From the TUC

The CUTS Factor: Vote for 2010′s worst spending cut

16 Dec 2010, by in Economics

What do you think has been the worst from a very bad bunch of public spending cuts? We’re running this poll to see what the nation thinks – add your 2pworth and forward it on to your friends! We’ll be unveiling the most hated cut here on the blog.

The Contenders:

Abolition of EMA

Education Maintenance Allowance (EMA) is a means tested benefit of between £10 and £30 a week, paid to 16-19 year olds in low income households as an incentive to stay on in further education.

EMA is intended to encourage young people to stay on in education and help with the cost of travel, books and equipment. Research by the Institute for Fiscal Studies shows that EMA has helped to raise participation rates in further education and that the “costs of providing EMA were likely to be exceeded in the long run by the higher wages that its recipients would go on to enjoy in future.”

Despite promising not to scrap it in the before the election, the government discontinued EMA in the spending review. Young people not in employment, education or training (NEETs) are regularly demonised by politicians and the media. But what chance do they stand if the support needed to get ahead in their careers is taken away at the first opportunity?

Higher education teaching budgets

Proposals to raise the cap on tuition fees from £3,000 to £9,000 a year have been met with fierce opposition. What has particularly angered young people is that a considerable proportion of the tuition fees hike is simply replacing the government’s own higher education cuts, rather than contributing to better funded universities.

The Spending Review in October included a £2.9 billion cut in universities’ teaching budgets along with a further £1 billion cut in research budgets. This is particularly bad for universities specialising in humanities subjects, who face having their teaching budgets scrapped altogether.

Higher education cuts are grossly unfair and will cause long-term damage to our growth prospects. Recent research from the Commission on Employment and Skills showed that many of our international competitors are increasing the skills of their workforce at a faster rate than the UK. Cutting higher education funding and pricing students out of university altogether will only make this worse.

Housing benefit

While the media focused on the cap on the local housing allowance, a cut that has particular resonance in London where rents are exceptionally high, a serious of further changes to housing benefit will leave people struggling to find work and afford to live in their own home.

From April 2013, anyone who has been looking for work for at least a year will have housing benefit entitlement cut by ten per cent. Quite how this will improve their chances of getting a job is anyone’s guess.

Long-term unemployment has risen steadily since the start of the recession and is now approaching a million. Lots of people will be affected by this cut.

A compassionate government would support those suffering from long-term unemployment and give them all the help they need to find work. Instead, the government has to cut their benefits, making it ever harder to find a job.

Disability Living Allowance

Cuts don’t have to big to be grossly unfair. In the spending review the government announced the removal of the mobility component of Disability Living Allowance from people in residential care, in order to save £135 million a year by 2015.

The mobility component is for people who have trouble walking. Disabled people can use this allowance to purchase an adapted car, a wheelchair or a scooter. These are not luxuries, but basic necessities required to allow people to live independent lives.

It’s hard to believe that money is so tight that we cannot afford £135 million a year. After all, City bankers are expected to pay themselves 51 times this amount this year.

Childcare element of working tax credit

The bungled announcement of the abolition of child benefit for higher rate taxpayers got the headlines, but the budget and the spending review contained a whole host of tax credit changes that will have a big impact on low and median income households. In fact, two thirds of the welfare changes announced in the budget and spending will fall on working families.

We’ve picked out the reducing the amount of childcare costs that can be met by working tax credits from 80 per cent to 70 per cent from April 2011. Decent childcare is beyond the budget of many families and prevents many women from returning to work. The childcare element of working tax credit is provides vital financial support for many low income parents wanting to balance work and family commitments.

Tax credit cuts will undoubtedly make it harder for women to return to work. Think tanks such as Policy Exchange support such a policy. If the government agrees, they should say so rather than giving working parents a nasty financial surprise next year.

