24/08/2014 - Cuts hit working families hardest

cutsTory propaganda suggests that those out of work, the 'scroungers' in their terms, are the ones who will be greatest hit by benefits cuts.

Like most Tory assertions it's lies. The majority of social security cuts announced by the government fall on working families. These families suffer twice the level of benefit losses as out of work families, according to a new report published by the TUC.

The TUC-commissioned analysis of those affected by cuts in social security support – undertaken by Howard Reed of Landman Economics – looks at all the welfare changes announced during this Parliament. It finds that annual cuts to key benefits will reach £30.5bn by 2016/2017.

Ministers frequently talk about how their welfare reforms target workless households. But the TUC analysis finds that most of the cuts will fall on working families, with working parents and their children facing the biggest cuts of all.

Working families will suffer a loss of social security support worth £17.9bn a year by 2016/17, twice the level (£6.2bn a year) experienced by out of work families.

Working families with children stand to lose the most – £11.7bn a year. With out of work families with children losing a further £2.3bn a year, the total cost of welfare cuts to families with children will be £14.1bn a year by 2016/17.

Three-quarters of all welfare cuts to people of working age will be on working families, with almost half hitting working families with children.

The analysis also shows that the Prime Minister’s pre-election pledge to protect pensioner benefits has been broken, with pensioner families suffering a loss of benefit support worth £6.4bn a year by 2016/17.

The biggest single area of welfare cuts announced has been the £13.8bn worth of annual cuts to tax credits – over ninety per cent of which will hit working families. Those in work will also bear over 90 per cent of the cuts in child benefit, losing £3.4bn a year by 2016/17.

The next biggest single welfare cut (at over £4bn a year) is the reduction in the value of Pension Credit, which will be borne almost entirely by pensioner families.

Many of the reductions in social security support are down to the Chancellor’s stealth cut to benefits, announced in June 2010, where the measure used to increase benefits every year was changed from RPI to the lower CPI measure. The move, combined with an unprecedented drop in earnings growth, is likely to reduce the value of the state pension for pensioner families by £1bn a year by 2016/17, according to the analysis, in spite of the government’s triple lock guarantee.

The government claims its biggest welfare reform of all – Universal Credit (UC) – will make work pay. The analysis proves that is rubbish. When UC is finally rolled out it will lead to a further £5bn of annual cuts – almost half of which will fall on pensioner families.

TUC General Secretary Frances O’Grady said: “Ministers like to say that their welfare reforms target workshy scroungers and will get them back to work. But the fact is that the bulk of the cuts hit low-paid families already in work, as well as pensioners who have no way to make up the money lost as a result of the Chancellor’s social security axe."

“With nearly half the total cost of welfare changes falling on working families with children, the Prime Minister has already failed his own new family test, announced just this week."