Complacent Budget puts child poverty promise at risk

March 23, 2011

Commenting on today’s Budget statement by the Chancellor, the Chief Executive of Child Poverty Action Group, Alison Garnham, said:

“This poverty-complacent Budget puts at risk the Government’s ability to meet its legally binding targets and its pre-election promises to end child poverty by 2020.

“Despite the Chancellor’s repeated recognition of the pressures facing families, the Budget contains nothing specifically targeted to help families with children.

“We’re hugely disappointed there’s no compensation package in the Budget to rescue families facing crippling poverty and debt. That’s really bad news because the pressure on family budgets is going to get worse very soon as cuts to benefits and tax credits hit April paypackets and benefit payments.

“Every little helps, so raising the Income Tax threshold will be welcomed by families desperately trying to make ends meet. But it’s nowhere near enough to make up for rising living costs or a whole range of cuts already announced that will hit the poorest the hardest.

“Income tax accounts for only about 3 per cent of the incomes of the poorest fifth of households. Today’s help with the threshold is relatively small beer compared to the harm of the VAT increase – the poorest families spend nearly 10 per cent of their incomes on VAT.

“We’re pleased that the Chancellor accepts that tax avoidance adds to pressure to raise taxes on families, so we welcome the proposed strategy paper but still feel the Government needs to face up to the fact that much more significant sums are being avoided than they are attempting to recover, so they must give greater priority to this work.”

Notes for editors

  •  For up-to-date background facts and stats on UK poverty, visit: www.cpag.org.uk/povertyfacts/
  • 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 one of over 150 member organisations of the Campaign to End Child Poverty, campaigning for public and political commitment to ensure the goals of halving child poverty by 2010 and ending child poverty by 2020 are met.
  • For information on income tax and VAT as a proportion of household incomes, see table 3
    • Cuts to in-work and other tax credits and benefits implemented from April 2011: Sure Start Maternity Grant limited to first child only
    • Child benefit rates frozen for three years
    • Other benefits (except state pension) to be uprated using Consumer Prices Index (CPI)
    • Housing benefit (HB) in private rents to be reduced for new claimants
    • capped nationwide
    • four-bedroom limit
    • reduced from median to 30th percentile
    • removing £15 excess for claimant whose rent is lower than the local housing allowance
    • Deductions from HB for other adults in the property to increase
    • Discretionary Housing Payments increased

      Tax credits:

    • Baby element (extra £545 a year) will be removed
    • Family element to be withdrawn from families on more than £40,000
    • Withdrawal rate to be increased to 41 per cent
    • Disregard for in-year income rise reduced from £25,000 to £10,000
    • Childcare costs to be cut from 80 per cent to 70 per cent
    • Basic and 30-hour elements of working tax credit frozen for three years
    • People over 60 eligible if working 16 hours
    • Child element to be increased by £180 above CPI
  • A baby born to a low-income family from April 2011 will be around £1,500 worse off compared to a sibling born in April 2010. Loses £190 Health in Pregnancy grant, £500 maternity grant, £500 Child Trust fund, £545 baby element – gains £255 in child element of child tax credit)

 

For further information please contact:
Tim Nichols
CPAG Press Officer
Tel. 020 7812 5216 or 07816 909302 
tnichols@cpag.org.uk