Giving with one hand and taking away with another

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