Monday, 12 September 2011

Two reports on who is being affected by the Cuts: One extremely unjust message

Today sees the publication of two important reports about who will be affected by the cuts and by how much. As a nerd who enjoys graphs this is a reason for joy; as someone with a care for social justice there is absolutely no joy to be found at all.

The Institute for Fiscal Studies (IFS) shows conclusively that the poorest will be hit hardest. The bottom fifth of earners will lose about 6% of their income in lost benefits and government services and around another 6% in real terms wage cuts – a 12% hit. Taking a 12% cut is bad for anyone, but for those already facing hardship - how can this be just? 

Well maybe it could if we were all in this together but we most definitely are not. The top fifth of society (basically all higher rate tax payers) are facing a 4% reduction. The highest 1% (£150,000+ tax band payers) are facing higher taxes, due mainly to changes in pension tax relief, but a combination of high pay rises and tax avoidance strategies will probably mean their real incomes will actually increase. 

The second study released today is from the Children’s Society and looks at the effect of the arbitrary benefit cap of £500 a week on any household. The sad but unsurprising fact is the poorest are disproportionately affected, and the poorest children even more so. Here are just the headline findings.
  • Children will be 9 times more likely to be affected than adults.
  • 69,000 adults and 206,000 children will have their household incomes reduced (by an average of at least £92 a week).
  • 27,000 adults and 82,400 children will be made homeless.
  • Children in poverty will move into severe poverty – an internationally recognised definition of poverty where lack of resources leads to serious impacts on children’s health and wellbeing.

There is a lot of interesting detail given in the study which I won’t go into but it is important to realise this work takes as its base the rather optimistic Department of Work and Pension estimates of the number of households affected, and uses very optimistic assumptions to avoid exaggeration. The related housing benefit cap will be introduced for everyone in January, and the total benefit cap will be introduced in April 2012.

These are all choices and do not let the Government rhetoric on deficit reduction fool you into thinking there is no other choice. The rate at which the deficit is cut is a choice, the proportion of cuts and tax rises is a choice, who will be most affected by the cuts and tax changes is a choice. 

Alison Tomlin stated on the eve of the Comprehensive Spending Review to Westminster Central Hall full of TUC and social justice activists, that the Government should be judged on the choices it made around how it treats the poorest and most vulnerable. My own judgement on the direction of government policy in general and the arbitrary benefit caps in particular is clear: - Unjust, unfair and unacceptable.