A financial education charity has said tax and benefit changes coming into force today will leave households £200 worse off. Credit Action, a financial education charity, has calculated they will leave households £200 a year worse off.
According to their research reductions to what parents could claim in childcare costs through the working tax credit alone would leave some families worse off by up to £1,560 a year.
Other changes due to come into force today include a £1,000 rise in the threshold at which people start paying income tax - this will mean 500,000 people will be lifted out of paying income tax altogether, a freeze in the inheritance tax threshold, an extra 5% on stamp duty for homes worth more than £1m and restrictions on tax relief on pension contributions for those on more than £150,000 a year.
The government is also cutting childcare support through the working tax credit. The resolution foundation says this will cost 450,000 people, which includes almost 290,000 lone parents, an average of £436 a year. For some families with two or more children it could be up to £1560 lost. This little-noticed change will have a huge impact on hundreds of thousands of families, but particularly mothers who work part time for low pay. Cuts to childcare support make no sense if it simply makes it harder for parents to work – as the office for budget responsibility has warned – and so ends up costing the taxpayer more.
The biggest losers will be those earning more than £35,000, with someone on £50,000 seeing their take-home pay reduced by £500 a year, according to the Institute for Fiscal Studies.
The results of Osborne’s Budget are really quite frightening, especially for the poorer sector of our society. And what are the government doing to help them? Nothing – it seems they are oblivious to the demise of the average man and woman in this country. Understandable really, given that over 20 of the Cabinet are millionaires and have never really experienced hardship.
This bunch of elites and toffs are totally unaware of the economic realities facing society -
1. The VAT rise will cost families with children £450 this year alone
2. Tax credits and child benefit will be frozen from April
3. Petrol prices are soaring with the VAT rise adding 3p per litre
4. Economic growth has stalled
5. Unemployment is rising again – now at a 17 year high
6. Nearly 1 million young people are now out of work
But fear not, for the government have a strategy to help the less well off. Called the child poverty strategy, it aims to offer genuine opportunities to the most deprived people in Britain. Many disagree with the principles outlined in it pages and argue it is a bungling attempt to solve a critical problem.
Responding to the publication yesterday of the Government’s child poverty ‘strategy’ and social mobility strategy, the Chief Executive of Child Poverty Action Group, Alison Garnham, said:
“A child poverty ‘strategy’ which does not set out how poverty numbers will fall, and by when, is not a strategy and is incredibly disappointing and surprising given the Prime Minister’s stated commitment on tackling poverty.
“The ‘strategy’ is unlawful because it has not kept to the requirements laid down in law by Parliament. An expert Child Poverty Commission should have been set up and consulted in the strategy’s preparation. This failure shows in the poor quality of the ‘strategy’ itself.
“It is absolutely staggering to see in the 'strategy' cuts to housing benefit and support for sick and disabled families that will make poor families poorer. On top of benefit cuts, wage stagnation and rising prices for basics like food, fuel and clothes mean there is an immediate crisis for families. Urgently addressing the financial crisis for families should be the foundation for the strategy.
“Requirements on social inclusion and the progress Ministers expect to make on their targets by 2014 are missing. We are astonished to see a consultation on scrapping child poverty duties for local government promoted in the ‘strategy’, instead of being clearly ruled out.
“The ‘strategy’ starts from a false premise, suggesting that the last decade made no progress and did not address worklessness. In fact there’s been a downward trend for child poverty in workless households, but an upward trend for in-work poverty, which is now the larger problem.
“Although we finally have a document that tells us what the Government plans to do, it appears to do very little. Taken together with the social mobility strategy it is hard to see how they will have any traction on the major problem of child poverty we face. Britain could have the same low rates of child poverty as other European countries, but to achieve this we need a strategy that learns the lessons of what successful countries on child poverty have got right and addresses the structural unfairness in our own economy.”
On top of all this, on April 1st housing workers and their tenants faced the start of a two-year package of reforms to housing benefit that will have far-reaching effects on families and communities across the whole of the UK.
The new housing benefit caps for people in the private rented sector and the move to cut the number of properties people can choose from will have an immediate impact on families looking to find a new rented home.
There is also an important change to the levels of housing benefit that people in both the social and private sectors will receive if they have adult children at home.
From 1 April, tenants sharing their home with other adults need to collect more money from them to contribute towards the rent, or make up the difference from their own money. This will be an incentive to tenants to encourage their children to leave home and could also lead to greater risks of rent arrears.
Sarah Webb, Chief Executive of the Chartered Institute of Housing (CIH), said:
"People are going to have their options about where they can live cut significantly and it is likely that demand for the properties that remain available will be squeezed further.
"Government has argued that rents will fall as a result of the measures. There is no evidence at this time to suggest that landlords will respond to the changes by cutting their rents. Indeed, the latest surveys from across the sector suggest that rents are going up as demand outstrips supply and the number of new homes being built continues to be half of the level needed."
The average rent in England and Wales edged ahead by 0.2% to £684 a month in February 2011, to leave the typical cost of being a tenant 3.9% higher than in February last year, according to letting agency network LSL Property Services.
Ms Webb added: "Where tenants face significant shortfalls the choice is going to be stark, find money from somewhere else or move. Given these are people on low incomes their ability to save by cutting back on other items is severely limited.
"Ultimately, this will mean low-income families moving from the communities where they have jobs, where their children are in schools, where they having strong social networks."
The full measures which have now come into force are:
1. There will no longer be a five bedroom Local Housing Allowance rate. Weekly Local Housing rates will not exceed £250 for a one bedroom property; £290 for a two bedroom property; £340 for a three bedroom property; £400 for a four bedroom property.
2. The £15 excess will be removed as soon as the Local Authority reviews a claim. Claimants will no longer be able to pocket any excess money after their rent is paid.
3. Non-dependants living in households of Housing Benefit claimants will see their deduction increases take effect from April 2011.
4. Disabled people with a long-term health condition who need overnight care or live with someone with similar needs, may now be able to claim Housing Benefit for a private rented property which has an additional bedroom for a non-resident carer.
Bearing all this in mind, how can the government legitimately talk about increasing fairness, supporting those who are less privileged and increasing the chances for the poor? Once again it seems the Tories are full of lies and dishonesty just so they can hang onto power.
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