The UK Governments ongoing changes to welfare, which began in 2010, will substantially reduce the amount of benefits paid to households and families.
The Council continues to voice concerns about the impact that Universal Credit, and in particular the payment of housing costs, is having on Highland tenants and landlords alike. Currently 90% of council tenants claiming Universal Credit are in rent arrears with the average arrears of a household being £710.27 compared with the average arrear of £315.76 for non-Universal Credit households.
The proposed changes to tax credits in April 2016 will result in very substantial cuts to the incomes of working families, including many with children. The planned cuts to in-work tax credits of £4.4 billion across the UK in 2016-17 will cost the average affected family £1,100; a reduction in income that many cannot afford. This impact takes account of the increase in the income tax personal allowance and the National Living Wage.
The Resolution Foundations analysis of the changes to tax credits highlights that although some will gain, many others will be worse off. It is estimated that a dual earning couple, without children, will be £650 annually better off. However, a single parent, working full-time on the national minimum wage, with 1 child will be £2,130 per year worse off. A single earner couple, employed full-time on the national minimum wage, with 2 children will be subject to a £1,310 reduction per annum in their entitlement.
The Work and Pensions Commons Select committee concluded in a recent report ...by increasing the rate of withdrawal in taxes and benefits to as much as 93% of additional income, the cuts run against the UK Governments objective of making work pay.
In addition to the above changes, other reforms due to come into effect from April 2016 present substantial challenges for families and households across the Highlands. These changes include a freeze on working-age benefits, Tax Credits and Child Benefit for two years, and lowering the Benefit Cap for a non-working family to £23,000.
Leader of the Highland Council Margaret Davidson said: Until the UK Government publish their joint Spending Review and Autumn Statement on 25 November 2015, and the Scottish Government then announces how it intends to use the new welfare powers included in the Scotland Bill, it is too early to gain a clear picture of the impacts these changes to the welfare system are having, and will continue to have, on Highland residents.
She added: The Council is continuing to work with a range of organisations and partners across key sectors including COSLA, NHS and the third sector to better understand the impacts of these reforms and help inform our mitigation activity.