Category: Budget

Cuts under Universal Credit are discriminatory and may be illegal

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The Labour Party released details of research last month, showing how new claimant families will get lower in-work benefit entitlements when tax credits are replaced by the Universal Credit benefit system.

Owen Smith, the shadow Work and Pensions secretary, said research commissioned from the House of Commons library shows that next year, thousands of working families will be at least £2,500 a year worse off as a result of the government’s cuts to Universal Credit.

Mr Smith MP, responding to Iain Duncan Smith’s recent claim on the Andrew Marr show that “nobody loses a penny” from cuts to Universal Credit, said:

Iain Duncan Smith is completely wrong to say nobody loses a penny from his cuts to in-work support.

 Cutting Universal Credit raises £100m for the government next year and that money has to come from somewhere.

What the Tories aren’t telling us is that the £100m – and a further £9.5 billion over the next five years – comes from the pockets of low- and middle-income families.

That means those currently on Universal Credit face losses of up to £2,400 come April.

Just like tax credit cuts, working families will be worse off next year and just like those cuts, Labour will fight them at every turn.

Earlier this month, analysis from the independent Office for Budget Responsibility, (OBR) suggested the changes to universal credit announced in the July budget would save the Chancellor close to £3bn by 2019-20.

The Labour Party is taking advice from lawyers about the legality of the benefit cuts under universal credit. Owen Smith, the shadow work and pensions secretary, said it is discriminatory that a single mother working full-time on the minimum wage could be almost £3,000 worse off under universal credit than a mother in precisely the same circumstances on tax credits.

The challenge raises the possibility that the new welfare system could be challenged in court.

Although the Chancellor abandoned plans to cut tax credits affecting millions of working families, in his Autumn Statement, it was due to  pressure from the opposition, because the cuts were rejected by the House of Lords and a number of uneasy Tory backbenchers also raised concerns about the negative impact the cuts would have on working families.

Labour MPs have highlighted that claimants will be substantially worse of claiming Universal Credit, the  in-work benefit payments are much lower.

In his autumn statement speech, the Chancellor said: “The simplest thing to do is not to phase these changes in but to avoid them altogether.” But he added: “Tax credits are being phased out anyway as we introduce universal credit.”

The OBR’s analysis show that by 2021 the changes to Universal Credit will save the Treasury almost as much each year as the controversial tax credits policy would have done.

Mr Smith said:

Those lucky enough to stay on tax credits will be massively better off than those on universal credit … That disparity cannot be fair, it cannot be right and it may not even be legal, and we are seeking advice as to the legality of that move.

Mr Smith also confirmed that a Labour government would reverse cuts to benefits happening under Universal Credit. He said:

We will press for the same reversal for the victims of the universal credit heist that will hit precisely the same Tory and Labour constituents just before the next election.

He made the comments in a debate about the welfare cap, after the government sought approval for a motion that said the breach of Osborne’s own fiscal rules were justified because of the reversal of tax credit cuts.

Junior Work and Pensions minister, Shailesh Vara, has confirmed that on current forecasts the cap will not be met for three years.

Universal Credit is to be rolled out gradually, with about 500,000 people on the new benefit by next April. The government has insisted they will be compensated for lower payments through a special scheme called the flexible support fund.

However, Owen Smith said the only money on offer was a £69m grant for job centre managers to help people who are close to getting into work with costs such as bus fares and new clothing.

He said:

Even if it were permissible to use that money, it is in no way going to make up for the £100m shortfall next year, the £1.2bn shortfall the year after, and certainly not the £3bn shortfall in 2020. It is completely impossible and I fear it is also misleading to the public.

Mr Smith also queried the Chancellor’s absence from the House of Commons during the debate, saying he had “carelessly, ignominiously fallen into his own welfare trap” and “slipped on his own smirk”.

He said:

But inexplicably, he’s not here to account for it. Last spring he was quite definite that he should be. He said: ‘The charter makes clear what will happen if the welfare cap is breached. The chancellor must come to parliament, account for the failure of public expenditure control’”.

