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08 July 2015

CHC comments on George Osborne's Summer Budget

George Osborne announced the following top line changes in his Summer Budget today:

  • Removal of automatic entitlement to the housing element of Universal Credit (UC) for out-of-work 18-21 year olds from April 2017.(New Claimants only) Exemptions will be in place for parents, certain vulnerable groups and for those recently in-work.
  • From April 2016, Housing Benefit claims will be backdated for a maximum of 4 weeks
  • The benefit cap will be reduced to £20k from £26k in Wales from Apriil 2017
  • Working age benefits will be frozen for 4 years (this includes working and child tax credits)
  • The rates for the Work Related Activity Group within Employment Support Allowance (ESA) will be brought in line with Jobseekers Allowance (JSA) for new claimants from 2017.
  • Child tax credits (Universal Credit) will be limited to two children from April 2017 for any new claimants and existing claimants who have more children after 2017. 51,000 working families in Wales already have two children so will be affected if they have any more children
  • Social rents – The government will reduce social rent in England by 1% per year for 4 years from 2016
  • A new National Living Wage for over 25s which will reach £9 by 2020

Stuart Ropke, Group Chief Executive of Community Housing Cymru, said: “Wales is a relatively low wage economy and the creation of a national living wage and the recognition that the current minimum wage falls short is to be welcomed. However, the breadth of welfare reforms announced today are worrying. Wales has already been disproportionately affected by welfare reforms in comparison to the rest of the UK. This is a tough budget for working families and young people, and we believe many may be hit by two or three different changes.

“By lowering the Benefit Cap to £20,000, we estimate that more than 7,000 families in Wales, with 2,240 living in social housing, could be affected. A cap of £20k could see an out of work family of two adults and three children lose an average of £3,200 per year. In many parts of Wales, families will not be able to pay high private rents because of the cap and there will be more demand than ever for affordable housing.

“The UK Government’s decision to end the automatic entitlement to Housing Benefit for 18-21 year olds could see up to 4,100 young people affected. Housing Benefit is a lifeline for so many vulnerable young people who don’t have the option of relying on their family.

"We will be working with our members and key partners to support those affected."

Following today's press release, we will be sending a detailed specialist briefing to members with further information on the impact of the changes along with our next steps. The Your Benefits are Changing Facebook page will also be updated with the latest changes.

You can read the full Summer Budget here.