Factbox: UK slashes welfare spending

(BestGrowthStock) – Britain’s coalition government said on Wednesday it would cut 7 billion pounds ($11 billion) from the welfare bill, on top of 11 billion pounds of reductions already identified in its June budget. Below is a breakdown of the changes to be made:


* Couples with children will only be able to claim Working Tax Credit if they work at least 24 hours a week between them, in addition to the existing requirement that one partner must work at least 16 hours a week. This will save 390 million pounds a year by 2014-15.

* The level of the basic Working Tax Credit and the extra payment made to those who work at least 30 hours a week, will be frozen for three years from 2011-12, saving 625 million pounds a year by 2014-15.

* In April 2011, the percentage of childcare costs that parents can claim through the Working Tax Credit will be reduced to 70 percent, from 80 percent, saving 385 million pounds a year by 2014-15.

* The extra amount of Child Tax Credit paid for each additional child, on top of the basic payment, will be increased by 30 pounds in 2011-12 and 50 pounds in 2012-13 above indexation, to provide more support to lower income families.


* Child benefit, previously a universal benefit paid regardless of income or wealth, will be removed from families where at least one parent is a higher rate taxpayer.

This change will save 2.5 billion pounds a year by 2014-15, according to the Office for Budget Responsibility.


* From 2013, the government will introduce a cap on household benefit payments of around 500 pounds a week for couples and lone parent households and 350 pounds a week for single adults, so that a workless family will not receive more in benefits than the earnings of an average working household.

Disability Living Allowance, Working Tax Credit and the War Widows Pension will be excluded from this cap.


* Universal benefits for pensioners, paid regardless of wealth, will be kept. These include free eye tests, free prescription charges, free bus passes, free TV licenses for the over 75s and Winter Fuel Payments.

* A temporary increase in Cold Weather Payments introduced by the last government will be made permanent, at a cost of 50 million pounds a year.

* The Savings Credit, paid in addition to the state pension to those aged 65 and over who have made some retirement provision of their own, will be frozen for four years, saving 330 million pounds a year by 2014-15.


* A time limit of one year will be placed on the payment of Employment and Support Allowance to those whose illness or disability affects their ability to work but not severely enough to prevent them working at all. This will save 2 billion pounds a year by 2014-15.

* The mobility component of Disability Living Allowance — a benefit paid to disabled people who need someone to help look after them or have walking difficulties — will be removed for those living in residential care as the cost of their needs is already met by public funds. This will save 135 million pounds a year by 2014-15.


* The age threshold of the shared room rate of housing benefit — a payment based on the cost of a single room in a shared property and paid to those who are single and do not have dependents — will be raised to 35 years from 25. This will save 215 million pounds a year by 2014-15.


* Spending on Council Tax benefits will be reduced by 10 percent from April 2013 and moved under the control of local authorities, saving 490 million pounds a year.

(Compiled by Kylie MacLellan)

Factbox: UK slashes welfare spending