Abolition of the UK Film Council

In June, Culture Secretary Jeremy Hunt announced the abolition of a number of arts bodies including the UK Film Council, which supports new British filmmakers and films, funds training, promotes British films and Britain as a location.

The decision was greeted with dismay and leading members of the global film industry, including Steven Speilberg to Bill Nighy, have called on the government to reconsider its decision. Abolishing the UK Film Council is another example of the government prioritising short-term deficit reduction over long-term economic gain. The body has a proven track record of providing vital funding for UK films from In the Loop to Bend it like Beckham. For every pound the UK Film Council invests, the UK economy gets £5 back.

The UK film industry is a world leader and currently worth approximately £4.5 billion a year. But with countries like Australia seeking looking to woo filmmakers away from the UK, abolishing the UK Film Council risks letting slip our competitive advantage.

Future Jobs Fund

Young people were the hardest hit by the recession, with nearly one in five 18-24 year olds out of work at its peak in October 2009. The last government’s response was to setup the Future Jobs Fund which, along with the Young Person’s guarantee, helped to provide young people with a definite job.

This bold move was particularly important given the experience of the 1980s recession when mass unemployment scarred an entire generation of young people with joblessness and poor career prospects.

The FJF was working well. Official statistics show that so far it has helped 100,000 young people into work. But the government scrapped the scheme in June and have not provided any plans to provide new support. Youth unemployment has not disappeared. But government support to help them find work has. The spectre of a jobless generation is still with us.

RPI-CPI indexation change

In the emergency budget the government announced that the rate at which key benefits, public sector pensions and some private sector pensions increase in value would move from the retail prices index (RPI) to the consumer prices index (CPI).

CPI is on average 0.5 percentage points lower than RPI, so this change will chip away at the value of benefits and pensions year after year. The cuts will build up so that after a decade or so, the value of a pension will be cut by hundreds of pounds.

The government claims that CPI is a more appropriate measure for indexing benefits. But housing costs and council tax – which are excluded by CPI – are major costs for pensioners. The real reason is cost saving – the Chancellor says it will save £6 billion a year by 2015.

This change will reduce the value of people’s income in retirement for generations to come – long after the government’s deficit reduction plan has come and gone.

Local authority grants

In announcing new settlement grants for local authorities from April 2011, the government has proclaimed a new era localism with local authorities having greater freedom to make their own spending decisions. But given the scale of cuts that have been imposed on them by Whitehall, councils instead face painful decisions about which vital public services to strip back. Many would argue that central government has passed the buck when it comes to cuts.

Reducing local area grants will inevitably means cuts to all sorts of local services; from support to tackle youth unemployment and crime, to home help, libraries and breakfast clubs for schools.

The scale of the spending cuts is still unclear, making an already tough settlement even harder for local council. What is clear is that local authorities in the most deprived areas are facing the sharpest spending cuts – in fact all bar two of the most deprived areas are facing the maximum possible spending cut.

This is the clearest sign yet of cuts hitting the poorest far harder than the rich.

Abolition of School sports partnerships

In late November Debbie Foote, a 17-year old from Lincolnshire, delivered a petition to Downing Street containing half a million signatures from teachers, parents and pupils expressing concern at plans to abolish school sports partnerships.

The campaign has been supported 75 Olympians and Paralympians, as well as ex-England keeper David James.

The Prime Minister is now said to be taking a close look at the decision to axe the £162 million fund for the 450 school sports partnerships across the UK.

Why are school sports partnerships so important? Setup ten years ago, their aim is to encourage five hours of school sports a week for all 5 to 16 year olds. The schemes have contributed to a miraculous revival of school sports. A recent survey found that 27 per cent more boys and 60 per cent more girls now take part in interschool competitive sport than in 2006.

Getting kids involved in sports at school isn’t just about creating a conveyer belt of Olympic athletes, physical education improves children’s health and can raise self esteem too.

A key strand of London 2012’s successful Olympic bid was its legacy plans. This government seems intent on abandoning this aim before the games have even begun.

