3.6 million UK families worse off after budget cuts

The £ 20-per-week reduction in Universal Credit (UC) Social Security benefits, along with changes to the way UC payments are ‘slashed’ by Boris Johnson’s Tory government, will leave 3.6 million families across the UK in a worse situation.

This is the analysis of last month’s budget by the Resolution Foundation (RF). According to the think tank’s analysis, the changes to UC mean 40,000 fewer people in poverty in working families, but 160,000 more people in poverty in unemployed families.

A UK Jobcentre (Creative comments)

UC was introduced from 2013 as a combination / replacement of several different previous social benefits. The declining rate is the amount of UA withdrawn for each book that an applicant earns from their work. Working allowance, the amount some claimants earn before the reduction is triggered, has been increased by £ 500 per year. The taper rate has been reduced by 8 pence from 63 pence to 55 pence. The change to £ 2 billion a year means active benefit claimants keep 45 pence of every additional pound they earn, instead of 37 pence.

Among the measures, RF senior economist Karl Handscomb said: ‘These changes are not enough to offset the damage caused by the recent £ 20 per week reduction in universal credit. While 1.3 million families benefiting from universal credit will be better off, nearly three-quarters of UC families will see their income drop this fall as the cost of living crisis takes hold. Universal Credit performed extremely well during the crisis. But the recent reduction in support means our basic safety net remains far too weak to support families facing bad economic news. “

According to separate research conducted by the foundation, tax measures introduced in the two years since Johnson took office, including the recent budget, will increase the tax burden by £ 3,000 per year per household. The foundation found that changes to the amount families can keep from their income if they are on UC only partially offset the effect of the withdrawal of the £ 20 per week boost put in place at the start of the pandemic. On average, beneficiaries would lose £ 800 per year, the RF calculated. The £ 3,000 figure produced by the RF includes business taxes, which are regularly passed on to consumers.

The RF focuses on measuring and improving the standard of living of low to middle income people. He conducts research in a range of economic and social policy areas, including income, inequality and poverty; jobs, skills and pay; lodging; wealth and assets; taxes and social assistance; public and state spending, and economic growth.

The government has removed the UC mark-up, as well as the job leave scheme, which has supported millions of workers, based on lies that the pandemic is almost over.

The £ 20 cut from UC was the largest one-time cut in social spending in British history, collectively taking £ 6 billion from the poorest. Johnson’s brutal cuts are worse than the Conservatives’ cut in housing benefits in 1988 and even the 1931 cut in unemployment benefits made during the Great Depression by the national government under former Labor leader Ramsay MacDonald.

The entire UC edifice is based on workers receiving poverty wages. The degression system is in fact a tax on the lowest wages. About six million people receive UC payments in households with 3.4 million children. UC is a punitive system, offering minimal financial support, often delayed and reduced by cruel financial penalties, reductions in payment and financial caps. The benefit is so low that the reduction in the £ 20 increase is pushing millions of people, including children, into dire financial straits.

The Joseph Rowntree Foundation estimates that the £ 20 cut alone will push half a million more people into poverty. About 40 percent of those who claim UC are employed at poverty wages and receive the allowance because their earned income does not cover basic living expenses like utility bills, food, and rent. .

Reducing the increase in unified communications and reducing the “drop rate” will mean another 120,000 more people in poverty. The Citizens Advice Bureau has warned that the gradual rate change does not “cushion the blow” of the £ 20 cut for those still looking for work, or the 1.7 million unable to work due to a disability, health problems or family responsibilities.

About 73 percent of UK families on UC in 2022-2023 will be worse off, with more than a quarter (27 percent) slightly better off. The RF says more than half of families will be worse off by more than £ 1,000 a year when everything is taken into account, and 75 per cent will see their income drop.

Millions of workers are constantly tossed between states of poorly paid part-time or full-time employment and unemployment.

Overexploitation and miserable low wages for the working class offset last month’s increase in the National Living Wage (NLW). For those with a zero hour contract, what matters as much as the hourly rate is the number of hours worked. Weeks without work / no hours or too few hours, and therefore reduced wages / no wages, can plunge families into debt, especially when the benefit system is deliberately made laboriously slow to respond to changes. of workers’ status.

The NLW has increased, but 55p of each additional pound is lost to workers due to changes to the CPU. With the end of the weekly increase of £ 20, the FR has found that despite the increase in the minimum wage, the lowest-paid fifth of households will still lose £ 280 per year.

The attack on workers’ incomes takes place against a backdrop of rapidly rising prices and wages that are failing to keep pace with inflation. On Wednesday, it was announced that the Consumer Price Index’s measure of annual inflation reached 4.2 percent in October. This figure was up sharply from 3.1% in September and is its highest level since 2011. The measure of retail price index inflation, which includes housing costs, is already fair. below 5%.

UK household incomes will fall by around £ 1,000 next year, according to an earlier RF analysis, as rising prices combine with cuts in social benefits and higher taxes. The Institute for Public Policy Research claims that a typical family will lose £ 500 per year due to the planned increase in national insurance taxes and an expected 5% increase in council tax.

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Natalee Broderick

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