Business groups have warned David Cameron that he cannot expect companies to automatically raise wages to compensate for cuts in tax credits that are likely to be unveiled in the summer budget.
Industry organisations, including the British Chamber of Commerce (BCC) and Institute of Directors (IoD), spoke out after Cameron gave a speech criticising what he claimed was a “welfare merry-go-round” and suggested higher pay should replace tax credits.
There has been speculation that Downing Street could unveil a plan to encourage companies to pay their workers more at the same time as the government announces £12bn of welfare cuts, including reductions to tax credits, next month.
Steve Hilton, Cameron’s former adviser, claimed in a Daily Mail article this week that it was a “complete travesty” that giant retailers like Tesco and Sainsbury’s are making billions of pounds in profits while they are “subsidised by the taxpayer so they can pay their workers a pittance”.
The Tory government is considering lowering the top rate of tax for Britain’s super-rich, it has been reported.
The move would see the top rate of tax being lowered from 45p to 40p in the pound (£), while hammering low-income families with £12bn in welfare cuts.
Former Tory Chancellor, Lord Lawson, has urged George Osborne to reduce the tax burden on top-rate tax payers in the ’emergency budget’ next month (July).
George Osborne has indicated during Treasury meetings that he may go ahead with the plan. It would encourage more businesses to invest in the UK, says Lord Lawson.
More than half of North East families will be affected by planned tax credit cuts, making us one of the hardest hit region’s in the country, it has been claimed.
The Government is set to carry out £12bn worth of benefits cuts which it will detail at its next Budget. Tax credits is predicted to be one of the areas where the axe will fall heaviest.
It is reportedly being considered that they will be cut back to the 2003 level, which the Institute for Fiscal Studies has calculated would reduce entitlements for about 3.7m low-income families with children by an average of £1,400 a year, reducing spending by about £5bn.
Labour says that 148,000 North East families – or 56% of the total – benefit from tax credits.
House of Commons figures also show that 70% per cent of those claiming them in the region are in work.
Ian Lavery, Labour MP for Wansbeck said:
“David Cameron and George Osborne must come clean about their proposals to cut tax credits. Their plans clearly put over half of the families with children in the region in the firing line.
“Many families have suffered greatly under the first five years of the Tories, with their incomes falling and bills rising, making life a real struggle already.
“Time after time, during the election campaign and in the first month of this government, they have ducked and weaved to avoid revealing the true nature of their plans. It’s not fair and it’s causing great distress for many. It’s time for the Prime Minister to spell out just what he has in store for families across the region and let the public decide whether his cuts are fair.”
According to campaign groups and charities, the welfare cuts will see the already high level of child poverty in the North East spread even to some affluent areas.
Forty-four days after David Cameron gained an unexpected majority on a dramatic general election night, opposition parties are still picking themselves up from the floor. But on the streets of Britain, tens of thousands of people took up their placards and filled the streets of London, Glasgow and elsewhere for the first major protest against the government’s plans for five more years of austerity.
Estimates of the size of the rally in central London on Saturday varied between 70,000 and more than 150,000; in Glasgow’s George Square several thousand gathered and there were smaller demonstrations reported in other cities, including Liverpool and Bristol.
“We’re here to say austerity isn’t working,” said Caroline Lucas, the Green Party MP, to great applause from the crowds in Parliament Square at the end of the march. “We’re here to say that it wasn’t people on Jobseekers’ Allowance that brought down the banks.
“It wasn’t nurses and teachers and firefighters who were recklessly gambling on international markets. And so we should stop the policies that are making them pay for a crisis that wasn’t there making.”
Marching under the banner End Austerity Now, protesters denounced public sector cuts, the treatment of the disabled and the vulnerable through welfare cuts, the privatisation of the NHS.
Teachers, nurses, lawyers and union groups marched under their own banners. Chants and songs demanded an end to Tory government, equality and more help for the poor. A sprinkling of celebrity faces – Russell Brand, Charlotte Church and actor Richard Coyle – were among the crowd.
The deputy first minister of Northern Ireland, Martin McGuinness, told the rally:
“It is David Cameron’s cabinet of millionaires – they are the people who are the real spongers. They are the people who are given free rein to live out their Thatcherite fantasies at the expense of ordinary, decent communities throughout these islands.”
