Nearly two thirds of the £15.9 billion of welfare and benefit cuts announced in the emergency budget and spending review will hit working families, undermining government claims that they are ‘making work pay’, the TUC reveals today (Monday).
TUC analysis of welfare changes for working age people shows that working households will suffer a loss of around £9.4 billion – nearly twice the level of losses for non-working households (£5.9 billion).
The analysis, which breaks down the welfare cuts (as well as welfare increases such as child tax credits and discretionary housing benefit payments) by working and non-working household, shows that 69 per cent of the policies announced in the spending review hit working households, at a cost of £4.5 billion.
The majority of the working age welfare cuts relate to benefits for children so working families will bear the brunt of the cuts, says the TUC.
This research follows a TUC study last week which found that departmental spending cuts will hit the poorest households 15 times harder than the richest 10 per cent, and analysis from the Institute for Fiscal Studies (IFS) which found that the tax and benefit changes announced in the budget and spending review were regressive.
With policies such as housing benefit cuts hitting low income households hardest and more than half of all poor children living in working households, the targeting of working households is likely to increase child poverty amongst working families, the TUC says.
Other key welfare cuts such as increasing the rate at which tax credits are withdrawn and reducing the childcare element of working tax credit will also act as a disincentive for low income households to work more hours or gain a second income, directly contradicting the government’s aim of ‘making work pay’, the TUC believes.
TUC General Secretary Brendan Barber said: ‘Ministers say that their welfare and benefit cuts are fair and justified because they will make work pay.
‘Polls show that they have already lost the fairness argument. Now we show that it is working families – both the poor and the squeezed middle – who are the big losers from welfare cuts, not the alleged workshy scroungers that the government claims to target.
‘These deep rapid cuts – concentrated on families with children – weren’t in any election manifestos. The speed and scale of the cuts are not an economic necessity, but a political choice. No-one voted for these cuts to their living standards, more child poverty, mass job losses and a ‘get out of tax free’ card for the banks.
‘The government needs to reconsider its spending plans before it causes any more economic damage and pain to working families.’
NOTES TO EDITORS:
Annual working age welfare budget cuts to be implemented by 2014/15 by financial impacts for working and non-working households
|Welfare changes by 2014/15||Amount cut (£millions)||Non-working||Working|
|Total budget cuts||£9,340||£3,946||£5,394|
|Percentage budget cuts||42||58|
|Total spending review cuts||£6,549||£2,005||£4,543|
|Percentage spending review cuts||31||69|
A full breakdown of the welfare cuts by working and non-working households is available at www.tuc.org.uk/extras/welfarechangesby2014-15.pdf
Source : TUC
All TUC press releases can be found at www.tuc.org.uk