OPFS Statement on Summer 2015 Budget
The budget has signalled four more years of austerity, with higher child poverty but lower taxes for the more affluent.
On the one hand the Chancellor offers a living wage five years ahead but this will be diminished by cuts to tax credits and a four year public sector pay freeze. In this pursuit of appearing tough on welfare: by freezing working-age benefits and tax credits for four years; capping the level of benefit a family can receive; and removing Housing Benefit for the under 21 year olds the Chancellor is punishing children who cannot help being born in into large or low income families.
We are shocked at the announcement extending parent conditionality which means, 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. This announcement will spread fear among single mothers and result in increased loss of benefit and dependency on foodbanks and even greater child poverty.
Summary of Budget
- From September 2017, there will be 30 hours free childcare for 3 and 4 year olds therefore, parents with a child of 3 and over, including single parents, who are able to work will be expected to look for work if they are claiming universal credit.
- From April 2017, new employment & support allowance (work-related activity group) claimants will receive the same rate as jobseeker’s allowance claimants. Existing ESA (WRAG) claimants will be unaffected.
- Working age benefits (jobseeker’s allowance, tax credits and local housing allowance) will be frozen for four years. Statutory sick pay, maternity pay, maternity allowance, paternity pay will continue to be indexed to CPI. Disability benefits (PIP, AA, DLA and ESA support group) will also continue to be indexed to CPI.
- The benefit cap will be reduced for those living outside of London from £26,000 to £20,000.
- From April 2016, the income threshold for tax credits (the point at which tax credits start to reduce) will drop from £6,420 to £3,850 per annum. The universal credit equivalent (work allowances) will also reduce.
- The taper rate (rate at which tax credits reduce) will increase from 41% to 48%.
- The support given through the tax credit system will be limited to two children so any subsequent children born after April 2017 will not be eligible for support. An equivalent restriction will also apply to Housing Benefit.
- From April 2017, there will be no eligibility for the family element of child tax credit for those starting a family after this date. Also the first child premium of universal credit will not be available for new claims from April 2016.
- The family premium of housing benefit will be withdrawn from new claims from April 2016.
- Support for Mortgage Interest scheme will become a loan so homeowners will have to repay the financial support they receive.
- From April 2017, there will be no housing benefit for 18 to 21 year olds with exemptions for vulnerable young people – those who can’t return home to live their parents. Those who worked for six months prior to making a claim can get housing benefit for six months while they look for work.
- A National Living Wage for workers aged 25 years and above will be introduced in April 2016 (£7.20 p/h) rising to £9.00 in 2020.