What the spending review welfare cuts mean for social care

The £7bn cuts in benefit spending announced in the comprehensive spending review, along with £11bn in welfare cuts from the Budget, will have significant implications for social care, says Gary Vaux.

Welfare reform has really hit the headlines in the last few weeks, but the debate has been dominated by one or two ‘big’ issues – the taxing of child benefit for higher-earners being the biggest, which of course in no way reflects on the income of the journalists and broadcasters covering the story. But it was also simple – there were no subtle nuances or consequences other than a direct loss of income for one sector of society. That has now changed with the comprehensive spending review.

Employment and support allowance is to be withdrawn after a year from those who get it because they’ve paid national insurance contributions in the past, unless they are in the most disabled ‘support’ group. Affected claimants will need to claim ESA via a means-test instead. ESA already involves a very stringent ‘health’ test – this introduces a further ‘wealth’ test, which will take those with savings or, more crucially, a working partner, out of entitlement, losing them £91.40 a week. 

There are other changes however, which take even more understanding and unravelling – and many of those changes impact directly on social care clients. The implications may not be obvious at first glance, if the reform is noted at all, but the consequences could be felt on social care and children’s services over the next few years.

To take a very simple example, the chancellor talked about “aligning the rules for the mobility and care components of disability living allowance paid to people in residential care’. That seems reasonable enough – a simple tidying-up operation. But in fact, it means that people in residential care who claim the mobility element of DLA (£49.85 at the higher rate) will find that it is withdrawn after four weeks, in the same way that DLA care component generally is. This will affect thousands of disabled adults and their families – and may also mean residential care homes seeking a review of their contracts with the local authority, as the cost of transport, previously met by the resident’s DLA, will have to be met elsewhere.

Another proposal is the introduction of a ‘cap’ on total benefit income. From 2013, a claimant’s benefits should not exceed £350 a week if single or £500 per week if they have children. This is a populist, and probably very popular, policy goal. Although families getting DLA, working tax credit or war widows pensions will be exempt, many families with three or four children, and an income of around £300 per week from jobseeker’s allowance, child tax credit and child benefit, will find that they have to obtain rented accommodation below £200 a week to stay within the cap. That’s probably manageable if they are in social housing but in the private sector?  So will they turn to social services for support if they fall into debt (and debt is often the trigger for family tensions to emerge) or even financial help if they find their income ‘capped’?

There is also the impact that this change could have on families who step in to look after a relative’s child or children as an alternative to the care system. They may be below the ‘capping’ figure if they have one or two children of their own – but the sudden influx of two extra children could bring them within it.

Changes in housing benefit and council tax benefit could mean poorer and larger families being priced out of certain areas of the country – and not just central London. What will be the impact on social care in the areas they move to?

Changes to education maintenance allowance could deter many vulnerable young people, including some looked-after youngsters, from staying-on in education.

Changes to the help available for child care expenses (reduced from 80% to 70% of the cost) within the tax credit scheme will create additional demand for financial help, as well as making it harder for parents to return to employment. Freezing some of the working tax credit rates will have the same effect.

A review of all DLA claims from 2013 onwards, announced in the Budget, is expected to reduce the numbers getting it by 20% – severe enough in itself, but this will also have a knock-on effect on carers, who could lose their carer’s allowance if the person they look after loses DLA or has it downgraded.

The child benefit change will save the government £2.5bn (although initially the Treasury said it was £1bn – maybe they need new batteries for their calculators). The other changes announced in the spending review and the Budget, of which the above is only a flavour, will save £15.5bn a year. But welfare reform is a bit like squeezing a balloon – you can grab it tight and make it smaller in one place but the pressure just pops up somewhere else. Social care services for families and adults could be the place where the balloon bulges – and maybe even pops.

Read full coverage of the spending review.

What do you think will be the impact of the spending review on social care? Have your say on CareSpace.

Keep up to date with the latest developments in social care. Sign up to our daily and weekly emails.

More from Community Care

Comments are closed.