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UK’s austerity drive set to hit millions of poor people
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MONEY was already tight for single mother Nicola Marshall and looks set to get tighter in a new austerity drive in Britain that will affect millions of low-paid workers.
“There’s going to be people out there who simply don’t have money to spare,” said the 37-year-old part-time office worker, who relies on tax credits to top up her 11,000-pound (US$17,000) a year salary.
Britain is slashing the credits, which currently help 4.5 million households, in a drive to reduce welfare dependency that has prompted warnings the cuts would hit the poor — and could be counterproductive.
The measures form the core of 12 billion pounds of welfare savings over the next five years as Prime Minister David Cameron’s newly elected Conservative government seeks to eliminate a budget deficit.
Reducing tax credits and restricting them to two children will cut 6 billion pounds from a system that costs 30 billion pounds a year, something finance minister George Osborne said was “simply not sustainable.”
Unveiling his budget on Wednesday, Osborne told the House of Commons that tax credits were “subsidizing lower wages.”
To offset the change, he announced the introduction of a higher minimum wage for the over 25s and income tax cuts for the lowest earners, promising to “make work pay.”
Analysts warned, however, that these measures would not mitigate the benefit cuts, prompting charities to warn the poorest could see their incomes slashed.
“In practical terms it means families forced to choose between paying the bills or missing meals,” said Nick Bryer, head of UK policy and campaigns for Oxfam.
Britain ‘has lost compassion’
The changes were hailed by Conservative lawmakers, and the mass-selling Daily Mail tabloid said it was a bold assault on Britain’s “bloated” welfare system.
“It was nothing less than a blueprint for transforming Britain into a better, more prosperous country — of self-reliant families, rescued from welfare dependency to enjoy the dignity and rewards of work,” it said.
But others cautioned that the changes could hit exactly the working families the Conservatives claim to champion.
Three million families will lose about 1,000 pounds a year under the tax credit cuts, which would reduce the incentive to work for people already receiving benefits, said Paul Johnson, director of the Institute for Fiscal Studies.
The government has insisted austerity is necessary to avoid the plight of crisis-hit Greece.
But Marshall fears that poor people are being increasingly vilified, and worries that “this country has lost its compassion.”
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