A ‘no change’ Budget from a Government which leaves most people worse off

Last week’s Budget is turning out to be a bitter disappointment for most people. As the analysis continues, it’s emerging that those on the lowest incomes will be worse off by £900 a year in 2020 as the promised increase in the National Living Wage will not go ahead.

On top of that, the Institute of Fiscal Studies is warning that British workers are to face another decade of stagnating wages; in their words this is ‘unprecedented’.

The Conservative Government’s social security reforms were meant to respond to the changing world of work, where labour markets are ‘flexible’ and jobs low paid and insecure.

But the Budget changes to Universal Credit (UC), although a welcome acknowledgement that the government’s flagship social security programme is not fit for purpose, aren’t nearly enough and won’t even come into place until next year.

This ‘no change’ Budget will only put a pound back into the programme for every ten that were cut from it by his predecessor.

The government’s own distributional analysis shows that even with these UC measures households in the second decile will be £250 a year worse off.

Anyone who has tried to claim Universal Credit since Tuesday 14th November, will not now receive their support until after Christmas day. This will mean 59,000 families going without over the festive period.

Those coming on to the programme next year will still be expected to wait five weeks for any support to appear, slightly reduced from the previous six week wait. This is in spite of evidence showing that 58 per cent of those moving on to Universal Credit from work were being paid weekly or fortnightly in their job.

They will have to bridge a long gap in income, pushing many further into debt as they are forced to rely on Department for Work and Pensions loans.

The Chancellor said that plans to extend Housing Benefit into the first two weeks of Universal Credit would help to combat this lengthy period of no income. It is still not clear which households will benefit from this ‘run on’; early estimates suggest it is about 600,000 out of the 7 million still to move on to UC.

And it will still leave a three week rent gap between Housing Benefit support ending and the new system kicking in. This will be too much for many of the families that need UC support. Inevitably more evictions will follow.

Casting back to the promises that were first made about Universal Credit – that it would reduce child poverty by 350,000, and simplify the social security system – it is clear that there is still a long way to go.

Punitive cuts and flaws in the design have left people entangled in debt as they navigate a complex web of waiting periods, loans and entitlements. Far from reducing poverty, the Child Poverty Action group predict a million more children will end up in poverty as a result of this failing austerity project.

Perhaps the worst omission was the Chancellor’s failure to restore the principle that work will always pay under the programme, undermined by his Government’s austerity cuts.

We are calling on the Chancellor to reinvest in the work allowances that were slashed in 2015, and which would have targeted income to those most in need while improving work incentives. Sadly there was once again no change in this regard.

And no change too on our pensions system, so desperately in need of action to restore the security and dignity of retirement. The Chancellor did not build on the success of Labour’s auto-enrolment, by tackling the problem of pension saving among those on low incomes, or those working multiple jobs.

He ignored the mounting problems in our occupational pensions system resulting from inaction, and he said nothing about the 7 million people who have lost £10,000 in pension entitlements thanks to his pushing back of the state pension age.

Labour’s cost neutral option to support women born in the 1950s retire up to 2 years early or the proposal to provide women on the lowest incomes some extra vital help weren’t even considered. At least there seems to be no change to the Winter Fuel Payment, despite a Conservative manifesto promise to cut this vital protection for older people.

Finally, even after the Equality and Human Rights Commission’s recent report calculated that since 2010, Government’s policies had cut £2,500 a year in income to disabled adults and £5,500 to families with a disabled adult and a disabled child, there was not a word in the Budget about disabled people.

No progress on the promise of the Work and Health programme, nothing to tackle the 31 per cent disability employment gap, and no response to the concerns raised by the UN Committee on the Rights of Disabled People who found ‘grave and systematic’ abuse of disabled people’s rights.

In our manifesto, Labour set out a transformative plan to boost our economy, raise the minimum wage and invest across the country. We also set aside billions to take the necessary steps to ensure our social security system provides dignity and security for all, including fixing Universal Credit.

I am offering to work with the Government to deliver a bolder vision for a prosperous Britain, failing that they should stand aside and let Labour get on with the job.

**This article originally appeared in The Times Red Box**

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