8 Responses to The CUTS Factor: Vote for 2010′s worst spending cut

  1. Tweets that mention The CUTS Factor: Vote for 2010′s worst spending cut | ToUChstone blog: A public policy blog from the TUC —
    Dec 16th 2010, 2:51 pm

    […] This post was mentioned on Twitter by ToUChstone blog, Rob Holdsworth, going to Work, Kieron Merrett, Kieron Merrett and others. Kieron Merrett said: RT @touchstoneblog: CUTS factor: Cast your vote for the most egregious spending cut here: […]

  2. Ian
    Dec 17th 2010, 9:47 pm

    The worst cut is not listed in this survey!

    The cuts to the public sector budgets and public sector jobs with, the knock on effect the cuts will have on the private sector too. An estimated 1.6 million jobs will be lost as a result of these cuts. The damage this will do to the public services provided to some of the most vulnerable members of society will be irrevocable and all but the wealthiest in this country will be affected in some way. The country should be investing its way out of the crisis and collecting the £123 billion in tax that is being evaded, avoided or just not being collected in the UK every year!

  3. Andy Coles
    Dec 18th 2010, 8:44 am

    I am finding it difficult to select one of the above as they are all vicious cuts and affect huge numbers of people and the most disadvantaged disproportionately. My vote is for all of them and other cuts not included as they all impinge unfairly on us and have little effect on the rich liars making these decisions.

  4. Robert Goddard
    Dec 20th 2010, 12:54 pm

    In my opinion they’re all bad but there isn’t an option to vote for them all.

  5. Stephen McManus
    Dec 22nd 2010, 1:40 am

    The worst cut of all is the sum total of all of these cuts, which add up to the beginning of the end for the welfare state. There has never been over provision from the wlefare state in the uk, the ruling elite, roughing it on their yachts in the indian ocean, would not allow it.
    Class conflcit is rife in the uk and the majority of us, the working class and the sub classes included in that grouping, are again on the recieving end. Never can it be said that we are not being attacked in some way. Never can it be said that we have it easy, working all hours to pay for the parasites at the top that dictate how we live and when we die, the sooner the better for them!
    The cuts will kill. Plain and simple. Lives will be shortened across the board. Drastically in some cases and less quickly for others. But without enough resources to live at a reasonable level, shortened, miserable and defeated lives will be the outcome.
    Without even having a mandate to govern, the condems have to be evicted from office pronto. We the working classes have to stand together and fight all the cuts till this govt is destroyed as it is them or us, there is no half way house to hide in. A new labour govt must be returned and it must be held properly accountable to us, unlike how it was under that Tory scum, Blair!

  6. Mrs B
    Dec 31st 2010, 3:05 am

    As far as I know the change from RPI to CPI uprating affects a whole lot more benefits than just those for the elderly …it includes DLA and Carers Allowance – DLA is also payable to disabled children and carers allowance to parents of disabled children

  7. zoe moore
    Jan 3rd 2011, 1:28 pm

    The cuts to social funding that this government is forcing through, are immoral and unecessary. They are politically motivated and will destroy the fabric of our society right across the board; from running local services, transport, education to any service which deals with caring for those less able to care for themselves.
    I agree with Stephen McManus; these cuts will kill. Cameron and Clegg will look on with their millions in the bank while people die and in true Tory fashion, they will claim it’s for the good of the nation (for “nation” read “greedy land-owning capitalists”).
    Write to your MPs now. Raise a petition. Do not let them think we’ll wait for action. We want these cuts stopped now. Write to your councils and demand the services you need. We must fight back now.

  8. Anna Massey
    Feb 4th 2011, 6:36 pm

    The worst cut is to the mobility element of the disability living allowance. Not only because it will have a substantial – for many, devastating – impact on the quality of life of many disabled people, but also because it reveals just how ignorant so many of the cuts seem to be of real people and the way government can support them.