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Conservatives in disarray as Osborne signals raid on Duncan Smith’s Universal Credit funds

Chancellor George Osborne

George Osborne and Iain Duncan Smith have clashed over the chancellor’s plans to soften the impact of tax credit cuts by raiding the budget for Universal Credit.

The Centre for Social Justice (CSJ), which was founded by Iain Duncan Smith, insists that the Chancellor could use this month’s Autumn Statement to ease the impact of the controversial changes without risking his drive for a budget surplus.

In a critical report, the thinktank warned against taking money from Duncan Smith’s flagship Universal Credit scheme to sweeten the tax credit pill. Duncan Smith said that he’s concerned that the raid will serve to “undermine people’s incentive to work.”

The CSJ said in their report that the UC reforms meant by 2020 only 9% of those currently getting tax credits would still be receiving them.

Instead, it was suggested that the Government could “help people to work more hours” or introduce a transitional fund for those hardest hit.

But Osborne is nonetheless preparing to fund plans to soften the impact of tax credit cuts by making people claiming Universal Credit forgo as much as 75p of every extra pound they earn. At present Universal Credit recipients lose 65p for every extra pound they earn. Osborne is thought to be examining plans to increase the figure, known as the “taper”, to 75p.

The most expensive course of action would be to only impose the tax credit cuts on new claimants – but the authors note that it would have the “least social and political cost”.

The chief executive of the Centre for Social Justice, Baroness Stroud, who is a former special adviser to the Work and Pensions Secretary said:

“There are no easy choices, but these are the options the Chancellor has. What he should not do is raid Universal Credit to pay for any transitional changes or he will be recreating the same problem there.

“The projected savings through changes to tax credits is £4.4 billion, the Government plans to turn a surplus of £10 billion in 2019-20 and of 11.6 billion in 2020-21.

“Why have a surplus if we can’t protect those on the lowest pay, doing the right thing by taking work?

“The Chancellor can protect these workers and have a surplus by 2020.

“This Government is set to achieve its historic aim to make sure work always pays more than welfare, we shouldn’t put that at risk.”

Paul Johnson, the Director of the respected Institute for Fiscal Studies, questioned whether the move would raise enough to limit the impact of tax credits. He said: “If you are also increasing the taper rate then you are losing quite a lot of the key design of Universal Credit.”

Both the Treasury and the Deparment for Work and Pensions have declined to comment, but Conservative Tim Montgomerie, a columnist for The Times and founder of the Conservative Home website, said he believed George Osborne “could be forced to resign” over his tax credit omnishambles, and he warned that the chancellor faces a “massive rebellion” from his own party because the policy  is “terrible politics”.

“You cannot fight an election saying you are standing up for hard-working families then you cut benefits for hard-working families,” he said.

Perhaps it is time for the Conservatives to recognise that policies are not an ideological tool designed to ensure the government gets its own way in exercising traditional Tory prejudices towards the working and non-working poor.

However, in fairness there has been a series of right-wing backbenchers that have aired their disquiet at the cuts, although that unease may have be motivated by a pragmatic rather than an any ethical objection. The proposed tax credit cuts do make a mockery of the Tory claims to ensuring that “work always pays,”and presents the public with an incoherent narrative that has now lost any credibilty.

Montgomerie said:

“I don’t think George Osborne will tweak,” he said. “If he does just try to get away with this, he will not just be defeated in the Lords, he will be defeated in the Commons.”

539627_450600381676162_486601053_n (2)Courtesy of Robert Livingstone

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This post was written for Welfare Weekly, which is a socially responsible and ethical news provider, specialising in social welfare related news and opinion.

Jeremy Corbyn confronted the Tories with the poverty they’re creating at PMQs – and all they could do was laugh – Liam Young

Originally published in the Independent by Liam Young.

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The Tories seem to forget that they were the last government – at some point they will have to take responsibility for their handling of the nation.

As Jeremy Corbyn stood for his second PMQs today, the mocking Tory laughs told us everything we need to know about their enduring Bullingdon Club-style politics. Old habits die hard, it seems. But Corbyn opened strongly, with an issue that unites the Labour party: the cuts to working tax credits which penalise the lowest earners, known colloquially as the Tory work penalty.

