Thursday, 31 January 2013

The Tax & Cut Time Bomb: April Showers Pain on the Poor




In the UK, the month of April is normally associated with torrential showers of rain.  In April of 2013, this month will be remembered for torrential showers of pain from the corporatized state's imposed punitive measures on the poorest people in the land.  Today’s article leads you through the unprecedented state abetted impoverishment of the nation.

The New Poll Tax


As of April, anyone currently claiming Council Tax benefit will see a rise in their annual council tax bill of up to £600 a year.  The central government has renamed the benefit Council Tax Support, cut the amount available by an arbitrary 10% and passed responsibility for administering it down to local councils.  This is the state equivalent of lighting the fuse of a poverty bomb and dropping it into the lap of local decision makers.

Council Tax Benefit currently supports 5.9 million UK households, 3.2 million of which are working age.  It is payable to pensioners, the disabled, people in low paid jobs and people unemployed through circumstance or sickness.  The government has stated that existing support must be retained for pensioners, but is providing no such stipulation for any of the other groups.  In fact, it will be single parents who work part time and require childcare who will be worst hit, with a possible 333% increase in the council tax contributions. 

The stated purpose of the cut is to reduce the current Council Tax Benefit bill by 10%, and is in no way based on the reality of the need for the support by the groups who currently rely on it.  The Resolution Foundation published its report No Clear Benefit on the changes this morning claiming it in effect sets a tax rate of 81p in the pound for the lowest paid workers in England. 

The devolved Welsh Parliament is absorbing the 10% cut entirely, whilst Scotland is splitting the cut between Central and Local government to make it easier to abate the impacts on constituents.  No such compassion has been showed by central government in England.

Gavin Kelly, the Resolution Foundation's chief executive, said: "Millions of England's poorest households… are already very close to the edge given falling wages, tax credits and benefits. Very few of those currently exempt from paying the full rate of council tax are expecting a large new bill to drop on to their doormat this spring. When it does, they are going to find it hard to cope."

The Bedroom Tax


In the same month, the Coalition’s infamous Bedroom Tax kicks in.  The Bedroom Tax stipulates that anyone claiming housing benefit faces cuts in their payments relative to the ‘under occupancy’ of their home.  If they class you as having one room more than needed, you lose 14% and it rises to a 25% cut if you’re classed as having two.  To anyone familiar with being poor, losing between £520-1300 a year means choosing between eating three meals a day and having the heating on for an hour in the evening. 

Do we really, as a nation, need to add to the suffering of a grieving family, the burden of making this kind of decision?

Inside Housing report that the plan will impact 660,000 social housing tenants, around two thirds of which will contain a person with a disability.  

Universal Credit and the Benefit Caps



April will also see the launching of Universal Credit.  Universal Credit will also be capped at £26,000 a year.  This cap will apply to all the benefits now rolled in to Universal Credit.  These include: Housing Benefit, Income Support, Job Seekers Allowance, Employment and Support Allowance, Child Benefit and Child Tax Credits, Carers Allowance, Maternity Benefits and Widows Benefits. 

These are the benefits that help people support sick, elderly and disabled loved ones; that help support disabled people to find and maintain jobs; that ensure poor children and poor families are supported whilst working; that women can take time to prepare for and recover from giving birth to their children and be home to take care of their newborn children; that bereaved pensioners are supported.

Barriers to Making Claims

The Universal Credit places un necessary barriers in the way of people claiming social security.  It means where historically some benefits relating to children were paid directly to women (a saving grace for women in relationships with abusive, alcoholic or drug dependent partners) they will now be paid together, to just one partner.  The system is also only claimable online and payable into a bank account, requiring people not only to have access to a computer and be computer literate, but also have a bank account to be able to make a claim. 
This is simply fantasy, which is exactly what service providers on the front line are saying to the Department of Work and Pensions, but sadly this has all fallen on deaf ears. 

A False Cap & Propaganda
The Government has cynically branded this cap as some sort of principled stand for the working poor of England.  They say that no one on benefits should receive higher payments per year than the average wage after tax.  While this makes a great sound byte, particular when couple with the kind of appalling ad campaigns below, there is more to the story.


The reason benefits are rising higher than wages in the UK is because corporations have ceased to pay a living wage to a vast amount of UK workers.  For some time, the state system has been protecting the working poor from this reality.  

The reason benefits have risen higher than wages is not because they are some sort of sop to the masses; it is because they have risen with the true cost of living.  Wages on the other hand, have not.

A government worth its salt, who truly wanted to support the rights of the working poor, would be addressing the fact the companies have ceased to pay a living wage.  Instead, this government has simply taken the safety net away for everyone.

The Impact

A joint report by the Children’s Society and Disability Rights UK on the Inquiry into Universal Credit led by Tanni Grey Thompson concluded up to half a million disabled people could lose out on Universal Credit alone.  These include:
  • 230,000 severely disabled people who live alone, or with only a young carer – usually lone parents with school age children – will get between £28 and £58 less in benefits every week.
  • 100,000 disabled children stand to lose up to £28 a week
  • Up to 116,000 disabled people who work will be at risk of losing around £40 a week.
Between the cuts in tax credits and the Universal Credit, the government itself confirmed that 200,000 children will be plunged into poverty as of April 1 2013.


