Benefits ‘could be frozen for two years’

benefits frozen

benefits frozenThe Government is considering freezing welfare payments for two years, according to BBC Newsnight.

Benefit payments currently rise in line with inflation but the Government is looking at the possibility of instead linking them to average wages, the programme claimed.

If the plans do go ahead then millions of families could be affected, with the amount they receive through benefits such as jobseekers' allowance and housing benefit potentially reducing.

Family debt

Critics will fear the move would plunge families further into debt at a time when many are already facing the severe financial pressures of the recession.

That is a criticism that has already been levelled at the Government amid Work and Pensions Secretary Iain Duncan Smith's claim that moving to monthly benefit payments would compound the problems being faced by the poorest families.

Addressing MPs, Mr Duncan Smith said the single monthly benefit payment of the new Universal Credit system would help people who have been claiming over a long period as it will help get them used to not receiving fortnightly payments before they enter the world of work.

He also defended the Government's move to encourage people who have limited internet skills to apply online as he said it represents a "very good opportunity to get these people back in to the 21st century".

Tips classed as wages

Welfare reform minister Lord Freud has confirmed that workers such as hairdressers and waiting staff who claim the new benefit will be required to declare tips, which will be classed as part of their income.

Meanwhile, the Social Market Foundation has published a report suggesting the change to monthly payments could hit poor households hardest.

It said the Government's attempt to encourage budgeting among claimants and requiring them to make their own rental payments could backfire.

Research by the organisation also found that most low-income families are against the change to a monthly payment and said they are worried about the prospect of getting into arrears with their rent.

The Government is setting up a £140 million scheme aimed at helping people to access "jam jar" style accounts, in which money will be separated off into different pots to cover rent and other living expenses.

Banks and other financial institutions have been asked to get involved in the scheme by the Department for Work and Pensions.