Osborne must not ‘balance budget on backs of poor’

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  By a Newsnet reporter

SNP Westminster Treasury Spokesperson Stewart Hosie MP has called for welfare changes to be reversed, ahead of the Chancellor’s budget announcement on Wednesday.

With the recent loss of the UK’s AAA credit rating, and a triple dip recession looming, the Chancellor is facing increasing calls to abandon his cuts and austerity policy and to inject public funds into capital expenditure projects in an effort to kick start the ailing economy.

However Mr Hosie’s call is likely to fall on deaf ears, with the Coalition government determined to maintain its regime of cuts to benefits and public spending, the burden of which is most likely to fall on the lowest paid, the unemployed, and disabled people.  

Last weekend Mr Osborne said Wednesday’s Budget would contain measures to “help those who aspire to work hard and get on” but would also set out the scale of further curbs on public spending from 2015.

The UK Government’s Welfare reforms including the Bedroom Tax, changes to Tax Credits, cuts in Child Benefit and benefit caps are imposing a disproportionate burden on those with low incomes. The Office of National Statistics estimates that average earnings in the UK have fallen in real terms since 2009 while an Institute for Fiscal Studies analysis has found poorer people are losing a higher proportion of their income.

The latest figures from the Office of National Statistics estimate that incomes have fallen in real terms since 2009, and are now at similar levels to 2002/3.  Treasury figures published recently show that as a result of tax and duty rises, and cuts to benefits, average household incomes are expected to fall by £200 (1%) over the coming year.

Meanwhile, the gap between the richest and poorest in the UK continues to widen.  Over the past 25 years, the top 1% of earners have seen their income rise in real terms by 117%, whereas the incomes of the lowest paid 10% have risen in real terms by only 47%.

As the Coalition government’s benefit cuts come into effect, the incomes of the poorest in society will fall even more relative to the incomes of the highest earners.  Figures released by the UK government in December last year showed that the UK was already the most unequal country in western Europe.  

A recent analysis from the Institute of Fiscal Studies found that that overall the UK government’s tax and benefit changes are regressive, meaning that poorer people will lose a higher proportion of their income than richer people.   According to the report:

“Indeed, the overall package of direct tax and benefit reforms now looks clearly regressive within the first nine decile groups of the income distribution.”  

Commenting, Mr Hosie said:

“George Osborne should not balance the economy on the backs of the poor – including through the iniquitous Bedroom Tax.

“One million households in Scotland will be affected by the real terms benefit cut, and the IFS estimate that affected households, with someone in work, will be hit by £165 per year.

“Changes to Tax Credits will hit 110,000 Scottish households to the tune of £700 per year.

“Child Benefit changes will affect 91,000 households in Scotland, and they will be hit by a whopping £1,400 per year on average.

“Last year’s Autumn Statement showed that as a result of the tax rises and welfare cuts being introduced, average household incomes are expected to fall by £200, or 1%.

“Osborne is sucking millions of pounds out of the Scottish economy, making recovery more difficult and undermining a return to growth – a Yes vote in 2014 would enable us to make these important decisions in Scotland’s best interests.”