It’s Raining, It’s Pouring, the Populace is Snoring


This is the nightmare that awaits the sick, the disabled and the poor of our country in April this year. What makes it even worse, is that these groups are already suffering and expanding at an eye watering rate down to the austerity measures already implemented.  Homelessness has risen 26% in the last three years.  Between 2011 and 2012 the number of families forced by poverty and a housing shortage to live in temporary bed and breakfast accommodation rose 44%.  The number of people dependent upon Food Banks has sky rocketed from around 41,000 in 2010 to over 138,000 today.  The government’s response to the fact to this astonishing rise in Food Banks? People cannot afford to eat, they cannot afford a home, and the government is taking yet more away from them claiming the rise in Food Banks is the fault of the poor and them choosing to spend their money on non essential items.

The government tells us that this forms part of their vital austerity programme, and that the UK simply cannot afford to maintain its existing levels of support.  This is simply not true.

The New Poll Tax aims to save the government £1.8bn by 2014/5. The Bedroom Tax aims to save £500m a year.  The Benefit Cap aims to save £290m 2012/3. 

At the same time, the Chancellor gave a tax CUT to the country’s highest earners of £3bn a year. 

This amount alone is greater than ALL the money saved from the hideous schemes outlined above. 

Not only this, but Corporation Tax has been cut by 1% losing the Treasury yet another £920m each and every year that it applies.

Meanwhile Corporations are already failing to pay their Corporation Tax, with Chair of the Public Accounts Committee stating the Corporations are now seeing tax avoidance as a legitimate means of making a profit.

In response, neoliberals and the government will say that this all makes perfect sense.  That cutting government costs associated with social security, and reducing the tax burden on the wealthy and corporations will stimulate growth and the end result will be more jobs and prosperity for all.  
The reality is that by the government’s own measures their policy is failing, as these policies always do.  They fail because they forget that companies only recruit staff and increase wages when their businesses expand, and their businesses expand only when there is a wealthy consumer class able to buy their goods.
Business relies on a public having enough money to buy the things they want, because they have money left over after they have paid for the things they need.

The results?  The deficit of the annual budget is rising not falling.  The national debt of the country is rising not falling.  Unemployment is rising, not falling (with govt massaging official figures by counting those in the government’s work programme, and the under employed as employed).  Underemployment, where people have to take part time jobs because full time jobs are not available, is rising, not falling.  Wages are stagnating.  In the last quarter of 2012, the UK economy did not grow, but shrank by 0.3% raising the likelihood of a triple dip recession…meaning the government coming out of recession, only to fall back into it again three times over in as many years.  This is the slowest ‘economic recovery’ in the UK in over a century.  

This is an not an economic recovery it is a still unfolding economic disaster.  Every new policy of austerity for the poor and tax cuts for the rich that this government rolls out pushes us further into debt and farther from recovery.

I have not even included all of the tax cuts on the rich, or all of the tax rises and service cuts facing the poor in today’s piece.  This is merely a selection to represent to jaw dropping scale of injustice facing the population of the country.

This April, if we do not act, the April showers will rain pain down on the poorest of the land with a force like Britain has not seen this side of World War II.  We need to mount the fight back now, because come April, the showers begin and with them the dampening of the dreams of a generation.

2 comments:

  1. Thank you very much for summarising - so clearly - the changes that are being forced on us (these were never in the manifesto of the Tories or the DibLems). And, most particularly, for illustrating the impact these cuts are going to have on the poorest and most vulnerable members of society.

    As a writer and activist you will, I hope, recognise that the following points of criticism are intended to be positive. Your use of language, when referring to some sections of society, is perhaps not as constructive as it might be; e.g. the use of the definite article implies one cohesive group, as in "the disabled" or "the elderly" as opposed to "disabled people" or "older people".

    Also " ... sadly this has all fallen on deaf ears" reinforces the misconception that D/deaf people are not receptive to information. Clearly, this is not the case. Perhaps indifferent, unconcerned or contemptuous would better describe the DWP's attitude towards service providers and their concerns?

    I hope you find the following language code a useful source of information:

    http://www.disabilitybackup.org.uk/language.php

    Again, thank you for bringing wider attention to this awful situation that we face.

    ReplyDelete
  2. Thanks so much for your comments JLT and I can certainly pause to consider how my choice of language might alienate the very groups of people I intend to support. I will definitely take these comments on board and consult the vocabulary reference you have provided to ensure I avoid such mistakes in the future. I assure you no offence was intended, but that it could be caused regardless is something I accept full responsibility for. We live and learn. Thanks for taking the time to point this out with care and offer me guidance and the opportunity to reach more people in the future.

    ReplyDelete

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