People on housing benefit could be forced to contribute part of their rent for the first time under measures that could be announced in next week’s Budget, which will outline some of the welfare savings promised in the Conservatives’ election manifesto.
Housing benefit costs £26bn a year, with an average payment of £93 a week. A 10 per cent compulsory payment by tenants would save about £2.5bn a year.
George Osborne may also squeeze the welfare budget by lowering the cap on benefits for one household in a year from £26,000 to £20,000 outside London and the South East, where rents are higher. The Chancellor originally planned to reduce the ceiling to £23,000 a year.
Changes affecting the sick and disabled would be controversial because ministers have promised to protect the most vulnerable. Plans to cut carer’s allowance are believed to have been dropped after opposition from David Cameron.
One proposal still under consideration would affect people receiving Employment and Support Allowance (ESA) who are deemed likely to be able to return to some work in the future. Instead of receiving £102.15 a week, the people affected would get the rate of Jobseeker’s Allowance paid to the unemployed– £57.90 a week for 18-24 years-olds and £73.10 a week for those aged 25 and over.
The move would not affect a second category on ESA who are judged unfit for work. A total of 2.5m people are on ESA.
Iain Duncan Smith, the Work and Pensions Secretary, wants his department’s savings to change people’s behaviour rather impose salami-slicing cuts. The switch would be portrayed as giving sick people more incentive to return to work. It could be coupled with a remodelling of controversial fitness-for-work tests to put more emphasis on what the sick and disabled can do rather than what they cannot.
The proposal emerged in a government document leaked to the BBC. Whitehall sources said it was “not government policy” and the Department of Work and Pensions said: “This is speculation based on documents leaked before the election. We do not comment on leaked documents.”
Kate Green, the shadow Minister for Disabled People, said: “Iain Duncan Smith should come clean with the public about his leaked plan to withdraw support from disabled people. Many disabled people would love the chance to work. But again and again this Government has failed disabled people with fewer than one in 10 people on the failing Work Programme finding a job. Disabled people need a government who’ll give them the support they need.”
Lord (Mike) German, Liberal Democrat welfare spokesman in the House of Lords, said: “Threats to strip away ESA from thousands of sick and disabled people is a clear sign of the nasty party shifting up a gear. This shows that – on their own in government – the Conservatives are dead set on balancing the books on the backs of the vulnerable and poor.”