Total spending on welfare is running at £192 billion, up from £132 billion ten years ago, George Osborne said yesterday.
He set out plans to axe £11 billion from the bill by the end of the Parliament, and warned there would be more changes to come under a radical overhaul of the system.
From now on, all key benefits with the exception of the basic state pension and pension credit will be increased in line with consumer prices, rather than the more generous retail prices index. That alone will save £5.8 billion by 2014.
Here are the other key changes:
Child Benefit
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This is paid by HM Revenue & Customs to the primary carer for the child/children and is paid to all families; £20.30 a week for an only or eldest child, plus £13.40 a week for any other children without a limit on child numbers.
Result: Frozen at current rates for three years.
Tax Credit
This is paid by HM Revenue & Customs to single people, couples or families on a low income. Most cash goes to families with children; they can receive £54 a week for one child, an extra £44 a week for a second child, and an extra £45 a week for the third child.
A child tax credit of £10.50 a week is also available to households with an income of £50,000, though the sum is capped at £10.50 regardless of the number of children. Payments cease at income of £58,000.
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Payments are paid directly to a bank or can be paid through an employer.
Result: Households on £41,500 a year no longer eligible from April 2011 and those on £26,000 no longer eligible from April 2012. Those on £16,000 or less get an extra £150 a year.
Sure Start maternity grant
This is a one-off £500 payment for any mother in a low-income family receiving income support, jobseeker’s allowance or tax credits.
Result: Will be paid out only for the first child.
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Jobseeker’s allowance
A sum of £51.85 is payable for up to six months to anyone aged 18 to 25 who is unemployed and available for, and actively seeking, work. A sum of £65.45 is the same benefit paid to a person aged 25 and over provided the person meets the same conditions. People are eligible regardless of their savings and a millionaire would be eligible provided he/she was available for work. A household with a couple both seeking work can expect to receive £102.75 a week.
Result: Annual increases to be linked to the lower consumer prices index, rather than retail prices. In May the figures were 3.4 per cent and 5.1 per cent respectively.
Income support
It is worth £65.45 a week for over-25s, £51.85 for 16 to 24-year-olds who are on a low income, work less than 16 hours a week, have savings of less than £16,000, are not in full-time education, and do not receive Jobseeker’s allowance. Amount may vary depending on personal circumstances.
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Lone parents, anyone on parental or paternity leave, a carer or refugee learning English who has been less than one year in Britain is eligible. Some 16 to 18-year-olds full-time at school studying A levels also qualify if they are a lone parent, do not live with a parent or guardian, are at serious risk of abuse or violence or are a refugee learning English.
Result: Annual increases to be linked to the lower consumer prices index, rather than retail prices. In May the figures were 3.4 per cent and 5.1 per cent respectively
Disability Living Allowance
Paid to children or adults who need someone to look after them or have walking difficulties because they are physically or mentally disabled. There are two payments, one for mobility and one for care: £18.95 a week is the basic mobility benefit and is given to those who need guidance or supervision to walk; £49.85 a week is the rate paid to those unable to walk, have restricted mobility or need a wheelchair. People eligible for this higher rate may also join the Motability scheme and have use of a car in lieu of the payment.
Anyone on DLA is also eligible for an additional care element of payment: £18.95 is the basic weekly rate for someone who needs care for a large part of the day or cannot prepare a main meal; the rate is £47.80 for those who need almost continuous day care or for long periods at night and £71.40 for those who need day and night care.These payments are not means-tested and can be made to people in work and with unlimited savings.
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Result: From 2013 all claimants will be subject to a new medical assessment. Budget small print shows the Government wants to see 20 per cent fewer claimants.
Local housing allowance/housing benefit
Amount depends on size of household and income, and varies according to the rental market rates in each council area. People unemployed or receiving benefits will qualify for maximum amounts, while a household with three children on an income of £20,000 a year may qualify for £690 a month benefit.
Result: Payments to be capped at £400 a week for a four-bedroom house, the first of many reforms flagged.
State pension
Currently £97.65 a week basic pension for a single person aged 65 and over who has paid national insurance contributions for 30 years. A couple can claim £195.30 a week. The money is paid by the DWP, regardless of savings, investments or income.
Pensioner households on low income may also qualify for a pension credit, which can increase the basic pension to £132.60 a week for a single person or £202.40 for a couple.
Result: Earnings link restored from April 2011. Annual increase will be earnings, inflation or 2.5 per cent, whichever is greatest.
Council tax benefit
The amount varies according to each authority and may be payable regardless if you own, rent, or live rent-free in a house. There may be extra rebates for those on a low income, depending on the number of people in the household, Someone on a full state pension and work pension is unlikely to qualify.
Payments are made by the DWP and may cover the entire bill for the lowestincome households or pay discounts of 75, 50 or 25 per cent of the annual bill.
Result: Frozen for a year from April 2011.
Health in pregnancy grant
This is a one-off grant of £190 payable to any woman who is at least 25 weeks pregnant to help to prepare for birth of a baby. Forms are available at GP surgery or hospitals when mothers-to-be attend antenatal classes. It is paid by HM Revenue & Customs. Mothers may also apply after the baby is born.
Result: Scrapped.