A million more families below the breadline by 2015
The TUC has done lots of research on the impact of the government’s welfare reforms and benefit cuts on ordinary families. Every year, we update our tax credit calculator to show the impact of benefit changes on family incomes.
We’ve also looked at the cost of wages failing to keep up with the rest of rising cost of living. We recently found that a worker on an average salary of £26,000 has already lost £4,000 since 2009 as result of falling real wages.
Every time the TUC publishes fresh evidence of the extent and impact of the UK’s living standards crisis, the government responds by pointing out that it has taken many millions of low-income families out of tax by raising the personal allowance, and that in any case Universal Credit will solve problems with welfare provision.
The TUC is sceptical about the efficacy of raising the personal allowance as a way to help low-paid workers – it’s an expensive way to provide a small amount of support, and helps richer households far more than poorer ones, as the Institute for Fiscal Studies has shown.
It’s also hard to share the government’s confidence about Universal Credit when it only helps those on the very lowest incomes and looks increasingly likely to face delays to its implementation as a result of IT glitches.
With this in mind, the TUC has published new research today that shows the cumulative impact of all welfare and tax policies, including Universal Credit and the raised personal allowance, as well as real wage growth over the course of this parliament.
The results are stark – millions of families are going to be thousands of pounds worse off a year by 2015 as a result of these policies. Whilst it’s true that direct tax changes help most families, and Universal Credit boosts the incomes of the 30 per cent of households, these are not enough to offset the huge losses elsewhere as a result of benefit cuts, reductions in tax credits and the VAT rise.
All in all, the combination of austerity policies and slower than previously forecast wage growth – an indirect consequence of economic stagnation and a direct result of the government’s public sector pay freeze and cap – will leave nine in ten families worse off by 2015.
Furthermore, the scale of losses means that a million more families will fall below the Minimum Income Standard – a measure setup by the Joseph Rowntree Foundation that estimates the level of income needed to maintain an acceptable standard of living in the UK today.
The government should be ashamed of reaching that milestone by the time of the next election.
You can see a larger version of the infographic here.