Budget signals 'war on the poor' say charities

Barnardo's Scotland released figures showing that removing tax credits faster and sooner from those in low paid work would leave some families much worse off, despite introduction of a living wage of £7.20, rising to £9.00 by 2020.

Eddie Follan of Barnardo's Scotland said: "Tax credit cuts could blow a £1,200 hole in some families' annual budgets, leaving them struggling to cover the cost of food, gas and electricity and childcare. Promises that this shortfall will be made up for by raising low wages are misleading, because the cuts to tax credits are so severe.

"Our figures show that unless tax credits are protected, more children will be pushed into poverty."

Hanna McCulloch, of the Child Poverty Action Group (CPAG) in Scotland said: "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, child benefit and housing benefit."

John Downie, director of public affairs at the Scottish Council for Voluntary Organisations (SCVO) said it was now evident that attacks on the social security budget were not about tackling the deficit, but 'a war on the poor' and part of an ideological push for a low tax, low welfare society.

He said: "Setting the new statutory living wage at £7.20 for next year when the recommended living wage is currently £7.85 is just a headline-grabbing con. Only the Treasury will benefit.

"We're a rich country. It's utterly senseless that we're treating people like this."

The withdrawal of automatic housing benefit entitlement from 18-21 year olds, the exclusion of under 25s from the National Living Wage and particularly the announcement that families having a third child after April next year will not be entitled to tax credits or Universal Credit led some to see the budget as particularly harsh on young people.

Scotland's children's commissioner Tam Baillie said that two thirds of children living in poverty were now living in a household where at least one family member worked. "Today's changes appear to ignore that parents and caregivers must feed and clothe all of their children - not just the first two," he said.

"The UK government is obliged under the UN Convention on the Rights of the Child (UNCRC) to provide children with an adequate standard of living. They are denying millions of children this basic human right."

Marion Davis, Policy & Research Advisor at One Parent Families Scotland said the chancellor was punishing children for being born into large, low income families. She also said forcing parents to seek work or have their benefit cut would drive more families into poverty. "From April 2017, single parents claiming Universal Credit will be expected to prepare for work from when their youngest child turns two, and to look for work when their youngest child turns three. The required childcare infrastructure is not in place, nor is family friendly employment opportunities," she said. "This announcement will spread fear among single mothers and result in increased loss of benefit and dependency on foodbanks and even greater child poverty."

Children in Scotland Chief Executive Jackie Brock described the budget as shameful. "There is a horrible and disturbing irony in George Osborne calling his spending plans 'a one nation Budget for one nation'. It is quite the opposite - and it serves as an indictment of the UK Government's manifesto pledge to eradicate child poverty by 2020," she said.

This was echoed by Peter Kelly, director of the Poverty Alliance, who added: "I could hardly believe he used the phrase 'we are all in it together' again, and was dressing it up as a one nation budget. That is clearly not the case."

He added: "There was an ironic cheer went up here when George Osborne announced people would be able to pass on inheritances of up to a £1m without paying tax," he said. "People were wondering 'what planet is the chancellor on'? It is very far from the experience of ordinary people."

However the thinktank the Centre for Policy Studies welcomed the budget's welfare measures. Spokesman Adam Memon said: "The Chancellor seems to have achieved his targeted cuts in the welfare budget including cuts to housing benefit and tax credits. We support measures to keep the welfare budget under control, including the introduction of a National Living Wage which will see increases in the minimum wage along with sensible age banding and further cuts in national insurance."

One significant question raised by the budget is how the new living wage will affect companies working on behalf of the state.

The freeze on public sector pay has less of an impact because much formerly public sector work has been contracted out to the private sector, where wages have often been kept low. Andy Willox, policy convener for the Federation of Small Businesses in Scotland said: "The understandable governmental drive to boost wages must be accompanied by extra help to make the numbers work in the sectors where we know pay and margins are a problem. Next year's national minimum wage increase will be difficult for employers bound into long-term contracts with big business or the public sector.

"We know that low pay isn't a big business or small business problem but an issue for certain sectors such as retail and care. We'll need to see governments in Edinburgh and London support firms making any transition."

Professor Paul Spicker, chair of public policy at Robert Gordon University, said the biggest savings would come from the cuts to tax credits and the freeze on the uprating of working age benefits.

However the controversial use of benefit sanctions was not a feature of the budget, he added. "Sanctions and re-assessments of people on ESA are the things that have caused most hardship in recent years, by effectively disqualifying people from benefits. that is what has driven people to suicide, to food banks and to crime."