Protesters set off from outside the Bank of England, and by the time the march reached Westminster – its final destination – a sea of banners, placards and flags stretched for more than a mile down Whitehall and past Trafalgar Square.
Treasury officials have asked the Department for Work and Pensions (DWP) to find even deeper cuts to welfare spending, according to reports.
BBC Newsnight’s Political Editor, Allegra Stratton, has reported that treasury officials have asked Iain Duncan Smith to find £15bn of welfare cuts, rather than the £12bn originally promised in the Tory manifesto.
A treasury source allegedly told Stratton that both child tax credits and working tax credit could be in the firing line for £8bn in cuts.
With a further £12bn in welfare cuts in the pipeline, what evidence is there to show that reforms to the welfare system are helping people into work and cutting costs?
The head of Housing and Communities at the London School of Economics (LSE) believes that savings are lower and costs are higher than planned.
Anne Power says:
“In 2013 and 2014, LSE Housing and Communities carried out a survey of 200 social housing tenants across the South West of England to find out whether welfare reform, introduced by the coalition government, was in practice helping tenants into jobs and making them better off.
“We found that the impact was direct, harsh and in most cases not leading directly to work. We have also talked to 150 social landlords and their tenants all over the country to understand the impact of cuts in benefits on the way landlords and tenants are managing.
“Our findings are striking. Welfare reform isn’t working as planned. Government savings are lower and costs are higher, particularly disability payments due to mismanagement.
“The ‘Bedroom Tax’, was introduced to make social housing tenants with one spare bedroom move home or pay more rent. This has led to empty homes in some parts of the country as many social landlords in the North and the Midlands have surplus larger properties which they have under-let to small households. Tenants now compete to downsize, leaving a costly supply of empty, larger units. Often tenants simply can’t find a smaller unit to move too.
“Sanctions, government-imposed penalties on job seekers who fail to meet Job Centre requirements, suspend all benefits with no notice. Many appeals have over-turned the job centre sanctions but often too late to prevent deep and sometimes tragic hardship. Housing benefit payments are also rising because evictions have forced tenants to pay higher rents in the private rented sector.
“Welfare reform is directed at getting a job. But older working age bands struggle because, after a long gap, skills may no longer be usable and jobs requiring IT require considerable retraining. Former manual workers often suffer serious injuries at work and can no longer do hard labour.
“Benefit cuts create longer term social costs too. For example, carers and their dependents may need a spare bedroom for a foster child or sick relative or night-time carer.
“The government is playing to popular attitudes. Spending on welfare, when austerity hits everyone, is not popular. There is a common belief that far more people cheat than actually do, whereas bureaucratic errors are far more common and cost more.
“There is general belief that people should work, whatever the job and certainly tenants we spoke to want to work. Tenants like working. But “booting” people into standing on their own feet can cut vital support lines without jolting them into a job. It can incapacitate them.
“Welfare reform is underpinned by a strong belief in the value of the market; if things don’t pay, they will stop happening, so if benefits don’t pay, people will stop depending on them. This over-simplified view has led to unintended and unnecessarily harsh consequences. As tenants feel less certain that they can rely on benefits, they find job centre interviews and the threat of sanctions too painful and too humiliating, so some just disappear off the unemployment register.
“The number of people actually finding work through job centre action is far smaller than claimed.
“On the other hand, tenants want to work whenever possible, even when pay is poor, so in that sense the strong work focus of welfare reform is positive. Tenants also like training and learning – and job centres send claimants on courses.
“Tenants are adjusting to lower incomes, although paying bills is a constant juggling act and it is no longer possible to take basic support for granted. The adjustment tenants are making would be far more painful if it wasn’t for advice organisations like CAB, churches and charities that offer emergency support. Food banks help in extreme circumstances.
“Social landlords are responding to welfare reform and the wider cuts they face with considerable anxiety. They know the vast majority of their 4 million tenant households are hard hit.
“Collecting rents becomes even more important, but far more challenging. Welfare reform has forced social landlords to recognise the need for more direct, face-to-face, front-line contact with tenants to ensure payments and help resolve problems. They develop opportunities for training and accessing jobs to help welfare reform work.”
Source – Welfare Weekly, 26 May 2015
Article reposted from AOL Money UK
Good Morning my darlings. I’m feeling a little less emotional about the election result (still angry though) and so I decided to look into what’s to come …
Few people predicted any one party could win outright but now the Conservatives have done just that.
