Coalition’s policies hammering hard-working families, says Usdaw

Date: 7 January 2013

The Coalition’s Benefits Uprating Bill to be implemented tomorrow (8 January) will cost families with two children more than £1,000 in the next three years, says shopworkers’ Union Usdaw.

The 1% cap on increases to tax credits and child benefit at a time when inflation is predicted to be between at least 2-3% will make a massive difference to families on low and middle incomes.

"These are the cruellest of cuts at a time when families are struggling to make ends meet," said General Secretary John Hannett. "How can the Coalition justify taking money out of the pockets of families on low incomes who rely on in-work benefits to provide the basic necessities for their children."

Usdaw's calculations show that by 2015-16, a family with one child will have lost £784, those with two children will lose £1,091 and families with three children a massive £1,398 as their tax credits and child benefit fail to increase with the cost of living.

Families on low and middle incomes have already lost out from previous freezes for three years to Child Benefit and Working Tax Credit.

The Treasury has admitted that a lone parent or a couple with one parent working full-time on the minimum wage would receive £660 less in Working Tax Credit from April 2013 than they would have done if tax credits had continued to rise in line with RPI (note 3) and that a family with two children will have received over £500 less in Child Benefit by April 2014 due to the freeze (note 4).

Usdaw's General Secretary John Hannett is very concerned at the impact the changes will have on Union members and working people throughout the country,

"Working people on low and middle incomes have already borne a disproportionate cost from the Government's cuts. The freeze on Working Tax Credit and on Child Benefit has already substantially cut the incomes of working people at a time when the cost of basic necessities like food and fuel has been rising so sharply.

"Many of our members are reporting that they struggle to afford to feed their families and heat their homes. That cannot be right for people who are already working as many hours as they can.

"The further cuts announced in the Benefits Uprating Bill are a kick in the teeth for working people that will fill many households with despair. Our members cannot understand how this Government can give a tax cut to millionaires at the same time as cutting the support that working people rely on to keep them above the breadline."

Paul, an Usdaw member from Kent who lives with his partner and two children aged four and two, works on the night shift in a warehouse to support his family, said:

"My pay isn't brilliant. It just about covers our outgoings and like most families at the minute, we need our tax credits to get us through week to week. My partner and I are really worried about the changes and that we will not be able to afford to live.

"My family and families like mine are urging the Government not to crucify working families. Right now, it is a big enough struggle. If these plans to cut tax credits over the next couple of years go ahead, then I worry that I will be forced into joining the queue at my local job centre because I would be better off."

Notes to Editors:

  1. Usdaw (the Union of Shop, Distributive and Allied Workers) is the UK's fourth biggest and fastest growing trade union with over 420,000 members. Membership has increased by more than 17% in the last five years and by nearly a third in the last decade. Most Usdaw members work in the retail sector, but the union also has many members in transport, distribution, food manufacturing, chemicals and other trades.
  2. Hansard 18 Dec 2012: Col 688W
http://www.publications.parliament.uk/pa/cm201213/cmhansrd/cm121218/text/121218w0001.htm#12121870000235
  3. Hansard 18 Dec 2012: Col 685W
http://www.publications.parliament.uk/pa/cm201213/cmhansrd/cm121218/text/121218w0001.htm#12121870000235
  4. The Benefits Uprating Bill confirms that:

In 2013-14:

  • Child Benefit and the basic and 30 hour elements of Working Tax Credit will be frozen
  • The couples & lone parents element of Working Tax Credit and the Child Tax Credit will rise by 1%

In 2014-15 and 2015-16 Child Benefit and all elements of Working Tax Credit and Child Tax Credit will rise by 1%

Families with 1 Child

Year

Loss from

Tax Credits

Loss from Child Benefit

Total Loss

2013-14

- 115

- 23

- 138

2014-15

- 230

- 39

- 269

2015-16

- 325

- 52

- 377

Total

- 670

- 114

- 784

Families with 2 Children

Year

Loss from

Tax Credits

Loss from Child Benefit

Total Loss

2013-14

- 150

- 40

- 190

2014-15

- 310

- 65

- 375

2015-16

- 440

- 86

- 526

Total

- 900

- 191

- 1,091

Families with 3 Children

Year

Loss from

Tax Credits

Loss from Child Benefit

Total Loss

2013-14

- 185

- 57

- 242

2014-15

- 390

- 91

- 481

2015-16

- 555

- 120

- 675

Total

- 1,130

- 268

- 1,398

Comparisons have been made against increases by the Consumer Prices Index (CPI) for couples or lone parents receiving Working Tax Credit 

For 2013-14, CPI was 2.2% in Sept 2012

The OBR estimate CPI at 2.5% for 2014-15 and 2.2% for 2015-16.