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By capping the amount that most key benefits can increase to just 1% for the next three years (well below the expected rate of inflation), the chancellor’s autumn statement will affect vital support that already struggling families depend on to make ends meet. 

Because this is not a cut in cash terms, it can be difficult to see at a glance what the impact looks like from family to family. We have created an autumn statement calculator to make the picture clear.

Our autumn statement calculator can give you an idea of how benefits and tax credits are likely to change for families as a result of the autumn statement.

What will be affected?

The main benefits paid to working-age households that will be affected include: child tax credit and working tax credit, child benefit, statutory maternity and paternity pay, job seeker’s allowance, income support, and parts of employment and support allowance. Some disability benefits, including the disability elements of tax credits, will be protected.

These cuts come on top of a three-year freeze to child benefit and key elements of working tax credit, which will go ahead in 2013 as planned. Notably, with these changes child benefit will only have risen by 2% between 2010 and 2015. 

Importantly, the change will also affect benefit support for rents for people in privately rented housing. From next year, as had already been announced, the maximum amount of help for this group will no longer be uprated in line with local rental prices. Instead, it will be linked to the consumer prices index.  

Changes announced in the autumn statement mean that, other than in areas where rental prices rise most rapidly, the maximum help with rents will increase by just 1% in 2014 and 2015. This could make it extremely difficult for families on low incomes in many areas to afford their homes. 

What does this mean in practice? 

By using our autumn statement calculator you can see the potential impact of this change on different types of households, working and non-working, over the next three years.  

Although working households would not normally be affected by changes to income-related, out of work benefits such as income support, they could still lose out substantially as a result of changes to uprating of in-work benefits, including child benefit, and child and working tax credits.

For example, an out-of-work couple with two children could lose £430 per year by 2015, compared to what they received before the autumn statement. If one or both parent is in work, they could still lose up to £360 from their benefit entitlement.

Autumn statement calculator - calculate benefit and tax credit changes

Complete the first three rows to calculate basic weekly household benefit entitlements for working and non-working families, before and after the 2012 autumn statement.

Note that for working households, the calculator shows their maximum weekly rate of support, and the maximum impact of the autumn statement announcements. Actual rates of support depend on household income.*

* Benefit rates shown for out of work households are the base benefit assuming no other sources of income. The calculator does not show additions, for example, for support with housing costs, or on account of disabilities.

Rates shown for working households are maximum rates of support. Actual levels of support vary depending on household earnings. It is assumed that working households are working 30 hours per week (so where eligible receive working tax credit, including the 30-hour element). For couples, rates assume no contributory out of work benefits (such as contributory job seekers’ allowance) received by either partner – effectively the couple is treated as if both partners are working.

 

Related to the autumn statement

Read our briefing document on this year's autumn statement.

Use our poverty line calculator to track how the poverty line has changed for a family since 2000.

By Sam Royston - Policy Adviser
Sam Royston
- Policy team

Comments

Good work Sam.

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