CPAG in Scotland responds to the emergency budget

July 8, 2015

 

CPAG in Scotland welcomes an increase in the minimum wage but is concerned that this budget will deprive many working families of the last traces of economic security. Cuts to tax credits, a reduction in the benefit cap and the freezing of family benefits will be disastrous for many. What the Chancellor described as a 'one nation' budget will in fact divide and exclude, increasing child poverty and in work poverty while lowering taxes for the better off.

“We welcome the UK Government’s plans to ensure that the minimum wage is a living wage. However, on its own this measure is nowhere near sufficient to compensate the thousands of families who will lose out as a result of the cuts to tax credits, universal credit and housing benefit. Wages take no account of family size and even a substantial increase in the minimum wage will leave many families in poverty, struggling to meet the basic costs of feeding, clothing and housing their children.  

“There should be no doubt that this budget is disastrous for working families across Scotland, depriving many of the last traces of economic security. What the Chancellor described as a ‘one nation’ budget will in fact divide and exclude, increasing child and in-work poverty while lowering taxes for the better off.

“Last week the UK Government  announced its intention to move the goal posts and invent its own measures for child poverty; today’s budget cuts will see child poverty as it is currently measured increase dramatically and no amount of distraction will protect families in Scotland from the devastating impacts of this.

“This Budget does exactly what David Cameron promised his Government would not do. It cuts child tax credits and harms working families.

“All hard- pressed families want is a fair chance to give their children the best start in life.  They need the Chancellor to tackle low pay and soaring living expenses.  Instead, the Chancellor’s cuts have made life harder for low-income parents trying to do the right thing for their children.”

Cuts to tax credits

“56% of poor children in Scotland live in working families but incredibly the Chancellor has removed tax credits targeted to help them.

“The increase in the personal tax allowance announced will be of little comfort to the 44% of working adults in the UK who earn too little to benefit from it. Meanwhile those who do see a marginal increase in their income will have much of that clawed back through reduced entitlement to tax credits and housing benefit.

“As the Resolution Foundation has noted, only about 1 per cent of what is spent on raising the personal tax allowance will benefit the low paid. It’s a tax cut for the better off rather than help for the lowest incomes.”

  • IFS analysis says limiting payment of the child element of universal credit (currently the child element of child tax credit) to the first two children in a family would in the long term reduce spending by around £3 billion. Affected families would lose an average of over £3,500 a year.
  • IFS analysis shows that increasing the higher-rate threshold will benefit those who are currently paying the higher or additional rates of income tax – the richest 9% of adults – so not by any reasonable definition middle income households. See  page 16 www.ifs.org.uk/uploads/publications/bns/BN172.pdf

Benefit cap

“Lowering the benefit cap to an arbitrary £20,000 will hurt vulnerable families and do little to incentivise work. This cut will mean that yet more families in Scotland who are already struggling will face the impossible choice between feeding their family and paying their rent.

  • IFS commentary evaluating Benefit Cap: “the large majority of affected claimants responded neither by moving into work nor by moving house.” www.ifs.org.uk/publications/7482

ENDS

 Notes to editors:

  • CPAG in Scotland campaigns for the abolition of child poverty in Scotland 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:

Hanna McCulloch
Policy and Parliamentary Officer,

CPAG in Scotland
hmculloch@cpagscotland.org.uk

0141 611 7090