A Budget for the “working people” overlooks some of the most vulnerable

Posted by Kate Maher / Friday 10 July 2015 / Cost of living Government spending

Earlier this week The Chancellor delivered his Summer Budget – the first from a majority Conservative government in almost 20 years. The focus was clearly on working families but looking across the different announcements it wasn’t hard to see some groups who haven’t benefitted from this Budget.

Low income families

One of the major announcements in the Budget was the introduction of a new National Living Wage. But will this help children living in families struggling on a low income? The government has said it will help ease the strain on family budgets for those in low paid jobs and account for reductions in tax credits. But, the change to tax credits is likely to have a sizeable impact on families, including those now in line to receive the new National Living Wage. According to the Institute for Fiscal Studies and the Resolution Foundation some of these families could be as much as £1,000 a year worse off.  

"There is simply not enough money going in to the new minimum wage to anywhere near compensate - in cash terms - people on tax credits"

Paul Johnson, Director of the IFS

Families not in work

Although the emphasis was on working people there wasn’t much in the way of action to address the challenges faced by parents seeking employment or those not able to work.  We know that a well-paid job can make a big difference to parents and their children, but, the four-year tax freeze on working-age benefits and the lowering of the benefits cap will make it far more difficult for the poorest parents to get and this will affect their children For example, children who care for severely disabled parents or children in lone parent families who have to balance childcare with work that pays. Some may no longer be able to afford the rent leaving them little choice but to uproot and possibly move away from friends and family they rely on for support. 

Young people

For young people this was not a budget to cheer. Far from it. Two and a half million people will get a pay rise through the new National Living Wage but under-25s will miss out. Thousands of students who would have received a maintenance grant to help with the cost of further education will have to take loans which will be a hit to many young people’s aspirations.

Not only that, 18 to 21-year-olds will lose their entitlement to housing benefit. There will be exemptions for the vulnerable, but no concrete details of which young people will be exempt, and even fewer details on how the system will now work to ensure the exemptions work in practice.

Young people receiving out of work benefits will also soon have to find either training or a work placement within six months under the new Youth Obligation. If they don’t they will lose their benefit payments. These are a combination of changes that could really hit young people hard. Including some of the most disadvantaged.

Each of these groups got far less attention in the post budget analysis than they should have. We work with low income families and vulnerable young people every-day and know how tough things can be for them. They can face huge challenges they need to overcome to find work and go on to live happy, fulfilled lives. They need as much help and support as everyone else. Unfortunately, it was these groups that the budget overlooked. 

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