UK Budget Response Generally Disappointing for Those on Low Incomes

UK BUDGET - Today the reaction to the budget has been pretty uninspiring.

Rishi Sunak opens the budget on the coronavirus outbreak: “I know how worried people are … what everyone needs to know is we are doing everything we can to keep this country and our people healthy and financially secure. This is an issue above party.”

The chancellor says “we will get through this together”. But there are other matters also to address, after the election victory. He adds: “We just had a general election where people voted for change … this budget delivers on that change. Yes, it is a budget that provides for security today, but it is also a plan for tomorrow.”

Sunak announces a fiscal stimulus totalling £30bn, including welfare and business support, sick-pay changes and local assistance.

He says this includes £7bn for businesses and families and £5bn for the NHS.

The chancellor says he believes this is larger than any other country at present.

More budget changes

• Many working-age benefits which had been frozen for four years. including Jobseeker's Allowance, Employment and Support Allowance, some types of Housing Benefit, and Child Benefit. will rise in line with the rising cost of living, going up by 1.7%. So, for example, child benefit for the eldest child will go up from £20.70 to £21.05 per week
• Those aged 25 and over will get the National Living Wage of £8.72 an hour, a rise of 6.2%, with younger workers also getting more. This is paid by employers
• The full, new state pension will go up by 3.9% from £168.60 a week to about £175.20 in April. However, most pensioners get the older basic state pension, which is also going up by 3.9%, from £129.20 to £134.25 per week. They may also get a Pension Credit top-up
• Many self-employed people face a higher tax bill from April, when the so-called IR35 rule is extended to the private sector. That could mean thousands of contractors and freelancers will pay more tax
• The gradual process allowing people to pass on property to their descendants free from some inheritance tax will enter its final stage of introduction. It will reach its target by 2021

Welfare

The Chancellor announces £1bn of additional funding, including a £500m local authority hardship fund.

Statutory sick pay will be available to individuals self-isolating. Sick notes will be available by contacting NHS 111.

The Chancellor says millions working self-employed or in the gig economy will also need help. The government will make it quicker and easier to access benefits.

Contributory employment and support allowance (ESA) will be claimable from day one, rather than day eight. The minimum income floor for universal credit will be removed. The requirement to physically attend a job centre will be removed – everything can be done on the phone and online

Additionally

Almost almost £1.1bn of allocations from the housing infrastructure fund will be made to build almost 70,000 homes in high-demand areas.

The chancellor announces a Grenfell building safety fund worth £1bn. The funds will help to remove cladding from tall residential buildings.

He says almost £650m of funding will be made available to help rough sleepers into accommodation.

Commenting on today’s Budget, Chief Executive of Child Poverty Action Group, Alison Garnham said:

“The new Corona virus emergency measures on Statutory Sickness Pay, employment support allowance and universal credit are welcome but low-income families need support in health and in sickness. When it comes to the nation’s longer-term priorities, action on poverty must trump potholes and pubs.  We need to properly re-invest in our social infrastructure.   

“Universal credit continues to cause havoc for millions, so it is disappointing that the Chancellor brought no substantial permanent reforms to the table today. The temporary lifting of the Minimum Income Floor in Universal Credit is very welcome, but to be effective, a plan for prosperity must include fixes to the fundamental design flaws and funding shortfalls that have left universal credit unfit for purpose. 

“It is within the Government’s power to spread opportunity more evenly across the UK and to enable struggling families to get on, but unless funding is restored for universal credit and for children’s benefits, investment in infrastructure will have limited effects.   This Budget was an opportunity to begin to slow the rise in child poverty but there was no evidence today that low incomes are the priority that they should be in any effective strategy to level up the country and boost the economy.  The Government could lift seven hundred thousand children from poverty by 2023 if it restored support for children in Universal Credit to its 2013 value, added £5 to child benefit and removed the two-child limit and benefit cap.  That would begin to level up those children and to send a strong signal to struggling families that they have not been forgotten.”

Corona virus:

While welcoming the new Corana-virus-related benefit changes announced today, Ms Garnham called for further support for people claiming universal credit and other benefits who must self-isolate to reduce the risk of spreading Corona virus.  Jobcentre staff need clear guidance enabling them to lift work-search and other requirements on claimants who must self-isolate, in addition to the Budget announcement to lift the requirement to physically attend benefit offices.

