“Overhyped budget does nothing to stop Coalition hammering of Scotland’s families” say child poverty campaigners

March 21, 2012

Responding to today’s Budget the head of CPAG in Scotland, John Dickie, said;

“Scotland’s families, like those across the UK, are already being absolutely hammered by the Coalition’s tax and benefit policies. Those policies will push tens of thousands more children into poverty and there’s nothing in this budget to turn that around. Instead the Chancellor has announced the next spending review will cut another £10billion from the welfare budget, another £10billion ripped out of the pockets of our poorest households.

"If the Chancellor was serious in wanting to “reward work” he would stop next month’s £2.16billion of cuts to support for working families, unfreeze and scrap the messy withdrawal of child benefit and invest more in the new Universal Credit so that all families are genuinely better off in work.

"As the independent Institute for Fiscal Studies has repeatedly pointed out increasing the personal allowance for income tax is of little benefit to our poorest families. They are already either too poor to pay income tax or will lose much of the gain through lost housing and council tax benefit. Hundreds of thousands of the poorest working families will gain just £33 a year from the tax threshold rise because of the withdrawal of housing benefit and council tax benefit at 85%. A rise in the earnings disregard for these benefits of just £4 a week would ensure they get the same gain as middle earners. (see note below)

"The Treasury’s own analysis shows that the poorest half of the population will be making a greater contribution to deficit reduction than 4 out of 5 people in the richest half. For all the spin about fairness, the reality is that it is the poorest who are being made to carry the greater burden” (see note below)

Notes for editors

  • For further details contact John Dickie, Head of CPAG in Scotland on 0141 552 3656 or 07795 340 618
  • Next month around £2 billion of new cuts to support for working families will be implemented. This includes removing all WTC entitlement from couples working between 16 and 24 hours.

    Changes taking effect from April 2012

    Measure

    Announced

    Savings (£million) 2012-13

    C-ESA withdrawn for work related group after 1 year

    CSR

    330

    WTC - hours rule change for couples from 16 to 24 hours

    CSR

    550

    Backdating cut from 3 months to 1 month

    budget 2010

    345

    Tax credits - introduce £2,500 disregard for in-year falls in income

    budget 2010

    445

    WTC - 50-plus element scrapped

    budget 2010

    30

    CTC - taper family element immediately after child element

    budget 2010

    465

     

     

     

    Total saved

     

    2165

         

  • In 2013/2014 every household in the bottom half of the income distribution will make a lose a larger proportion of their income from tax, tax credit and benefit changes than 4 out of 5 households in the top half. See Chart B.2 in the Annexe B to the Budget: Impact on Households (http://cdn.hm-treasury.gov.uk/budget2012_annexb.pdf)
  • The poorest households will only keep £33 from tax threshold rise, not £220 as claimed. Around 900,000 low paid households receive housing benefit (HB) and just over 700,000 receive council tax benefit (CTB). These groups will mostly overlap. HB and CTB both apply tapers to net earnings. For HB this is at 65% and for CTB this is at 20%, resulting in combined withdrawal rate of 85%. This means that hundreds of thousands of the poorest working families will have 85% of the £220 gains from the tax threshold rise taken back through the taper. They will therefore only gain £33 a year, not £220 a year.
  • For up-to-date background facts and stats on UK poverty, visit: www.cpag.org.uk/content/child-poverty-facts-and-figures. For facts and figures on poverty in Scotland see our briefing.
  • CPAG is the leading charity campaigning for the abolition of child poverty in the UK and for a better deal for low-income families and children.
  • CPAG is the host organisation for the Campaign to End Child Poverty, which has over 150 member organisations and is campaigning for public and political commitment to ensure the goal of ending child poverty by 2020 is met.