Apparently still-somehow-Chancellor Philip Hammond is going to give a ‘Spring Statement’ soon, telling us all how great we’re doing.
Who’s actually doing that well, I wonder?
Certainly not the 11 million families about to be hit by the biggest government benefit cuts for six years.
I mean – 11 million families? That’s half the country!
Working-age benefits will be frozen for a third year, taking £1.9 billion out of the UK economy and affecting those 11 million families.
A measure limiting benefit claims to a family’s first two children, costing up to £2,780 for a family having a third child, takes £400 million out of the economy this year and affects 150,000 families.
The withdrawal of the family element of support for new tax credit and universal credit claims from families with children will cost families up to £545. It withdraws £200 million from the economy this year and will affect 400,000 families.
And Universal Credit will cut £200 million from the economy because some claimants have lower entitlements compared with the existing system, especially the long-term sick (now traditional victims of the Tories) and working families.
You’ll probably read in the mainstream media that these measures are “saving” money from the public purse.
You all know this is a lie, though – right?
Money that goes to the poorest in society benefits the economy the most – because it goes through more hands before being reclaimed by the Treasury, meaning it has more ability to add to Gross Domestic Product.
It’s called the multiplier effect.
Taking that money out of the economy will affect it – as previous cuts have, every year since the Tories took office back in 2010.
So don’t let Philip Hammond fool you. His economics hurts.
A further public spending squeeze will see the second largest annual cut to the benefits budget since the financial crash. According to new research by the Resolution Foundation thinktank, the changes from April will save around £2.5bn and dent the incomes of the “just about managing” families that Theresa May has vowed to help.
The cuts will affect around 11 million families, including 5 million of the struggling families that the prime minister stated she would focus on.
There will also be some good news for the low paid, with more than 1.5 million workers set to benefit from a 4.4% pay rise when the national living wage increases from £7.50 to £7.83 at the start of April. However, that measure will be outweighed by the effective £2.5bn cuts to working-age benefits.
While there were bigger cuts in 2012 when child benefit was removed from higher earners, this year’s squeeze will fall on low- and middle-income families. The new analysis suggests these families are set for an average loss of £190 this year alone, though some will be far worse off.
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