This comment was first printed in 'The National' on Thursday 9th July 2015
Despite the Chancellor’s assurances that this is a ‘one nation’ budget’, there should be no mistake that this is a budget which will exclude and deprive, widening the gap between the haves and the have nots and forcing more children across Scotland into poverty.
David Cameron’s pre-election pledge to ‘protect child tax credits’ was quickly forgotten yesterday as the Chancellor announced that fewer low income families would qualify for both working and child tax credits. Given that less than a third of tax credit spending goes to out-of-work families, this is a move which will penalise families who are already in employment and doing their utmost to provide for their families. It is a kick in the teeth for the working poor.
Neither should we be fooled into believing that families who lose out as a result of tax credit cuts will be compensated by increases in the personal tax allowance and the minimum wage. These measures will do precious little for Scotland’ poorest families. An increase in the personal tax allowance makes no difference to the 44% of adults in the UK who earn too little to benefit from it. And those who do see a marginal increase in their income as a result of the change will have much of that gain clawed back through reduced entitlement to means tested benefits.
Furthermore, while increases in the living wage are hugely welcome, no single wage level can take account of family size. Even a living wage will be insufficient to support a family of four, meaning that even if wages rise many families will end up worse off overall as cuts to child benefit, child tax credits and tax credits kick in.
As well as punishing parents in work, this is a budget which penalises parents who are unable to work or struggling to find employment. Lone parents will also lose entitlement to benefits if they aren’t actively seeking work by the time their youngest child is three. In the absence of flexible, affordable childcare this measure could lead many more parents towards sanctions, poverty and the food bank.
Lowering the benefit cap to an arbitrary £20,000 will also hurt vulnerable families while doing very little to incentivise work. CPAG’s caseload shows that in Scotland many of those currently affected by the cap are already going through crisis or difficult transition. They are often lone parent families who are forced to live in expensive, temporary accommodation after fleeing difficult or violent relationships. Reducing the cap will mean more families facing the impossible choice between feeding their family or paying their rent. It will also see more landlords struggle as clients get deeper into debt and arrears.
Last week the UK Government announced its intention to scrap its child poverty targets and invent its own method of measuring poverty. Yesterday’s budget cut will see child poverty – as the rest of the world understands it - increase dramatically - and no amount of fiddling with the measurement system will protect families in Scotland from the devastating impacts of these changes.
Even before these latest cuts were announced, the IFS had projected that up to 100,000 more children in Scotland would be living in poverty in 2020 than had been in 2012.It is likely that these changes – the freezing of working age benefits, the benefit cap and cuts to tax credits –will cause that figure to increase further still.