More than 3 million families will lose out as a result of the government’s sweeping cuts to welfare, according to the official analysis, with an extra 250,000 people falling into relative poverty by 2029-30.
The official assessment of the impact of the benefits cuts – including a sharper-than-expected cut to universal credit payments – shows those eligible for disability payments will be hit the hardest. As a result the number of people living in relative poverty will rise to nearly 14.5 million, including an extra 50,000 children.
The analysis has prompted anger from disability campaigners and is likely to add to the angst among Labour MPs, dozens of whom are considering voting against the measures later this year.
Charles Gillies, a senior policy officer at the Multiple Sclerosis Society, said: “The chancellor has chosen to double down on harmful benefits cuts, despite warnings this approach will push more disabled people into poverty and worsen people’s health.
“People are wondering how they will continue to cover their basic living expenses and the extra costs of their disability – like visits from carers to help with things like washing, cooking and going to the toilet. The government has a moral obligation to scrap these cuts before the real damage is done.”
The work and pensions secretary, Liz Kendall, outlined most of the changes to the benefits system last week, with the aim of both getting more people into work and making billions of pounds’ worth of immediate savings for the Treasury.
Those changes included a £1bn scheme to help people get back to work, as well as changes to incapacity benefits designed to encourage more people to register as potentially being able to work in the future.
But the most significant measures were changes to the personal independence payment (Pip) criteria, to limit the number of people who can claim it. Under the changes, people who are not able to wash half of their body, or who are unable to cook a meal for themselves will no longer be able to claim Pips unless they have another limiting condition.
Ministers have made a series of further cuts in recent days after the Office for Budget Responsibility (OBR) judged the package Kendall announced would not make the savings she had promised.
In addition, incapacity benefits, which were already due to be cut in half, will now also be frozen in cash terms until 2029-30, with the basic rate of universal credit also being cut in 2029.
The impact assessment published on Wednesday spells out for the first time the precise impact for millions of households.
The analysis shows the 3.2 million families who lose out as a result of the measures will see their incomes drop by an average of £1,720 a year in real terms.
Just over 370,000 people who currently claim Pips will lose them, while another 430,000 who would have been eligible for them in the future will not now get them. On average these people will lose £4,500 a year.
A further 150,000 people will lose their access to carer’s allowance – equivalent to one in 10 unpaid carers. The charity Carers UK said they were the “first substantial cuts to carer’s allowance in decades” and would cause “huge anxiety for hard-pressed carers and their families who need every penny they can get to pay their bills”.
The average individual Pip loss of £4,500 a year, combined with the loss of £4,250 a year in carer’s allowance could see some households lose at least £8,740 a year as a result of the changes. More than a million unpaid carers already live in poverty.
Meanwhile, 2.25 million people who now claim universal credit will be affected by the decision to freeze the health element of the payment, each of whom will lose £500 a year on average. A further 730,000 future recipients will lose an average of £3,000 a year.
The OBR said the £4.8bn cuts package was “the largest package of welfare savings since the July 2015 budget” which was presented by the former Tory chancellor George Osborne and included a four-year freeze to most working-age benefits and cuts to tax credits and universal credit.
The cuts will be felt most keenly by those on lower and middle incomes, according to a separate analysis by the Treasury. While the bottom 10% of earners will not feel much impact, the next 20% will lose around £250 a year on average, while the 20% above that will lose about £300 a year.
Officials say the real impact of the overall measures will be less severe because some of them will help more people back into work, something which was not measured by the OBR. In its statement the OBR said it had not been able to do so in part because the announcement had been so rushed.
“The government did not provide us with a comprehensive and robust analysis of these potential effects, and we were not, in the very limited amount of time available, able to develop our own analysis of their net impact on labour supply,” it said.
Alison Garnham, the chief executive of the Child Poverty Action Group, said: “Stealth social security cuts bring neither stability nor security to struggling families and will push child poverty even higher. Growth and better living standards are not achieved by taking money from families with the least.”
Rebecca Florisson, principal analyst at the Work Foundation at Lancaster University, said the cuts could be “devastating” for the sixth of all Pip claimants who were in work because they would undermine their ability to stay in a job.
