Poor families will lose most from Statement

Families will lose out again
Published on Monday, 03 December 2012 15:20
Posted by Scott Buckler

Families will lose out the most if the Chancellor freezes or cuts working age benefits in his Autumn Statement this Wednesday, according to new TUC research published today

The TUC-commissioned research - carried out by Howard Reed of Landman Economics - models the impact of cutting working age benefits by £10bn, a figure suggested by the Chancellor in his 2012 Budget.

It finds that these cuts would come at a huge cost to many families, including those in work, with some households set to lose over £2,000 a year.

Poor families would lose most from a £10bn cut in the welfare budget, with low income households losing over £700 a year - eight times more than the richest ten per cent of households who would lose than £100.

And while out-of-work families look likely to be the main target in the Chancellor's Autumn Statement the TUC research shows that working families will lose out too. Working lone parents would lose over £300 a year if the Chancellor's £10bn cuts go ahead.

In this scenario, households with children would lose around £500 on average, £70 more than those without children. Many key benefits are based on family circumstances, as well as on income levels, so it is impossible for the Chancellor to target welfare cuts at people out of work without also hitting households with children, says the TUC.

The research examines seven key working age benefits and how families and households would be affected by freezing or cutting them all by the same amount.

The Chancellor has already frozen child benefit and cut working tax credits in previous Budgets, which have left some working families thousands of pounds worse off.

A fresh raid on the welfare budget will not help a single person into work, warns the TUC, but it will make millions of people already struggling to pay the bills even poorer.

The call for more welfare cuts, made in the 2012 Budget, came about because a deteriorating economy has made it harder for the Chancellor to meet his debt target. Instead of making the worst off even poorer the Chancellor should focus on growth, says the TUC.

Rather than add to people's misery with fresh cuts, the TUC is calling on the Chancellor to start again with a fresh plan for growth.

The TUC wants a new growth plan to include:

  • a new well-capitalised State Investment Bank
  • a beefed up Green Investment Bank with powers to borrow
  • new infrastructure spending to improve our transport network and improve the UK's energy supply
  • an industrial strategy that supports high-growth industries and improves skills across the workforce
  • a proper jobs programme that gets people - particularly unemployed young adults - into sustained employment.

Unless the Chancellor changes course and implements a bold new programme for jobs and growth, the TUC fears the UK could face a lost decade of economic stagnation, low wages and poor employment prospects.

TUC General Secretary Brendan Barber said: 'Two years of economic stagnation have left the Chancellor's austerity plan well off-track.

'Deep spending cuts have killed off the recovery and risk causing permanent economic damage.

'Faced with this bleak economic outlook, it would completely wrong for the Chancellor to lash out at families by slashing vital benefits even more.

'Families are already reeling from reductions in working tax credits and child benefit, and a fresh welfare raid will put an ever greater strain on their finances. Making poor people and their children even worse off won't get a single person back into work.

'Instead, the Chancellor should start a new plan for growth. A proper State Investment Bank, fresh infrastructure spending and a proper jobs programme may cost more now but they will pay off in the future by providing the growing economy we so desperately need.

'Unless the Chancellor starts to deliver a proper plan for growth the UK could face a decade of low wages, poor job prospects and economic stagnation.'

Source: ©TUC

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