Again, the Tories laughed at the name ‘Kelly’, so apparently unbelievable do they find the first names of Corbyn’s constituents; they soon fell silent, however, as they heard of her struggle as the mother of a disabled child earning minimum wage in a 40.5-hour-per-week job. Corbyn tackled the bullyboys by pausing at their laughter this time. ‘Some may find this funny,’ he said, as he continued to talk about mass inequality and the housing problem in London. It was a subtle highlight of something glaringly obvious: for millionaires protected by Tory policies, inequality bolstered by unfair taxes and buy-to-let properties really is hilarious.

Cameron’s reply to the work penalty issue was the same old line: apparently a £20-a-week increase in wages will magically solve the problem. This is not true, of course, as Corbyn promptly replied: working families are set to be £1,300 a year worse off as the Conservative government hammers the working and middle classes so as to give to the super rich.

Cameron claimed that Corbyn’s figures on poverty were wrong, but perhaps that is something to do with the fact that the Work and Pensions Secretary fixed the definition of ‘poverty’ recently. You don’t feed and clothe homeless children by changing a definition, and the government should be ashamed. The fact that 50 per cent of wealth is in 1 per cent of hands globally is shambolic, and reports today that inequality is growing in the UK even as our country now has the third most ‘ultra-high net worth individuals’ in the world put paid to Cameron’s claims to have driven opportunity. There could be no bigger proof that his policies continue to squeeze the middle and punish the poor.

Jeremy Corbyn probably had a headache even before PMQs started. George Osborne’s proposal of a ‘fiscal charter’ has been causing problems for Labour over the last few days, not least because it was once a Labour policy rubbished by Cameron himself. It seems strange, then, that Tories are so desperate to implement it now, considering that the Governor of the Bank of England has not endorsed its proposal and no economist has come out in support of it. Most commentary has focused on how it is unrealistic to try and tie the hands of future governments – almost as though Osborne is trying to make an ideological (and erroneous) point about how Labour ‘caused the recession by their overspending’, rather than the truth about rich bankers running wild without regulation. Of course, it also gave Osborne an excellent opportunity to personally ask Labour MPs to rebel – little more than a cynical attempt to ruffle some feathers.

In June, over 70 economists published a letter that clearly noted that the charter has ‘no basis in economics’ and that permanent surplus would increase the debt of households and businesses. The policy is not about protecting the British economy; it is an attempt to bury the Labour party under the same message of the last government. The Tories seem to forget that they were the last government – they have been in power now for almost six years, and at some point they will have to take responsibility for their handling of the nation.

Despite all this, PMQs today were the best moment of Corbyn’s leadership of the Labour party so far. Osborne’s attempt to destabilise the Labour party and force Labour MPs to rebel spectacularly failed, while Corbyn asked if he could bring the Prime Minister back to reality as Tory rhetoric failed against his grassroots facts.

Cameron wants to get Britain building houses, he wants to alleviate poverty, and he wants to rebuild the economy – or so he’d have you believe. In the last five years, house-building has stalled, poverty has increased, inequality appears to be rising and the national debt has doubled. At some point, the Tories have to stop blaming Labour for their own disastrous record. Corbyn is now attacking their mythology head-on – and he might just be getting somewhere. 

Liam Young is a freelance political journalist studying international relations at the LSE

Austerity Is a Choice, Labour Must Offer Another – Jeremy Corbyn

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Austerity is a political choice not an economic necessity. When the Chancellor rose to his feet at the emergency Budget in July, and when he does so for his Spending Review in October, what is being put forward is an ideologically-driven rolling back of the state.

The analysis published today by the TUC reveals how the Budget gives money to the rich, but takes away from the poor.

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This is the Conservative project, dressed up in the post-crisis language of budget deficits and national debt for extra impetus. Inequality doubled under the Thatcher government, and her heirs seem to be doing all they can to ensure that legacy is extended.

