Cuts to family budgets bite

Cuts to childcare support alone will leave families up to £1500 a year worse off

Families in Blackburn with Darwen on Wednesday started to feel the real impact of the Conservative-led Government’s decision to cut too deep and too fast as cuts to tax credits, childcare support and child benefit start to take hold.

With family budgets already squeezed by January’s VAT increase and rising inflation Labour is warning that Wednesday’s measures will add to the growing squeeze on millions of families on low and middle incomes – with women and families with children being hardest hit:

  • A total of 570 families people across the Borough who claim support for childcare costs will lose an average of £ 439 a year due to cuts to this support alone, according to independent research by the Resolution Foundation. Some families with two or more children could lose up to £1560.
  • A total of 21,020 families in Blackburn with Darwen will see their child benefit frozen for three years from this month – a real terms cut of £75.40 this year for a family with three children., a total of 39965 children affected.
  • And around 4215 more people on middle incomes in the Borough started paying tax at the 40p higher rate threshold meaning even more families will lose all their child benefit in 2013 – worth £2,500 for a family with three children.

Analysis by the House of Commons Library shows that the changes coming in today, combined with the Government’s VAT rise, will cost a family with three children – and each parent earning £26,000 – over £1,700 a year. This is equivalent to around 5p extra on the basic rate of income tax.

“David Cameron promised to lead the most family-friendly government ever and George Osborne said we’re all in this together. So why are their changes to tax and benefits coming into force today hitting women harder than men and taking so much support from children, with families on low and middle incomes being hit the hardest of all?”

“We’ve been through a global financial crisis – not a recession made in Britain. And like every major economy in the world we now have a big challenge to get the deficit down. So there have to be tough decisions including some spending cuts and fair tax rises like the 50p top rate of tax for the richest and the national insurance rise we proposed last year.

“But as Labour has consistently argued, by making a political choice to cut the deficit further and faster than any other major country George Osborne is going too deep and too fast and putting jobs and growth in Blackburn with Darwen at risk. And he is doing so in an unfair way, giving the banks a tax cut this year while low and middle income families here in Blackburn with Darwen are hit hard

Labour’s shadow chancellor Ed Balls MP added:

“This is a Black Wednesday for thousands of families in the country.

“The Conservative-led government says some families will be better off because of a small cut in income tax. But this change is more than offset by the VAT rise – which the government itself says will cost a family with children an average of £450 a year – and all the other changes coming into effect today. As the independent Institute for Fiscal Studies has said the government is giving a little with one hand, but taking much more away with lots of other hands.

“Cutting too deep and too fast isn’t just hurting families and businesses, it also isn’t working. We’ve now got higher unemployment and slower growth and so the government will actually be borrowing £46 billion more than planned. That’s a vicious circle because with fewer people in work paying taxes, it’s harder to get the deficit down.”

Author: Kate Hollern

Kate is the leader of the Labour opposition group on Blackburn with Darwen Council.

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