Around two thirds of welfare cuts will fall on working families
In his Spending Review speech, the Chancellor stated that:
Fairness means creating a welfare system that helps the vulnerable, supports people into work, and is also affordable for the working families who pay for it from their taxes.
His political game has been to justify large cuts to welfare budgets by claiming they are targeted at lazy claimants (with closed curtains) whose benefits need to be cut in the name of fairness as well as deficit reduction. But analysis that we have published today shows the rhetoric does not match the reality. In fact, 69 per cent of the welfare cuts announced in the CSR hit working households. These changes include cut significant cuts in Tax Credits for working families, cuts in the entitlements of people claiming contributory ESA (some of whom will have working partners) and Housing Benefit cuts that will affect those who are working as well as those who are workless.
When the measures from the Budget are included the picture doesn’t get much better for ‘working families who pay their taxes’: 58 per cent of its measures hit those in work. These include the Child Benefit freeze, the move to uprate Tax Credits by CPI, cuts in Housing Benefit (with 19 per cent of working age claimants in employment the impact is significant), cuts in DLA (with at least nine per cent of recipients in work and some with working partners) and more Tax Credit reductions. Of the entire welfare cuts package, over both the Budget and the Spending Review, we estimate that around 63 per cent of cuts will affect those who are in employment.
By pointing this out we are not advocating greater cuts for those who are unemployed. The very poorest people in society need to be protected and will experience significant drops in their household income as a result of the Chancellor’s measures (and as well as being out of work many of those who will be hit have families to support or are living with disabilities). But we are attempting to highlight that there will be more losers from the Coalition’s policies than George Osborne would like us to believe. Hard working taxpayers are the focus of the majority of the welfare budget reductions.