From the TUC

The Pre Budget Report and Child Poverty

24 Nov 2008, by in Economics, Society & Welfare

Last month 10,000 people came to the End Child Poverty rally in Trafalgar square to urge the government to keep the promise to halve child poverty by 2010; the key measure we were demanding was an extra £3 billion in tax credits and benefits for children. Did today’s pre-budget report move us closer to this goal?

Not a great deal, unfortunately. First, the positive news; the pre-budget report took the right decisions about the level of investment that was needed to bring about a recovery. For egalitarians, the most important decision may be the changes to income tax for the wealthy – if this is followed up it could mark an important political break with the taboo about increasing taxes on the rich. From 2011-12 the 45 per cent rate for people earning over £150,000 a year will raise an extra £670 million a year; even more importantly; restricting the personal allowance to a half for those earning over £100,000 and zero for those earning over £140,000 will raise almost twice as much £1,320 million a year, and will make the structure of income tax significantly more progressive. (These data are in Annex B – turn to table B5.)

For low-to-middle income workers, the £600 increase in the personal allowance, introduced as a temporary measure to deal with the 10p tax smashup, will be made permanent, with an extra increase of £130, helping to make the system rather more progressive. The PBR also announced that increases in Child Benefit and the child element of Child Tax Credit will be brought forward to January and April of next year respectively. (See Chapter 5 of the PBR.)

All this is very welcome, but it falls short of the good news for people on low incomes we had hoped for; this could have been done through a mixture of increases in tax credits, Child Benefit and, as we urged, Jobseeker’s Allowance. This makes the PBR something of a missed opportunity, leaving a lot still to be done in Budget 2009. The Chancellor confirmed the Government’s plans to put into law their commitment to eradicate child poverty by 2020: this is good news but we need a redoubling of efforts to deliver the investment needed to meet the 2010 target, which is, after all, the foundation for this legislation.

The Chancellor’s announcement of £1.3 billion extra for Jobcentre Plus, including a substantial extra investment in the Rapid Response Service is exactly in line with what the TUC was hoping for. The insistence that the Government will be going ahead with their plans for workfare is not – bullying the unemployed is the last thing we need at the moment. The stingy attitude to unemployed people could also be seen in the announcements about extra help for people whose homes are threatened: the mortgage rescue scheme and the increase in the capital limit for benefit help with mortgage interest payments are very welcome, but the Government are still going ahead with their decision to limit help for unemployed people to two years. Anyone facing long-term unemployment will now face losing their house as well.

So today we have seen a very mixed bag: important measures to deal with the recession, but failing to provide the help for poor families we hoped for. Time is running out. Like the other members of the Campaign to End Child Poverty, the TUC will carry on putting pressure on the government to keep its child poverty promise.

One Response to The Pre Budget Report and Child Poverty

  1. Intute: Social Sciences Blog » Blog Archive » What did they think of the Pre-Budget Report?
    Dec 2nd 2008, 12:19 pm

    […] useful postings on the TUC Touchstone blog which focus on the possible impact on child poverty and the […]