Hard choices for hardworking families

30 Sep

George Osborne has used his speech at the Conservative Party Conference to solidify the position he outlined in the Budget: a position which takes income from the poorest families and protects pensioners, who have generally fared better in the climate of austerity. I’ve blogged about the difference in the impact of his policies on old and young before (here and here), and it is difficult to resist the conclusion that part of the motivation for relative generosity towards older people is voting behaviour. The older generation votes in larger numbers than young adults, and is also more likely to vote Conservative. In the light of Lord Ashcroft’s gloomy polling, perhaps Mr Osborne needs all the votes he can get.

He is freezing benefits that seem crucial to keeping the least well-off families afloat, including jobseeker’s allowance, tax credits, child benefit, income support, and the local housing allowance rates in housing benefit. Many of these benefits are vital supplements for low waged workers. Pensions, meanwhile, are left to rise in line with inflation.

Last week Ed Balls announced that Labour would cut child benefit in real terms by only allowing it to rise by 1% in the first two years of government, so perhaps we should not be surprised that George Osborne is showing that his austerity measures are tougher than theirs. On both sides of the political divide, less well-off families seem to have become the battle ground for effective defeat of the deficit. And the Conservatives made sure to underline the importance of that battle, after Ed Miliband’s unfortunate silence on the matter.

George Osborne’s move to squeeze the income of poor adults cannot but have consequences for children. If you are a single parent on minimum wage struggling to cope with in-work benefits as they are, the new regime looks harsh. The inclusion of an element of housing benefit in the freeze is concerning, as the difference between benefit levels and rents may increase, and there is little affordable housing on offer in the current market. If the government thinks housing benefit is expensive to support, has there been reflection on the individual and social costs of homelessness, which may increase, as people struggle to manage to pay their way under the freezes outlined today? The cost of living has not been frozen.

As women are more likely to be lone parents and/or low-paid workers, they are losers under these proposals. And women work more in the public sector and so are affected by the continuing pay freeze there. In single-earner families with two children, around £500 a year in child benefit and tax credit payments will be lost according to figures quoted in the Guardian. At the other end of the scale, the abolition of tax on inherited pensions will benefit the families of relatively rich men the most. The Conservatives’ ‘women problem’ is not helped by such measures, and neither are the life chances of children in less well-off families.

The justification for these benefit freezes is to ensure that benefits rise no more in value over time than working wages. The problem with this argument is that the difference between the two is substantially explained by wage stagnation in a fragile recovery, rather than any great largesse towards benefit claimants. A stronger economic recovery would help everyone more. The Prime Minister said today that we shouldn’t ask pensioners to bear the burden of reducing the deficit – why is it ok for children to bear the burden instead?

 

 

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