10.4m UK households – more than one in three, 26 million me, women and children – will be left on average £150 poorer than they are today. Worse still, this loss will be concentrated on families already struggling, or even failing, to get by: those at or below the UK’s poverty line.What’s more, this year won’t be the first time those families have had money snatched from them: it is the fifth in a row. The reason isn’t a new tax, or unemployment, or universal credit. It’s the benefits freeze.
Usually, each year, anyone receiving a working-age benefit – which includes working and child tax credits, which prop up low wages for households that need it – gets an increase in line with whatever the level of inflation is each September.
This week, September’s inflation was announced at 2.4%, meaning that, on average, everything is 2.4% more expensive than it was a year ago. If the rate continues about that level, in the coming year you’ll need 2.4% more money just to afford to buy the same things. An increase to benefits in line with that amount would be what you would need just to stand still.
Ever since 2015-16, the Conservative government has instead “frozen” these benefits – a false term, given that in reality each year these families are seeing their incomes cut. For next year, the well-respected Institute of Fiscal Studies (IFS) estimates the average hit to income at £150.
But the cumulative effect of five years ends up much higher, at something in the region of £700 to £800, taken from families who were hardly finding it easy to get by in 2015. Even for those in work, the relatively fortunate ones, wages are yet to return to their pre-financial crash levels, meaning the government has imposed a devastating double whammy on the people least able to cope with it. The government did not need to take this money from low- and middle-income families. It made a choice, and has all but escaped condemnation for doing so. What amounts to a large-scale robbery has received hardly a fraction of the scrutiny universal credit has rightly garnered.
This does save the government a fairly significant amount of money. The IFS estimates the freeze next year will save about £1.6bn, instead of allowing benefits to rise in line with inflation. Keeping that freeze year after year – as the Conservatives have done – compounds these savings, meaning the measure has now probably reduced government spending by about £8bn a year.
Ever since entering government, the Conservatives have made a series of cuts to corporation tax, reducing government revenues by between £12bn and £16bn a year – far more than the money saved by the benefits freeze.
It’s also the result of deliberate and sustained demonisation of benefits and the people who live off them – leading to the bizarre situation where it’s easy to cut benefits.
At no point did the Labour Party offer to reverse the benefit freeze and offset its effects. It didn’t even contain the bare minimum: a promise to at least end the freeze and increase benefits to – or, better, above – the level of inflation. Somehow the party of the workers forgot perhaps the most serious financial blight on millions of working families (and those looking for work) – and it has yet to make helping those families its stated policy.
In the UK’s ridiculous current politics, trying to enact a measure that would help 10 million families would be a tough political sell. But right now, no one is even trying to make it. As a result, 10 million families are being made poorer every year, and virtually no one in politics or the media has their corner.
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