The UK Government’s emergency budget in July 2015 has provoked a great deal of comment. Changes to Tax Credits, freezing working age welfare benefits and the introduction of a so-called ‘national living wage’ have been just some of the issues that have been raised. Below we gather the comments of some of the leading members of the Poverty Alliance’s network in Scotland. To find out how to get involve din the anti-poverty network in Scotland visit our website at www.povertyalliance.org
Citizens Advice Scotland
Cuts to housing benefit shameful
Commenting on today’s budget in which the Chancellor announced that automatic entitlement to housing benefit was being cut from 18-21 year olds, Graeme Brown, Director of Shelter Scotland, said:
“This is a youth tax and a shameful decision which is unjustified and cruel. It completely removes the safety net that is in place to protect young people whose circumstances often prevent them from staying in or returning to the family home.
“Whether it’s someone fleeing an abusive relationship or thrown out of their home, or someone caught between jobs a long way from home, we have a duty to support young people.
“Cutting this vital lifeline for many thousands of young people is simply wrong and I fear that, despite Shelter Scotland and other support service’s best efforts this will cause very hard times and lead to a rise in homelessness among young people.”
Graeme Brown added:
“Short-sighted cuts like this do nothing to fix the root cause of the housing benefit bill – which has grown due to the chronic shortage of affordable homes, a growing reliance on the private rented sector and sky-high rents. That’s why the reduction in the benefit cap doesn’t make sense as it will drive those affected by it out of their homes for not being able to pay their rent, in effect, clearing out people who rely on housing benefit from high rent areas.
“In Scotland, we need to build at least 10,000 new homes for social rent each year for the foreseeable future to tackle the shortage of affordable housing. By investing in affordable housing, not only would this bring hope to the 150,500 households on council waiting lists, it would also gradually reduce the housing benefit bill, which in turn would leave more funds available for investment in housing.
One Parent Families Scotland
Marion Davis, Policy & Research Advisor at One Parent Families Scotland said
“The budget has signalled 4 more years of austerity, with higher child poverty but lower taxes for the more affluent.
On the one hand the Chancellor offers a living wage 5 years ahead but this will be diminished by cuts to tax credits and a 4 year public sector pay freeze. In this pursuit of appearing tough on welfare: by freezing working-age benefits and tax credits for four years ; capping the level of benefit a family can receive; and removing Housing Benefit for the under 21yr olds the Chancellor is punishing children who cannot help being born in into large, low income families. “
We are shocked at the announcement extending parent conditionality which means, from April 2017, single parents claiming Universal Credit will be expected to prepare for work from when their youngest child turns 2, and to look for work when their youngest child turns 3. The required childcare infrastructure is not in place, nor is family friendly employment opportunities. This announcement will spread fear among single mothers and result in increased loss of benefit and dependency on foodbanks and even greater child poverty. “
“A bad day for Scotland’s children”
In response to the Chancellor’s announcement today that future Tax Credits and Universal Credits will be cut, Eddie Follan from Barnardo’s Scotland, said: “It’s been a very bad day for Scotland’s children. Cuts to Tax credits and changes to Universal credit will leave more families in Scotland struggling to buy basics.
“It would seem that the pleas of those organisations who work with families, children and young people who are already struggling to make ends meet, have fallen on deaf ears.
“Barnardo’s Scotland was one of many who warned that any cuts to tax credits would remove a vital support to low income households across Scotland.
“By failing to protect tax credits for all, the UK Government is at risk of consigning more children to poverty.”
Child Poverty Action Group Scotland
Responding to today’s emergency budget Child Poverty Action Group (CPAG) in Scotland’s Hanna McCulloch said:
“We welcome the UK Government’s plans to ensure that the minimum wage is a living wage. However, on its own this measure is nowhere near sufficient to compensate the thousands of families who will lose out as a result of the cuts to tax credits, child benefit and housing benefit.
“Wages take no account of family size and even a substantial increase in the minimum wage will leave many families in poverty, struggling to meet the basic costs of feeding, clothing and housing their children.
