Wednesday, January 16, 2013

What is really happening to the poor amid this avalanche of cuts? [Michael Meacher MP]

My own constituency, Oldham West, is one of the poorest in the country.   How are they being affected by the cascade of cuts?   Housing benefit cuts in April will particularly impact on pensioners, families on low incomes, disabled people (many already traumatised by Atos assessments of their alleged capability for work), the long-term sick , and the jobless.   The so-called bedroom tax will hit those classified as ‘over-occupying’ their property.   People with 1 bedroom more than they are supposed to need will have their housing benefit cut by 14%, and with 2 bedrooms more than they need a cut of 25%.   This will affect about 2,000 households in Oldham.   Moving to a smaller property will be difficult because of the housing shortage (there are 8,500 on the waiting list in Oldham) and because of the priority given to homeless people.

A ‘universal credit’ is being introduced which limits the total of all benefits that can be received, including housing benefit, child benefit, income support and all other social income including crisis loans.   This will affect about 200 families in Oldham, will add pressure to already tight budgets for many large families, and will increase the risk of rent arrears.

The Council Tax rebate is now being cut by 10%, but pensioners who are nearly half of these claimants are exempted so that persons of working age will now have to pay 20-25% of their Council Tax bill which is likely to be £3.50-£6 a week.   It is expected that 17,000 people of working age in Oldham will now have to pay this extra amount.   Further, if these extra tax payments cannot easily be collected, it is likely that the outstanding arrears will have to be redistributed to other Council Tax payers. 

In addition the government has just announced, in Osborne’s Autumn Statement last month, that not only is public sector pay being held down to a 1% increase over each of the next 3 years when inflation is running at 2-3% (in other words, after inflation they will be 1-2% worse off each year), but benefits and tax credits are also being restricted each year to the same 1% increase.   That means that a quarter of Oldham’s population is about to suffer, on top of cuts already made, a further cumulative cut in their standard of living.   As a result of all these measures it is estimated that the poorest tenth of households will in cash terms be an average of £3,995 a year worse off, or £76 a week, which is some 32% of their annual income.   It should be noted that many, if not most, of these cuts will affect persons in work since a high proportion of working people today are in poverty, defined as having an income less than 60% of the median wage which is about £390 a week).

The government have also just announced, in the local authority settlement by Eric Pickles, that the 50 Councils with the biggest cuts (including Oldham and Rochdale), where a third of children live in poverty, face spending reductions on average of £160 per head of population.   By contrast, the 50 Councils with the smallest cuts in the prosperous southern shire counties, where child poverty is less than 10%, will have their expenditure reduced by just £16 per head of population.

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Michael Meacher MP
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