The Budget showed austerity is about political choices, not economic necessities. There is money available: the inheritance tax cuts announced in the Budget will lose the exchequer over £2.5billion in revenue between now and 2020. What responsible government committed to closing the deficit would give a tax break that only applies to the richest 4% of households?

The Conservatives are giving away to the very rich in inheritance tax cuts twice as much as reducing the benefit cap will raise by further impoverishing the poorest, and socially cleansing many towns and cities.

Another choice was to cut UK corporation tax to 18%, which at 20% is already the lowest in the G7, lower too than the 25% in China, and half the 40% rate in the United States.

The Treasury estimates that this political choice will see our revenue intake from big business fall by £2.5billion in 2020. That’s nearly twice the amount saved by cutting the tax credits available families with more than two children.

In such circumstances, Labour must be clear: we oppose the Budget, and we oppose austerity. As a group of 40 economists wrote to the Observer a few weeks ago, “opposition to austerity is actually mainstream economics, even backed by the conservative IMF”.

The language of “bringing down the deficit” is non-controversial, it is the method (austerity) that reveals the Chancellor’s agenda as just a cover for the same old Conservative policies: run down public services, slash the welfare state, sell-off public assets and give tax cuts to the wealthiest.

I stood in this race because Labour should not swallow the story that austerity is anything other than a new facade for the same old Conservative plans.

We must close the deficit, but to do so we will make the economy work for all, and create a more equal and prosperous society. Bringing down the deficit on the backs of those on low and average incomes will only mean more debt, more poverty, more insecurity, more anxiety and ultimately more crisis.

We must invest in a more productive economy. Our national infrastructure – energy, housing, transport, digital – is outdated, leaving the UK lagging behind other developed economies. In the Budget, the Chancellor cut back public investment even further.

You cannot cut your way to prosperity. We need to invest in our future. And that takes a strategic state that seeks to shape the economy so that it works for all.

That is the choice for Britain and the choice that Labour must offer.

Jeremy Corbyn is the Labour MP for Islington North and Labour Party leader.

This article was originally published on 7.09.15

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Pictures courtesy of Robert Livingstone

 

The Psychological Impact of Austerity – Psychologists Against Austerity

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A recent report from the Psychologists Against Austerity collective directly links cuts to public services with mental health problems.

Well-established psychological research that explains these links already exists. However, this knowledge has been missing from the debate on austerity so far.

Psychologists are often in a position to see the effects that social and economic changes have on people. We also occupy a relatively powerful position as professionals and therefore have an ethical responsibility to speak out about these effects.

Introduction

The Coalition government since 2010 has implemented a program of cuts to public services and welfare that has disproportionately affected  the most vulnerable people in our society in the name of ‘Austerity’. Measures like the bedroom tax, cuts to disability benefits, the introduction of Universal Credit and cuts to local government, social services and NHS budgets have been presented by the Coalition as necessary to the UK’s economic recovery.

Ideas like ‘the nation has maxed out its credit card’ and austerity as a painful but necessary medicine have been used to frame these policy choices as unavoidable and moral.

We argue that recent cuts are both avoidable and immoral. As psychologists we are often in a position to see the effects that societal and economic conditions have on people.

Psychologists also occupy a relatively powerful position as professionals with access to resources like theory and research and therefore have an ethical responsibility to speak about these effects. Indeed, according to the British Psychological Society (BPS) code of ethics, part of the standard for competence is sensitivity to developments in our social and political context.

It is imperative to take into account the psychological costs of austerity for individuals and communities. Psychological impacts of recent austerity policies have been little discussed in media and policy debates, yet there is clear and robust research linking recent austerity policies with damaging psychological outcomes.

Work at an epidemiological level on social determinants of health like the Marmot Review and The Spirit Level shows robust evidence for the effects of social inequality on health, including emotional well-being. Mental health problems are associated with markers of low income and social economic status in all the developed nations, no matter which indicator is used. There are indications of higher levels of mental health problems following austerity, with a rise in antidepressant prescriptions, and GPs reporting increasing numbers of mental health appointments, and a rise in male suicides.

