BUDGET RESPONSE: Working families continue to pay the price for falling UK productivity

In her response to the Chancellor, George Osborne’s Budget, Rachael Maskell, MP for York Central says whilst she welcomes the announcement that the National Minimum Wage is set to rise by around a 40p/hour by next April, the scale of tax credit cuts will leave 3 million working families worse off.  A family with one earner on average earnings will lose over £2,000 in tax credits from the announcements today, and young people will be expected to live at home because they will not be eligible for housing benefit.

Rachael Maskell points out that buried in the small print of the budget, is the fact that the national debt has risen sharply since 2010 from £0.76 trillion to a staggering £1.36 trillion and is expected to rise further. This, coupled with the news that the Office of Budget Responsibility has forecast a fall in productivity for the next four years, means that the only way the government can prevent our deepening financial crisis is to slash public services. We can expect to see the detail of the scale of the cuts to services this autumn following the Comprehensive Spending Review, but already £18bn cuts have been confirmed by the Chancellor in his pre-election budget. 

Also what looked like a £10bn increase to the NHS will be overshadowed by the £22bn ‘efficiency savings’ demanded of the service in the next 5 years, and we have already seen that York Hospital will be starting on this agenda with the proposed cuts to the cleaning and maintenance staff pay highlighted earlier this week. The continual stagnation, or real terms pay cut, for public sector workers announced today will also have an impact on depressing the local economy, as low to middle earners are more likely to spend their wages in the city of York than further afield.

Rachael Maskell MP says:
“The Northern Powerhouse has tragically been derailed by today’s budget, expedited by the announcement last week that the essential rail improvement projects have now been ‘paused’. Today’s budget did not announce any investment in developing any new infrastructure projects or an industrial growth strategy for the North, nor sought to make reparation for the serious cuts to local government budgets. The opportunity for the government to show its green credentials was lost as renewable energy would now be subject to the Climate Change levy, road building was prioritised over rail improvement and as we have just seen, the Green Investment Bank put on the market. The budget stagnates a green economy which Labour would have used as the engine for our growth strategy.”

“Families will be hit the hardest as tax credits are cut to working families. Half of all working families in York currently receive in work benefits. Families with more than two children will not receive additional Tax Credit or Universal Credit to support their families. Currently each additional child brings an additional payment of £2,780 a year. With sharp increases in private rent in York and the lack of social housing, which will fall further with the new plans for ‘right to buy’, the new lower benefits cap will challenge family finances. Tragically today will result in many more families struggling to make ends meet and more families living in poverty. As the MP for York Central, my door is open to all constituents as I will take up your fight against now impossible cost of living challenges.”


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