellor's figures are contested. The King's Fund does not estimate that anything like £2 billion will be raised.
  • The funding gap is much bigger than £2 billion anyway - it simply isn't enough, say critics.
  • There is no immediate investment to help cover the funding shortfall caused by the New Living Wage

The Chancellor isn't yet sitting down. But no one here is cheering yet.

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