In his Spring Statement the chancellor reported higher tax receipts and lower interest rates on government debt. Official forecasts allow him to use an additional £30bn on our behalf. Good news for the public finances and promised end to austerity.
But not for those on the lowest incomes.
Ahead of the statement and anticipating the good news, Citizens Advice asked the chancellor to make 2 policy changes. First, end the benefits freeze (growing numbers unable to buy essentials and some at risk of eviction). Second, end the 5-week wait for first payment of universal credit (causing real hardship evidenced by a big increase in attendance at food banks). (1)
Disappointingly, neither proposal was accepted.
It’s possible to assess the existing and likely impact on clients in different ways. There may be more debt or risk of eviction. In the current year CARBS clients’ need for referral to a food bank has been rising as our chart shows. Also the number of people claiming universal credit is increasing and this will continue during 2019.
At national level, the situation was outlined by 2 respected think tanks:
Institute of Fiscal Studies
“There was no reprieve announced for the millions of working age families dependent on benefits. The fourth year of the benefit freeze is going ahead. 10 million families will have lost an average of £420 a year as a result of the freeze. Ignoring those only affected by the child benefit freeze, 7 million poorer families will have lost an average of £560 apiece. At the same time the benefit system is facing mounting challenges from increasing in-work poverty, increasing numbers with disabilities, and a growing impact from high levels of private renting.” (2)
“The final year of the freeze on working age benefits, which takes effect next month, will leave a low-income couple with children £200 worse off next year, rising to £580 once the full effect of the freeze is included. Overall tax and benefit changes being introduced this April will take £100 from families in the bottom fifth of the income distribution and give £280 to those in the top 10 per cent.” (3)
1) How the chancellor can ensure the spring statement delivers for low income households, Citizens Advice, 08/03/19
2) Spring Statement 2019, IFS, 13/03/19
3) £30bn windfall gives Chancellor the scope to end austerity – but it continues for lower income households Resolution Foundation, 13/03/19