Emergency Budget will create more poverty for families


The Conservative Government’s continual mantra throughout the UK General Election and after, that they are “for  hard working families”, has been exposed as a sham following the measures George Osborne introduced in his emergency budget, which aims to make £12bn of welfare “savings” by 2019/20.  While the new living wage is a welcome development, at £7.20 it is 65p per hour lower than the Living Wage that has been campaigned for in recent years.  There there are warnings that this rise and the £200 increase in the tax threshold, will not make up for the losses faced by working families and others due to welfare cuts.

Professor John Veit-Wilson of Newcastle University has criticised the Government for ‘hijacking’ the Living Wage, and which has in recent years been used by the Joseph Rowntree Foundation to describe the amount of money needed for a minimally adequate level for a decent inclusive life, as judged by the population as a whole.  He uses Orwell’s description of “newspeak” to describe the tactic:

“this was done partly by the invention of new words, but chiefly by eliminating undesirable words and stripping such words as remained of unorthodox meanings”.

Welfare cuts breakdown

1,600 Scottish households will be affected by the lowering of the benefit cap.  Osborne also placed a limit on the number of children parents can claim tax credits for in future.  Anyone having a third child after April next year will not be entitled to tax credits for that child and any subsequent children they may have.  This measure will not impact on existing families with children unless their number increases.  He has again lowered the age threshold by which single parents claiming Universal Credit have to seek to work. They will now have to “prepare for work” when their youngest child turns two and will have to actively seek work when they are three years old.   While the budget announced 30 hours of free childcare per week, it is doubtful whether the increased demand can be met by current services.  The income threshold for tax credits will also be reduced from £6,420 to £3,850 and the rate at which a household’s tax credits are reduced as they earn more will be raised, by increasing the taper rate to 48 per cent, and the income rise disregard will be reduced from £5,000 to £2,500.

Jobseekers have again been targeted as working age benefits are frozen for a further 4 years. Osborne claimed that this is because working age benefits had increased by 21% since 2008, while wages have increased by 11%, however, JSA has risen by only £12.60 in 7 years and will not rise for a further four years, while energy prices have rocketed and people have had to choose between eating or heating their home.   To say that some benefits have risen 21%, while true, is also misleading, given that they have actually been subject to a real terms cut each year since the Coalition gained power in 2010 due to below inflationary rises and freezes.

Sick and disabled
New claimants who are sick, disabled, or suffer from mental health problems that are placed in the Work Related Activity Group for Employment Support Allowance will, from 2017, now only receive the same amount as those claiming JSA, meaning that in general, this group will lose:

  • £26.05 per week
  • £104.20 per month
  • £1,354.60 per year

While this applies to new claimants, it is worth noting that those being reassessed for ESA could be considered to be making a new claim. Those in the support group for ESA will be unaffected.

Young people

Young people are particularly hard hit by welfare cuts.  Those between the ages of 18-21 face the withdrawal of automatic housing benefit entitlement, leading to warnings from homelessness charities that this will increase the number of homeless young people.  While there are to be exemptions to this rule for the most vulnerable, the terms of these have yet to be defined .  There will be a “youth obligation” for young people aged 18-21 that says they must either earn or learn, rather than going straight onto benefits after finishing school, effectively removing their ability to claim JSA. Anyone under the age of 25 is also to be excluded from the new National Living Wage.

Social housing 

For those living outwith Scotland with a household income of £30,000 a year face having to pay market rents if they live in social housing (outside London where the threshold is higher).  They are now described as “higher earners” despite the fact that two people working 40 hours per week on the Government’s Living Wage of £7.20 per hour will earn £29,952, just £14, 976 each.  This is slightly under the threshold, but as the Government intends to raise hourly rates to £9 per hour by 2020, more people on a low income will end up paying full market rents if the threshold does not increase simultaneously.  The Scottish Government has responsibility for housing, so this will not apply here.

While the Government says that raising income tax for the highest earners is a tax on aspiration, it seems that they don’t apply a similar ideology to those at the lower end of the income scale.



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