“There should be no doubt that this budget is disastrous for working families across Scotland, depriving many of the last traces of economic security. What the Chancellor described as a ‘one nation’ budget will in fact divide and exclude, increasing child and in-work poverty while lowering taxes for the better off.
“Last week the UK Government announced its intention to move the goal posts and invent its own measures for child poverty; today’s budget cuts will see child poverty as it is currently measured increase dramatically and no amount of distraction will protect families in Scotland from the devastating impacts of this.
“This Budget does exactly what David Cameron promised his Government would not do. It cuts child tax credits and harms working families.
“All hard- pressed families want is a fair chance to give their children the best start in life. They need the Chancellor to tackle low pay and soaring living expenses. Instead, the Chancellor’s cuts have made life harder for low-income parents trying to do the right thing for their children.”
CUTS TO TAX CREDITS
“56% of poor children in Scotland live in working families but incredibly the Chancellor has removed tax credits targeted to help them.
“The increase in the personal tax allowance announced will be of little comfort to the 44% of working adults in the UK who earn too little to benefit from it. Meanwhile those who do see a marginal increase in their income will have much of that clawed back through reduced entitlement to tax credits and housing benefit.
“As the Resolution Foundation has noted, only about 1 per cent of what is spent on raising the personal tax allowance will benefit the low paid. It’s a tax cut for the better off rather than a helping hand for those on the lowest incomes.”
- Official Scottish child poverty figures for 2013/14 are available at http://www.scotland.gov.uk/Topics/statistics/browse/social-welfare/incomepoverty.
- In the BBC Question Time Leaders debate, the Prime Minister pledged: ‘Child tax credit we increased by £450. That’s not going to fall.’
- IFS analysis says limiting payment of the child element of universal credit (currently the child element of child tax credit) to the first two children in a family would in the long term reduce spending by around £3 billion. Affected families would lose an average of over £3,500 a year.
- Resolution Foundation: “A single parent with one child, working 16 hours a week on the NMW could experience a cut in annual income of £845. To prevent this income fall they would need to boost their earnings by nearly £1,500 (due to high effective tax rates)” http://www.resolutionfoundation.org/media/blog/will-wages-fill-the-tax-credit-gap-dont-budget-for-it/
- IFS analysis shows that increasing the higher-rate threshold will benefit those who are currently paying the higher or additional rates of income tax – the richest 9% of adults – so not by any reasonable definition middle income households. See page 16 http://www.ifs.org.uk/uploads/publications/bns/BN172.pdf
“Lowering the benefit cap to an arbitrary £20,000 will hurt vulnerable families and do little to incentivise work. This cut will mean that yet more families in Scotland who are already struggling will face the impossible choice between paying their rent and providing for their family.
Scottish Trades Union Congress
Responding to today’s Conservative Government Budget statement Grahame Smith, General Secretary of the Scottish Trades Union Congress (STUC), said:
“Despite presiding over the slowest recovery on record, the Chancellor continues to pursue the very austerity policies which have failed to effectively tackle the deficit whilst cutting public spending on desperately needed public services.
“Real wages are still almost 10% below pre-recession levels and the proliferation of low paid service sector employment relying on below Living Wage pay and zero-hours’ contracts is undermining the security of hundreds of thousands of workers.
“The Chancellors so-called National Living Wage, pitched at £7.20 next year, will be nothing of the kind and is simply a cheap gimmick aimed at undermining the successful work we have undertaken to promote a meaningful Living Wage that genuinely helps people out of in work poverty.
“Despite the statement that Britain deserves a pay rise, this will not be the case for many low paid public sector workers with the continuation of a public sector pay cap. This is another kick in the teeth for hard working public service workers.
“The most vulnerable will continue to suffer most and we have little confidence that measures announced today to help young and disabled people back into work will be any more successful than in the past. The Government appears to be relying once again on sanctions to get vulnerable people to accept precarious employment instead of proper support to help people access permanent and sustainable employment.
