At least one in five working-age families in most UK constituencies – including in Liz Truss’s seat – would lose out by hundreds of pounds on average if real-terms benefit cuts go ahead, a study has found.
The scale of the impact of a below-inflation rise on already struggling households and by extension, local shops and businesses, is revealed in a study by the Joseph Rowntree Foundation (JRF). It would amount to the biggest-ever real terms cut to benefits in a single year.
The findings will increase pressure on the prime minister to stick to promises made by her predecessor, Boris Johnson, to guarantee benefits would rise next April in line with September inflation – about 10% – rather than by the rise in earnings figure of 6%. This real-terms cut would deliver around £5bn in savings to the Treasury.
Dozens of backbench Tory MPs are understood to be prepared to rebel over real-terms benefits cuts, while a number of cabinet ministers – including Penny Mordaunt and Robert Buckland – have also signalled their opposition.
The JRF analysis shows seven out of 10 MPs represent areas where at least 20% of households are reliant on universal credit and other means-tested benefits. These include 193 Conservative seats, including a number of key marginals where over a third of working-age families would be affected by a cut.
“Politicians should think long and hard about the impact of withholding hundreds of pounds from thousands of families in their constituencies when the basic rate of benefits is already at its lowest in real terms for 40 years and prices are sky-high,” said Katie Schmuecker, JRF’s principal policy adviser
Families in ”red wall” seats in one-time Labour strongholds taken by the Conservatives at the last general election would be particularly badly affected by real-term benefit cuts. They include Blackpool South, where nearly half (46%) of households stand to lose out, Burnley (38%), and Redcar (33%).
Just under 9,000 families on means tested benefits in Truss’s South West Norfolk constituency – 21% of the total – would see their income hit by hundreds of pounds, while 9,000 households (23%) in Norwich North, held by the welfare secretary, Chloe Smith, would lose out.
The very worst affected areas already suffer from high poverty rates. They include Birmingham Hodge Hill, where 61% of working-age households are in receipt of mean-tested benefits, Bradford West (57%), Belfast West (56%), Bradford East (51%) and Belfast North (50%).
The JRF analysis shows that even in the most affluent constituencies at least one in 10 households are on means-tested benefits. It has estimated average net loss to the poorest tenth of the population resulting from raising benefits in line with earnings would be £214 a year once personal tax changes are factored in.
A real-terms cut in benefits would increase the numbers of UK households in poverty by 450,000 next April, according to estimates by the conservative Legatum thinktank, increasing the overall number of people below the breadline to 16 million.
Jonathan Ashworth, the shadow welfare secretary, said: “This analysis reveals how devastating more real-terms cuts to universal credit will be for millions of households – pushing more children into poverty up and down the country.”
A Department for Work and Pensions spokesperson said: “The secretary of state commences her statutory annual review of benefits and state pensions from late October using the most recent prices and earnings indices available.”
