Baroness Dianne Hayter is a Labour Whip and part of the Shadow DWP team in the House of Lords
T.S Eliot was right: “April is the cruellest month”.
March saw a budget which takes from the old to give to the rich. Now, in April, as new benefit changes come into force, it becomes ever clearer that these, and the budget, are hitting the young and the old, and the decent hardworking majority – and particularly women.
Tomorrow, the 6th April will see George Osborne’s policies immediately impact upon hundreds of thousands of couples earning about £18,000 a year – as they will lose up to £4,000 a year in tax credits. According to figures compiled by the Institute for Fiscal Studies up to a million families with children stand to lose £511 annually from. Some 470,000 children are in families losing over £70 a week. Because the number of hours needed to qualify for tax credits has increased from 16 to 24 hours a week, many will no longer be covered – yet the idea that employers will suddenly increase the available work by 50% is a particularly cruel joke. Almost a million families in the hard-working squeezed middle are set to lose all their child tax credit.
Any budget should be about people: how to raise from across the economy the money we need to spend on health, security, education, roads, housing, parks – all those things which contribute to people’s well-being and family life. Such money should be raised in a way which promotes jobs and growth, and which increases equality and social stability whilst encouraging people to work hard, save hard and spend wisely. This budget fails on all accounts.
This budget will mean the very poorest – who don’t pay tax – don’t gain. Poorer working families who get housing and council tax benefits will be only £33 a year better off from the tax threshold rise (because as their income goes up, their benefits go down ) – less than the price of a loaf of bread a week. But couples both earning £40,000 gain 10 times this (£440 a year).
Pensioners are being hit too. Osborne’s policies mean that people turning 65 next April who have saved for a bit more than the state pension will now be taxed on this amount, losing some £320 a year. In total, 5 million pensions over 65 will be affected – having to contribute between them some £1.25bn extra in tax by 2016-17.
All of this doesn’t just harm the families themselves, but also the local community. Pensioners and the lower paid tend to spend their money in local shops, at the post office, in nearby services. This helps keeps those shops, barbers, newsagents, cafes, pubs – and bakers – going. Cut what people have in their purses and wallets, and small shops soon feel the pinch. Everyone loses.
Except the rich. Higher stamp duty on big houses doesn’t affect most rich people, as they rarely move home. The income tax saving for someone earning £1 million a year will be £42,500, but the rich will pay nothing on their mansion unless they move – and guess what? Only 4,000 will be caught by this a year, compared with nearly a hundred times as many (300,000) who will benefit massively (by £40,000 every year) from the ending of the 50p tax rate.
So here we have it. Women and pensioners lose most; Osborne’s circle gain most. You couldn’t make it up.