Ms Garnham said:

“It is critical that universal credit payments are made available immediately on a non-repayable basis to anyone self-isolating who needs to claim.”

In addition Ms Garnham called for:

• in the event of schools closures there should be an emergency uplift in child benefit at least to the value of free school meals to ensure that all parents can provide their children with adequate healthy food at a time when family incomes are likely to be reduced as parents have to stay off work to care for children, and children cannot receive free school meals.   Work-search/work-preparation requirements should be lifted for parents self-isolating or where children are required to stay off school.
• a temporary uplift in key benefits to ensure people who have to self-isolate can afford to eat healthily and heat their homes.   Sanctions and deductions should be lifted from people’s awards if they are self-isolating, and/or people who are sanctioned and self-isolating should have automatic immediate access to a hardship payment.

The SNP has said the Tory government is failing millions of workers by refusing to increase UK statutory sick pay to at least the EU average in the face of the Coronavirus crisis.

Speaking at Prime Ministers Questions, Ian Blackford challenged Boris Johnson to follow the example of other European countries who have much higher rates of statutory sick pay.

The SNP Westminster Leader said the UK's current "meagre" £94.25 per week rate was "poverty pay" by comparison to the rate in Ireland of £266 per week, and other countries such as Germany and Austria where it is £287 per week. The UK currently has the second lowest rate in the EU.

Responding to the Budget Statement David Sinclair, Director of the International Longevity Centre UK (ILC) commented: 

“The Government has yet again missed an opportunity to recognise the enormity of the policy challenges which come from us living increasingly longer lives.”

“We are failing to maximise the economic potential of longer lives; we are failing to invest in preventing ill health; social care is in crisis; and we know pensioner poverty will start to increase.”

“We have no comprehensive plan of action to respond to the challenges of demographic change.”

“At the same time, we continue to fail to invest seriously to make the most of the potential social and economic opportunity of longevity.”

“The Coronavirus crisis highlights how we have been far too complacent about the impact of infectious diseases despite the fact a major pandemic has been increasingly likely.”

“In the short term there is an immediate need to invest to protect our most vulnerable citizens and ensure our health care system can cope. We very much welcome the Government commitment to ensure the NHS will have the funding it needs.” 

“But over the next few years we need to significantly push more health spending towards the prevention of ill health. Investing in the prevention of ill health will result in fewer vulnerable people when the next crisis happens. It is also key to help the Government achieve its ambitious goal of ensuring people can enjoy at least 5 extra healthy, independent years of life by 2035.”

“Longevity could offer a huge economic return for UK PLC. By 2040, over-50s could be spending 63p in every pound. And supporting people to spend or work for longer could add 2% to UK GDP every year.” 

“Yet the cost of lost productivity as a result of largely preventable diseases already exceeds £500 billion in better off countries every year.”  
“We won’t deliver an economic longevity dividend without investing in health systems.”  

“The lack of commitments on adult social care are a real concern. The system is already in crisis. A commitment to cross party talks on the funding of social care may be welcome, but it must not kick spending decisions into the long grass again. Inaction and delay by successive Governments have created a crisis which requires an urgent solution.”

Commenting on today’s (Wednesday) Budget Statement, which set out emergency action to tackle coronavirus, TUC General Secretary Frances O’Grady said:

“The government’s coronavirus plans will leave millions of workers behind. Without urgent action, too many will be plunged into poverty and debt.

“Today’s announcements won’t help the nearly 2 million people who miss out on sick pay because they don’t earn enough. Telling them to turn to the broken benefits system isn’t good enough. We need decent sick pay for all.

“Ministers must now urgently bring together unions and employers to talk about how to support jobs, including through wage subsidies for short time working schemes, and further help for public services – especially social care.”

On investment announcements, she added:

“This spending u-turn is badly overdue. The priority now must be to repair the damage of ten years of Tory devastation.

“Helping working families and rebuilding public services must come first. And we need to see concrete action on the challenges of the future.

“This means banning zero hours contracts, sorting social care, ending the UK’s dire regional inequalities, setting out a credible plan to achieve net zero, and getting an EU trade deal that supports jobs and workers across the UK.”

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