Since the financial crisis, suicides have increased in European countries that have adopted austerity policies (UK, Greece, Spain and Portugal), but not in those who have protected their welfare state (Iceland and Germany). In this paper, we assume that the emotional well-being of societies and individuals is determined by multiple factors that interact with each another. These include economic, societal, familial, psychological and biological influences.

We use the terms ‘emotional well-being’, ‘distress’ and ‘mental health problems’ rather than ‘mental illness’. This is because there is disagreement about whether emotional difficulties are best understood as a product of individual pathology, or a consequence of toxic environments and difficult life experiences. We use diagnostic terminology as a proxy for a wide range of experiences of distress, which are biographically unique. As psychologists, we believe that the diagnostic and medical understanding of ‘mental illness’ often neglects socioeconomic context.

As Lynne Friedli says:

“Mental health is produced socially: the presence or absence of mental health is above all a social indicator and therefore requires social, as well as individual solutions.”

Psychological research provides evidence for some of the wide range of pathways by which increasing social inequality and austerity increase emotional distress. In this paper, we have outlined well-established pathways to short and long term psychological damage from austerity policies; we have called these ‘austerity ailments’.

They are:

  • Humiliation and shame
  • Fear and distrust
  • Instability and insecurity
  • Isolation and loneliness
  • Being trapped and powerless

Key conclusions

Austerity policies have damaging psychological costs. Mental health problems are being created in the present, and further problems are being stored for the future.

We have identified five ‘Austerity Ailments’. These are specific ways in which austerity policies impact on mental health. These experiences have been shown to increase mental health problems. Prolonged humiliation following a severe loss trebles the chance of being diagnosed with clinical depression. Job insecurity is as damaging for mental health as unemployment.

Feeling trapped over the long term nearly trebles the chances of being diagnosed with anxiety and depression. Low levels of trust increase the chance of being diagnosed with depression by nearly 50 per cent.

These five ‘ailments’ are indicators of problems in society, of poisonous public policy, weakness of social cohesion and inequalities in power and wealth. We also know what kind of society promotes good health.

Key markers are that societies are equal, participatory and cohesive.

Some important indicators of a psychologically healthy society are:

1. Agency
2. Security
3. Connection
4. Meaning
5. Trust

Mental health isn’t just an individual issue. To create resilience and promote wellbeing, we need to look at the entirety of the social and economic conditions in which people live.

Implications and recommendations

The evidence presented in this report indicates that a range of key psychological experiences can be directly linked to public policy, and are sensitive to macro social and economic changes.

It is therefore crucial that policy makers and service developers consider the psychological impacts of current and future policies. Creating the conditions for wellbeing and resilience directly helps to prevent distress in the short and long term, thereby saving resources and reducing suffering.

 We call for:

  • Social policy that works towards a more equitable and participatory society, to facilitate individual well-being, resilient places, and strong communities.
  •  Policy makers to take into account the psychological impacts of macro social and economic changes.
  • A social security system that empowers and supports, rather than punishing people in times of need.
  • Public services to increase focus on preventing distress, improving citizen participation and social justice, as well as help facilitate the five positive indicators above.
  • Co-production to be one such model of public service reform. This approach harnesses individuals’ and communities’ assets and expertise rather than viewing them just as passive recipients of and burdens on services.
  • A community-led approach to mental health and emotional wellbeing that develops collective responses to individual needs and by doing so works to strengthen communities and build on communal resources.

You can read the full briefing paper here.

 

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Benefit cuts “will involve cuts to benefits” shocker

imagesBy Private Eye Political Correspondent Noah Surprise.

There was widespread shock across Britain today that the £12 billion of welfare cuts promised in the Tory election manifesto would turn out to be £12 billion of cuts to the welfare budget.

“We definitely didn’t think these 12 billion worth of cuts would involve people like us,” said one first-time Tory voter, having her child tax credits halved.

“We thought it would only affect those wretched people on those awful benefit shows on Channel 4.” https://upload.wikimedia.org/wikipedia/en/b/bb/Benefits_Street.jpg “We feel utterly betrayed by the Tories,” said another father, who is having his family working tax credits slashed.