“It is simply grotesque that the Government should be handing out tax-cuts to the inheritors of millions whilst embarking on a further programme of cuts to benefits.
Joseph Rowntree Foundation
Responding today to the Chancellor’s Emergency Budget, Julia Unwin, Chief Executive of the Joseph Rowntree Foundation said:
“The Chancellor is right to focus on building a prosperous UK with higher pay and lower welfare and the role of raising pay and productivity to achieve this. The move to create a national wage which reflects living costs is an important and welcome recognition that the minimum wage falls well short of achieving an adequate standard of living.
“The £12 billion cuts to welfare have however been targeted at low-income working families, most of whom rely on tax credits to make work pay. Higher income from increasing the national minimum wage and the personal tax allowance will go some way towards closing the gap, but cutting support before the jobs market has had the chance to respond is a dangerous gamble. The cuts in tax credits and the reduction of the work allowance in Universal Credit, means that working families on low incomes will find it even harder to make ends meets.
“We need a credible long-term plan to make work more secure, build more affordable homes and lower essential bills, or times will simply get tougher for those on low incomes.”
The Poverty Alliance
UK Government One Nation Rhetoric Does Not Ring True
Anti-poverty campaigners have reacted with anger to the announcement of swingeing cuts that will affect young people, those in work and people starting a family. This is not a budget for one nation, but rather one that will help those who are already well off.
There were a number of aspects to the budget announcement that will give anti-poverty campaigners grave cause for concern:
- Families affected by tax credit changes: from 2017 families with 3 children will be effectively penalised by the Government. The Chancellor has presented the budget as one to help families living on low incomes. Instead, it will trap many in poverty.
- Changes affecting young people: This budget was a clear attack on young people – denied Housing Benefit, receiving a lower National Minimum Wage if aged less than 25, and if you live in England and Wales, no access to grants for university. Young people have suffered under 5 years of austerity and it looks as those this will only get worse.
- Cuts to social security benefits: It was clear from the pre budget leeks that we could expect big cuts in benefits. Cuts to Employment & Support Allowance (ESA) and freezing most working age benefits until 2019, will punish some of the most vulnerable in our society.
- National ‘living’ wage: The Chancellor may have adopted the rhetoric of the living wage, but the reality falls far short. The Living Wage is currently £7.85 an hour. This new increase in the minimum wage is welcome, but it will not make up for the cuts to tax credits for many people.
The Poverty Alliance spoke with a number of people who had experience of living on low incomes
Lisa Maley, a lone parent from Fife, said
“The booming economy isn’t happening where we are. They are taking away the things that people need. If there are no jobs, what are young people supposed to live off?”
Derek Holliday from Glasgow said:
“We are condemning the next generation to a lifetime of poverty. These cuts will have an impact on people’s health and the lives of their children.”
Peter Kelly, Director of the Poverty Alliance said today:
“These cuts will hurt the most vulnerable people in our society.
“Lowering the benefit cap to £20,000 per annum is ideologically driven. It will save very little money and will push more families into poverty.
“Changes to housing benefit and the introduction of the Youth Allowance are unfair to young people. The Chancellor has made a difficult environment for young people even harder.
“It is particularly distressing to see cuts to Employment & Support Allowance. These are people who have been assessed as needing extra support to enter the workplace, and the Chancellor has seen fit to launch an attack on their already low incomes.
“We know people want to work but cutting their benefits and casting them as ‘skivers’ will not help them find a suitable job any quicker.
“It is unacceptable that the most vulnerable groups will once again be the people hurt the most by cuts to the welfare system.
“The Poverty Alliance has campaigned for many years for a Living Wage. We are pleased that George Osborne has finally recognised that the free market fails many people who are trapped in low paid employment. However, his ‘national living wage’ is not the answer.
“The Living Wage is £7.85 an hour, and is based on what people need. The Chancellor may have adopted the rhetoric of the Living Wage, but his policy still lags behind.”