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Chancellor maintains inflated hardship fund to help councils cope with cuts

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The council-run hardship fund that was massively increased to help residents cope with welfare cuts in the past parliament will be kept running at its highly inflated level, Treasury papers show.

Budget documents released after the chancellor’s speech reveal that authorities will receive £800m for discretionary housing payments over the next five years.

This works out at £160m each year on average, just £5m less than the sum awarded to authorities for 2014-15.

The annual average for this parliament represents an eightfold increase on the £20m allocated for the fund in 2010-11 – the last year before welfare reforms took effect.

Chancellor George Osborne’s decision to sustain the inflated level of funding for DHPs points to a recognition within government that his welfare cuts and changes will leave many residents facing hardship.

According to Budget documents, the £800m is “to help ensure local authorities are able to protect the most vulnerable housing benefit claimants”.

Details of the hardship fund emerged after chancellor George Osborne unveiled a slew of cuts and changes to social security payments during his July Budget speech (see box).

The chancellor George Osborne said the cuts and changes to social security payments outlined in his Budget aimed to move the UK from being a “high welfare economy” to a “lower welfare country” that supported “the elderly, the vulnerable and disabled people”.

But Matthew Reed, chief executive of the Children’s Society, described the Budget as a whole as a “a disaster for low-income working families”.

He added: “We know that children are the most affected by capping benefits. So reducing it further will push even more children into poverty.

“To make matters worse the government will no longer be accountable to these children – having announced last week they will abolish an income-related measure of child poverty.”

SUMMER BUDGET: Welfare cuts

  • A £14,000 cap on the amount of tax credits that out-of-work families with five children or more can claim.
  • A curb on the amount of tax credit or benefits families with three or more children can receive when children are born after April 2017.
  • Restrictions on the housing benefit for 18 to 21 year olds who are out of work from 2017
  • A lowering of the overall cap on the total amount that any household can receive in social security payments from £26,000 to £23,000 in London and £20,000 outside of the capital



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