Why the caps won’t fit...

Oldham Council’s finance chief Councillor Abdul Jabbar says Oldhamers are set to lose up to £25million when welfare reform plans are introduced next year. He speaks exclusively to Chronicle reporter ANDREW RUDKIN about how struggling families will plummet further into misery.

The Department for Work and Pensions brings in benefit capping next year to cut billions from the nation’s costs.

In Greater Manchester alone, benefits cost taxpayers over £6.8billion according to recent research.

But with proposed changes such as a bedroom tax - housing benefits will be cut for working-age tenants ‘under-occupying’ their properties - millions of pounds will be drawn back from claimants.

In extreme cases, Abdul Jabbar fears more people could become homeless.

The Oldham Council cabinet member for finance and human resources, said: “I am against it because it’s affecting some of the poorest and most vulnerable members of our community.

“A low-income couple living in a two-bedroom flat or house getting the full housing benefit will be deemed to be under-occupying their property. They will have to pay 14 per cent of the rent themselves.

“It might be the couple have a child at university. That child may not have a home to return to because these families will have to downsize or won’t be able to afford their rent. How is that fair?”

The biggest losers after April will be people on Disability Living Allowance (DLA). They will lose around £6m in benefits when switched to the new Personal Independence Payment (PIP).

These figures do not take into effect the loss of Education Maintenance Allowance. A total of 4,231 students received £3.1m in the area last year from EMA, since replaced by the Student Bursary.

The council says the introduction of local housing allowance has reduced housing benefit payments to tenants who rent their house privately by £2.5m a year.

Councillor Jabbar says the total amount lost in the changes could be £25million.

“When we add all those amounts together we will see a very substantial loss to the Oldham economy. It will have a knock-on effect for business and shops.

“Council services will be presented with huge challenges. People will turn to us for crisis loans, they will have difficulties in feeding and clothing their children and homelessness could increase.”

Lord David Freud, minister for welfare reform, states the cap will broadly stop people from claiming more in benefits than the average household earns. Couples and those with children cannot claim more than £500 a week; single people without children no more than £350 a week.

An Oldham couple with six young children, living in a four-bedroom, privately-rented Band A property could see a benefit reduction of £250 a week. A single, unemployed person in a two-bedroom housing association Band A property could lose £13 a week.

People claiming working tax credits are exempt from the benefit cap, as are pensioners and those claiming war-related benefits.

From October 2013, tax credits and benefits including Jobseeker’s Allowance, Employment and Support Allowance, Income Support, Working Tax Credit, Child Tax Credit, Housing Benefit and Income Support will start to be merged into a single Universal Credit payment.

Councillor Jabbar believes more incentive should be swayed towards getting people back into work.

“The Government should have a growth plan which will stimulate the economy and give a real chance for people in public and private sector to get jobs.

“More than one million are unemployed, that’s a generation who should be in work. If you want to reduce the benefits bill, the Government should invest in the economy, private sector and public sector.” Councillor Jabbar faces the task of chopping £30m from the council budget over the next two financial years. He believes affected people need to start preparing in advance.



LOSERS and LOSERS
The shortfalls

Benefit Cap: £760,000

Size Criteria (under occupancy in social rented sector): £1,700,000

Council Tax Support (estimated): £2,000,000

Reduction in Social Fund (estimated): £740,000

Disability Living Allowance to Personal Independence Payment (estimated): £6,000,000

Loss of Education Maintenance Allowance (based on 2011 figures): £3.100,000

Housing Benefit (payments to tenants who rent houses privately): £2.500,000

The council claims that once the impact of the changes to Working Tax Credit, Incapacity Benefit and Employment Support Allowance are quantified, the total would reach the £25million mark.



Chancellor George Osborne this week announced cuts of a further £10billion from the national welfare budget. The Government revealed the cuts at the Conservative Party Conference — set to be made by 2016/17.

Extra support could be removed for unemployed parents when they have more children and housing benefits for under-25s could be limited, according to the new measures.