“Why didn’t Osborne say these 12 billion worth of cuts would affect me? I naturally assumed it would hit people in the North, guests on the Jeremy Kyle show and muslims. That’s why I voted Tory.”

George Osborne has insisted he’d worked hard to ensure that the cuts to benefits were spread evenly between those people most likely to vote Labour and those most likely to vote Lib Dem.

539627_450600381676162_486601053_n (2)Courtesy of Robert Livingstone

See also:

Budget 2015: cuts to make Daily Mail readers wince, but not just yet

The budget: from trickle-down to falling down, whilst holding hands with Herbert Spencer

And finally, a timely reminder of Martin Niemöller’s words on the ultimately self-destructive complicity of bystander apathy, because despots never simply attack and persecute the group of your choosing:

Child protection must not be used for dealing with the symptoms of increased poverty

imagesSocial work academics discuss why we must pause to evaluate the growing need for child protection services amidst austerity.

Authors: Brigid Featherstone (The Open University), Anna Gupta (Royal Hollway, University of London), Kate Morris (The University of Nottingham), Jo Warner (University of Kent), Sue White (University of Birmingham).

According to a recent report by the Joseph Rowntree Foundation, 39% of people in households with children now live below the Minimum Income Standard. The figure has risen by over a third since 2008/09.

Families with children are now at greater risk than any other group of having an inadequate income and the number of homeless families living in bed and breakfast accommodation has risen by 300% over the last five years as a direct result of austerity.

Humiliation, shame, fear, distrust, instability, insecurity, isolation,  loneliness and feelings of being trapped and powerless are widespread features of the social and emotional landscapes of individuals and their families in a world of benefit sanctions, zero hours contracts and precarious housing.

Small wonder that relations between family members, including those between parents and their children, can become increasingly fraught in such circumstances.

Child protection need rising

Meanwhile, figures published last week in CYP Now, using official statistics and new figures obtained under an FOI, show the number of children being looked after by the state rose by 8% under the coalition government. The number of children placed on child protection plans rose by 33% while the number of Section 47 inquiries rose by a staggering 42%.

The links between poverty and a child’s chances of becoming subject to child protection processes or being looked after are undeniable according to the international and national research.

A child in the most deprived decile of neighbourhoods nationally has an 11 times greater chance of being on a child protection plan and 12 times greater chance of being a looked after child than a child living in the most affluent decile.

‘Wholly inappropriate’ use of child protection

We hear regularly about the impact of reduced services and benefit cuts on the capacity of families to cope and to care.

We hear of cash strapped local authorities who do not have the services to support families within communities.

We are, therefore, increasingly concerned that the child protection system is being used in a wholly inappropriate way to deal with the consequences of austerity and of policies that are depriving children and their families of food, housing and basic support services.

The effects of austerity are exacerbated by the continued existence of a risk-averse climate despite increasingly heroic efforts by local authorities to develop more strengths based approaches.

‘Long on blame, short on help’

Thus, families are experiencing practices that are long on blame and short on help in too many instances as a recent conference organised by the Transparency Project, involving lawyers, other professionals and family members, discussed.

The policy commitment to adoption, reaffirmed in recent days, is extremely worrying in a context where many birth families are unable to access what is needed in terms of material, emotional and social supports to care safely.

This is leading to increased concern across the sector and, indeed, more widely.

Pause for thought

Individual court rulings have drawn attention to judicial comments where social workers have been asked to think again about the importance of relational bonds and children’s identities and to desist from social engineering, and the UK has been specifically criticized this year by the Council of Europe for its removal of children from women who have been subject to domestic abuse, or who are suffering from depression (Report 1 Committee on Social Affairs, Health and Sustainable Development, 2015).

Such women are particularly vulnerable in the current climate where services for domestic abuse are very stretched.

The evidence is mounting that we need to pause and make vital links between wider economic and social policies and the harms that children and their families experience. The child protection system must not be a system for dealing with the symptoms of increased impoverishment.

Article first published on Community Care.