Before today, the party manifestos were seen as starting points for coalition negotiations, but now that the Tories have won a small majority they will be able to implement their pledges.
So what were those pledges and how will they affect you? Let’s take a look…
The Tory manifesto was stuffed full of promises on tax, including raising the personal allowance to £12,500 and increasing the 40% tax threshold to £50,000. The threshold is currently £42,386, which means current higher-rate taxpayers could save a tidy sum.
A key Conservative pledge was on inheritance tax…
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To say I am gutted at the outcome of the 2015 General Election would be an understatement.
I am lucky. I work. I don’t claim benefits, due to a small inheritance from a late relative, I don’t have to worry about money. I am relatively healthy.
But, we are all one malignant cell, one car crash, one redundancy from having to rely on the welfare state.
Although I had a bit of a twitter argument with an SNP voter this morning, I admire Scotland for coming together and ousting the tories completely. I just wish they’d voted Labour which would have reduced the tory majority.
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The Liberal Democrats have blown the lid on Tory plans to cut £8 billion from the child benefit bill if they are re-elected.
The Liberal Democrat chief secretary to the Treasury, Danny Alexander, made a statement in which he revealed that the plans for the cuts was outlined in a document entitled “Welfare Reforms Quad Summer Reading Pack” by Iain Duncan Smith which was sent to members of Quad (the four most senior cabinet members) in June 2012.
The proposed cuts contained in the document included:
- Limiting support to 2 children in child benefit and child tax credit, so cutting up to £3,500 from a family with three children.
- Removing the higher rate child benefit from the first child, an average cut of over £360 for every family with children.
- Means testing child benefit – cutting £1,750 for a two child middle income family
- Removing child benefit from 16 to…
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David Cameron was challenged over the death of diabetic benefits claimant James Clapson and over the closure of the Independent Living Fund (ILF) on Sunday’s Andrew Marr show. Cameron’s unapologetic response was that there are hardship funds available for ‘difficult cases’.
On his programme yesterday Marr asked Cameron if he accepted that the £22 billion of welfare cuts so far ‘has hurt a lot of poor and vulnerable people?’
Cameron replied that it had involved ‘difficult decisions’ but:
“ . . . we have protected for instance the pension, we’ve protected benefits for the lowest paid, we’ve always made sure that we’ve increased spending on disability benefits rather than reduced it.”
On the subject of why one million people now depend on food banks, Cameron argued that:
“One of the things we did was that Labour, because they didn’t like the PR of this, they didn’t advertise or promote the existence of food banks through job centres. We changed that because we thought that was, that was basically sort of selfish and shortminded…”
And when it came to the subject of James Clapson, a former soldier who failed to turn up for a Jobcentre interview, had his benefits sanctioned and died after being unable to refrigerate his insulin, Cameron was entirely unapologetic. His response was:
“Well we have hardship funds and councils have hardship funds for exactly those sorts of tragic cases but if you’re asking me is it right that people who are asked to turn up for interviews or asked to fill in a CV or asked to apply for a job should have to do those things before getting benefits then yes it’s right that we do have that system in place . . .”
When asked about another case involving a claimant with learning difficulties who had his benefits sanctioned for not using a computer, Cameron again relied on hardship funds and entirely ignored Marr’s suggestion that there should be a review of the system:
“I look at all of those individual cases and all of those cases can be addressed by the hardship funds and by the flexibilities that are there in the system . . . People watching this programme who pay their taxes, who work very hard, they don’t pay their taxes so people can sign on and show no effort at getting a job, as I put it on the steps of Downing Street those who can should; those who can’t we always help”
Cameron was equally dismissive of the abolition of the ILF, due to take place in June:
“Well what we’ve done is we’ve given that responsibility to local councils as the last resort and local councils have that funding available to help.”
When Marr pointed out that the funding is only for one year, Cameron replied simply “they have it for difficult cases” before once again reminding listeners how many more people have moved into work under the Coalition.
Cameron’s lack of compassion, apology or understanding combined with a total refusal to actually look into what is going wrong with the benefits system are a powerful reminder of what another five years of Conservative led government will mean to sick and disabled claimants.
Source – Benefits & Work, 20 Apr 2015