£34.4m loss for Wolverhampton claimants forecast
Benefit claimants in Wolverhampton will lose £34.4 million over the next three years in controversial welfare reforms, says a council study.
The city council said caps on benefits and changes for thousands of people such as the bedroom tax would hit the city's economy.
It will leave traders and businesses £4.75m worse off over the next year as people have less to spend, the leader of the controlling Labour group said.
By 2016, if there is no change in current claimant numbers, cuts and a one per cent cap on benefits will see payments drop £34.4m.
The Government says moves provide an incentive to get more people working while protecting funding for the most vulnerable.
From next month about 20,000 people of working age previously having all council tax paid will have to pay 8.5 per cent, costing them an average of £73.73 a year.
At the same time anyone in council or social rented housing with a spare room has a 14 per cent cut in housing benefit, or 25 per cent with two spare rooms. More than 4,000 lose some benefits unless they move to a smaller home.
From the end of September, benefits will be capped at £26,000 a year, or £500 a week, for couples or lone parents and £18,200 a year, £350 a week, for single person households, affecting about 250 city households.
In October, people on Disability Living Allowance will start to move to a new Personal Independence Payment, requiring re-assessment. About 20 per cent of people on DLA will not be eligible, affecting 1,900 city people.
From April 2014, annual rises in state benefits for working age people will be capped at one per cent, apart from for the disabled.
Council leader Councillor Roger Lawrence said: "The money that people are losing in benefits is money they would have been spending in local shops and businesses. We have to respond to what is going to happen and the first thing is to ensure people get all the help we can give to get the benefits they will be entitled to to help them through difficult times.
"We're going to be setting up a helpline with the Citizens Advice Bureau. The reforms to the welfare system which are being introduced by the Government are likely to have a big impact on our city and some of its poorest residents.
"They will primarily affect people who are in work and are already having to tighten their belts because of the economic downturn.
"The only real way to improve the fortunes of Wolverhampton people is to carry on the work being done to improve the skills of our residents, grow our employer base, support business and attract inward investment."