Analysis of George Osborne's July 2015 Budget by Joan Grant of KUWG
It
is with some relief that I can report that the Government decided not
to make all Housing Benefit claimants pay 10% of our rent.
However,
the budget took away the right of young people (18-21) on JSA to
claim Housing Benefit. There will be an exemption for those young
people who are parents. There are less than 20,000 young people on
JSA claiming Housing Benefit. Many have troubled backgrounds and are
not able to live with their families. Their situation will be made
more vulnerable. Saving: £40M
They
abolished maintenance grants for students from low income and
replaced them with loans. Saving: £2.5B. This change just means that
young people will be saddled with more debt. A measure like this
makes it harder for people from low income backgrounds to get access
to higher education and therefore better paid jobs.
The
Apprenticeships that the Tories harp on about are just 6 months of
providing cheap labour. They are nothing like the 3 or 5year
apprenticeships that young people used to get in the 1970s when they
learnt a trade properly.
We
really must highlight the unfairness of the treatment of young
people. The Tories are blighting the futures of a whole generation of
young people: they are saddled with debt, paid low wages and have no
security. It is interesting to note that pensioners have not
had
a penny of cuts. Is that because they tend to vote Tory? Pensions go
up by at least the rate of inflation. There are of course some
pensioners on low incomes. But overall pensioners are more likely to
be home owners than young people. This will be the subject of a
detailed post at a later date.
The
rumours about tax credits were right. These have been cut back quite
a lot. People already claiming tax credits will be affected from
April 2016 and they will be £1000 a year worse off on average. April
2017 is when the major changes, such as only paying Child Tax Credit
for 2 children, take effect.
The
really unexpected measure was the new National Minimum Wage for
people over 25. However, experts have now calculated that people who
get tax credits will still be worse off, despite higher wages. That
to me, takes some doing. Humans can put satellites in space and send
astronauts to repair them quite easily. But we cannot figure out how
to spend literally billions of pounds in a way that ensures low
earners have enough money to live on and do not have to use food
banks. Obviously, the Tory Government has no interest in solving the
problem of low pay.
At
this point, I have to declare an interest. I am someone who argued
that tax credits need to be cut back. To me, it made no sense that
people in work cost the nation 6 times as much as people who are out
of work. We needed wages to rise which has now happened. However this
new National Minimum wage is less than the Living Wage of £7.85
outside London and £9.15 an hour that low paid workers need right
now in order to make ends meet.
Some
of the other rumours proved fairly accurate.
Working
age benefits were frozen for four years – we had been told that
they would be frozen for two years. That freeze now goes on for a
further two years. This freeze does not apply to most disability
benefits including ESA Support Group. Saving: £4bn
Changing
the amount of ESA-WRAG to the same as JSA happens in April 2017. It
will not affect anyone currently getting ESA WRAG. Saving: ££640m.
I think the Tories will have a go at making this reduction apply to
people already in the WRAG at a later date.
The
Benefit Cap was reduced from £26,000 to £23,000 in London and
£20,000 everywhere else. As this includes rent, it will lead to more
people not being able to afford their rent, especially in London.
Saving: £200m. They also reduced the LHA’s (Local Housing
Allowances). They reduced the grants to Housing Associations, and
plan to make them cut rents by 1%. There were no measures to cut
private sector rents. Private rents are extortionately high and
cutting them would actually reduce the housing benefit bill.
In
stark contrast, they raised income tax thresholds and raised the
Inheritance Tax thresholds.
Cutting back tax credits
saves a significant amount of money, but most of the other cuts save
very small amounts. They raised more in taxes than they gave away. So
it proved to be a fairly typical Tory budget – they took from the
least well off and gave more to the better off. All the signs are
that Labour will support the reduction in the Benefit Cap.
For
further info see a report by the IFS: Andrew Hood - Benefit Changesand Distributional Analysis.
