BUDGET 2016: THE NEXT GENERATION COMES SECOND
Responding to today’s Budget, Child Poverty Action Group Chief Executive Alison Garnham said:
“This Budget puts the next generation last and set to be the poorest generation for decades. The Chancellor ignored both the 3.7m children in poverty now and the fact that according to IFS projections we face the biggest increase in child poverty in a generation.
“The Chancellor delivered some big investments for the better off but there was little here for hard-up parents trying to get better off by earning more. Children were prioritised behind business groups who got costly tax cuts.
“Increasing the personal tax allowance is an expensive way to badly target help for the low paid. It is simply not a social justice measure when 85 per cent of the £2 billion the Treasury spends goes to the top half and a third goes to the top 10 per cent. For every £1000 the personal tax allowance goes up, basic rate taxpayers gain £200, but Universal Credit rules will claw back 65 per cent of that gain from the low paid, leaving them only gaining a maximum of £70 a year.
“Improving children’s life chances starts with ensuring families have enough money. That means restoring cuts to Universal Credit – which from April will hit the very same working families as would have been hit by the now abandoned tax credit cuts – and re-investing in children’s benefits.
"Parents are crying out for more free, quality childcare so that they can work more hours while their children are well looked after. Many parents will welcome the extension to the secondary school day. If are to tackle child poverty and close the attainment gap between low-income kids and their better off peers, we need to see bolder decisions and a bigger investment in childcare so that every family who needs a childcare place can get one.”
Help to save:
“It’s right to help hard-up families to save but in the real world the Chancellor’s universal credit cuts will leave many working parents with nothing extra to put aside. If he wants to help families save the Chancellor should end the discrepancy which leaves Universal Credit claimants subject to far harsher rules on savings compared to their counterparts on tax credits.
“The triple lock on pensioner’s income has achieved huge falls in pensioner poverty. Extending the same protection to children must now be the priority.”
Notes to Editors:
• Child poverty projections:
The IFS projects a 50 per cent increase in relative child poverty – from 17.0 per cent in 2014-15 to 25.7 per cent in 2020-21 – and an increase in absolute child poverty from 16.7 per cent in 2014-15 to 18.3 per cent in 2020-21. The latter will mean that over a decade, the income of families towards the bottom of the income distribution has actually gone down – something without precedent in modern times. The Resolution Foundation’s Autumn 2015 projections suggest 200,000 more children will fall into poverty in 2016/17 as a direct result of measures in the Summer Budget. The projections below are based on income before housing costs are deducted.
Relative child poverty projections 2013-14 2016-17 2020-21
Resolution Foundation 2.3m 2.9m 3.7m-3.9m
Institute for Fiscal Studies 2.3m 2.7m 3.6m
• Tax cuts:
The Resolution Foundation reports that 4.6m adults don’t earn enough to pay tax and 85% of the gains from tax cuts go to the richest half of households –
• Universal Credit cuts:
Universal Credit (UC) cuts which take effect next month will make it harder – not easier – for low income families to get better off by earning more, hitting the incomes of working families in much the same way as the now abandoned plans to cut the thresholds for tax credits.
CPAG’s research with the TUC found that much bigger reductions to child poverty could be achieved by channelling support through Universal Credit instead of raising the income tax threshold.
Increasing the child element of Universal Credit would have the strongest impact for reducing child poverty, the research found.
The cuts to UC work allowances – the amount claimants can earn before Universal Credit starts to be withdrawn – will mean some 35,000 existing UC claimants see an overnight loss in income. For some people, like single people without children, the work allowance – once the central plank of UC – would be removed altogether by the oncoming cut.
For a couple with children, the work allowance (for non-renters) falls from £6400 a year to £4800. For a lone parent, it falls from £8800 to £4800 a year. For single people, the current £1400 allowance is scrapped. So UC starts to be withdrawn for every extra pound earned above this level, making it harder to make work pay.
Those who are migrated from a legacy benefit onto UC will receive transitional protection but this will cease on a change of circumstances, such as stopping work or a partner leaving the household. The Resolution Foundation estimates that the increases to the minimum wage will not directly benefit about 60 per cent of those expected to be on UC.
• 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 coalition, which has members from across civil society including children’s charities, faith groups, unions and other civic sector organisation, united in their campaigning for public and political commitment to ensure the goal of ending child poverty by 2020 is met.
For further information please contact:
CPAG Press and Campaigns Officer
Tel. 020 7812 5216 or 07816 909302