Osborne’s budget hammers families and the poor

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​£12 billion of welfare cuts means Scots will suffer more than other parts of the UK 

8th July 2015 by Robert Armour 0 Comments

Over 300,000 Scots families will be hit after George Osborne’s Budget statement revealed £12 billion worth of additional welfare cuts - plunging the poorest deeper into poverty.

Despite announcing a revised timetable for the cuts – taking place over three years now instead of two – the Budget sounded a death knell to hard pressed Scots already suffering under Tory economic reforms.

The elderly, vulnerable and disabled would be protected said Osborne – but third sector campaigners said the cuts would make the unemployed, the vulnerable and working families struggle to make ends meet more than any government has done before.  

The £2 billion spend on tax credits in Scotland would be drastically scaled back - meaning families with more than three children will see their allowance cut.

Other families reliant on the allowance will see a four year freeze, making those parents struggle to keep up with the rising cost of living.

Budget summary

Working-age benefits to be frozen for four years - including tax credits and local housing allowance

Tax credits and Universal Credit to be restricted to two children, affecting those born after April 2017

Higher-income households in social housing will be required to pay rents at the market rate

Reduce earnings level for tax credits withdrawal from £6,420 to 3,850.

Disability benefits will not be taxed or means-tested

18-21-year-olds will not be en​titled to claim housing benefit automatically, with a new "earn to learn" obligation

Employment and Support Allowance payments for claimants deemed able to work to be "aligned" with Jobseeker's Allowance for new claimants

Moves on the living wage blasted as "a con"

Other measures announced include cutting benefits for those on the work related activity group of Employment Support Allowance – which will see their benefits aligned with job seekers support – a reduction of up to £30 a week.

John Downie, director of public affairs, Scottish Council for Voluntary Organisations (SCVO), said this budget was an admittance by the chancellor his attack on the poorest and most vulnerable isn’t actually about tackling the deficit.

Instead it was all part of his push for a low tax low welfare society.

“This is the work of an economically-illiterate chancellor who is dead set on cutting, freezing and scrapping welfare to reach his target of £12bn cuts,” he said.

“Osborne is demonstrating a cruel disregard for the impact this will have on hundreds of thousands of people’s lives. The sad truth is that far too many people can’t afford to feed and clothe themselves and their families, or keep a roof over their heads.

“Taking money from the pockets of our poorest people will only plunge them deeper into poverty and increase inequality which will be a drag on the economy.”

The automatic entitlement to housing benefit for 18-21 year olds will be ended, a move which Graeme Brown, director of Shelter Scotland, called “shameful”.

“It completely removes the safety net that is in place to protect young people whose circumstances often prevent them from staying in or returning to the family home,” he said.

“Whether it’s someone fleeing an abusive relationship or thrown out of their home, or someone caught between jobs a long way from home, we have a duty to support young people.

“Cutting this vital lifeline for many thousands of young people is simply wrong and I fear that, despite Shelter Scotland and other support service’s best efforts this will cause very hard times and lead to a rise in homelessness among young people.”

Ella Simpson, director of Edinburgh Voluntary Originations Council (EVOC), said the cuts will see an incredible number of people who are currently struggling move into poverty.

She added: “In a country with one of the lowest corporation taxes, it is extremely disappointing that the chancellor has not seen fit to ensure that people in lowest wages would benefit from general business relief.

“Yet again we are not investing enough in Britain’s future; putting our young people at serious disadvantage. Lessons from welfare reform in the 1980s, which resulted in massive youth homelessness, have been completely ignored.”

Citizen’s Advice Scotland’s head of policy Susan McPhee said the third sector would have to pick up the impact of the changes.  

She said the freezing of working age benefits for four years was a cut in real terms.

And some of the sharpest cuts were focused on young people in society, “many of whom will be left without adequate support, particularly those who have no families to support them.”

The living wage, which starts at £7.20 next April and rises to £9 an hour by 2020, will be compulsory and replaces the minimum wage which of £6.50.

However, John Downie 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. Combined with tax credit cuts it means that people will be worse off and only the Treasury will benefit.

“The chancellor and prime minister’s war on tax credits will back fire and will worsen poverty levels in the UK. We’re a rich country.

“It’s utterly senseless that we’re treating people like this.”