FOR Good Friday, read Bad Friday.
This is the day when austerity bites, especially for families. New figures from the respected Institute for Fiscal Studies (IFS) show that households with children will be more than £500 worse off on average this year, despite the Coalition's much trumpeted rises in tax allowances. Though prepared for the Labour Party, this material merely replaces already published percentages with stark figures.
Low income families dependent on minimum wage part-time jobs come off worst, as the Government attempts to shave more than £2bn a year off the bill for tax credits. Nearly a million of them lose credits worth around £545 a year and more than 200,00 will lose nearly £4000 a year, around a quarter of their income, unless they can increase their hours. Labour shadow chancellor Ed Balls is right to accuse the Treasury of giving with one hand and taking away far more with the other.
The Treasury condemns the IFS figures as "partial", while simultaneously presenting a skewed and selective version of the changes. At the very least, this is a pot calling a kettle black. Once again the Government put up a Liberal Democrat minister, Treasury Chief Secretary Danny Alexander, to draw its fire.
Yesterday, Mr Alexander made three main claims, none of which stands up to scrutiny. His central contention is that changes in tax and benefits fall "less on lower incomes than on the highest incomes". These are weasel words as the Treasury's own figures show that the poorest half of British people are making a greater contribution to deficit reduction than four out of five people in the richest half. And, of course, next April, the very richest will enjoy a huge tax cut.
Secondly, he claims that 24 million taxpayers will be better off "in cash terms". But what matters to hard-pressed households is not what they have in their wallets but what that money can buy. In real terms (ie after inflation) the rise in allowances gives basic rate taxpayers just 81p a week (£42 a year), according to research from the House of Commons library. Meanwhile last year's VAT increase is costing the average family £450 a year. Add the three-year freeze in Child Benefit, domestic fuel up 17% in one year and record petrol and diesel prices and the picture looks even grimmer.
Mr Alexander's third point is that the changes create "a position which encourages and incentivises work". Yet the IFS figures suggest that a couple with two children and who work part-time on the minimum wage will now be better off on benefits, unless they can rack up at least 19 hours of work a week. That sounds reasonable, except that in the current climate there is already extensive under-employment as well as unemployment and an estimated 80% of parents will not manage to increase their hours. What is worse, those who do work more may find they lose housing benefit and council tax benefit virtually pound for pound.
If the Coalition was serious about reducing child poverty and helping low income working families, it would have delayed these changes until the introduction of Universal Credit in October 2013, instead of risking spiralling debt and homelessness. The SNP predicts 100,000 Scottish children will be plunged into poverty by today's changes. Is it cynical to speculate that the only way the Coalition will be able to claim that Universal Credit has made the poor and needy better off is to make them considerably worse off in the meantime? At least George Osborne has stopped claiming that "we're all in this together".
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