TUC analysis shows poorer families hit harder by cuts than wealthy ones

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TUC general secretary Brendan Barber today launches an attack on the government’s austerity plans, accusing Chancellor George Osborne of targeting families.

TUC analysis of government spending plans show families are the biggest casualties of the government’s austerity plan, with funding for the public services they use set to be cut by over £7,000 a year by 2018.

Commenting on the report, Brendan Barber said: “This analysis lays bare the deceit behind the government’s austerity rhetoric.First we were told we were all in it together. In fact poor households are bearing a far heavier burden than the very wealthiest in society.

“Then we were told that a dose of short, sharp pain would set up the recovery. Two years later the economy has barely moved on and the majority of the Chancellor’s ever-growing cuts are yet to come.

“With his economic plan in tatters, the Chancellor will no doubt resort to divisive attacks by telling us he is fighting for strivers against shirkers, as if punishing people for not finding work can somehow help the economy.

“But in fact working families are the main target of the government’s austerity crusade. By slashing the education and social care budgets, as well as funding for key public services such as the police, he is making life far harder for parents and their children.

“The evidence across Europe over the last few years is that piling further cuts on top of failing austerity policies only adds to people’s misery, increases the debt and holds back the economy. It is time for the Chancellor to change course, rather than make things even worse for families across the country.”

Families First, carried out for the TUC by economist Howard Reed ahead of the Chancellor’s Autumn statement on 5 December, models the use of public services by household and family type, and then assesses how these groups will be affected by spending cuts.

While much of the debate ahead of the Autumn statement has been on welfare cuts, departmental spending cuts are the largest part of the Chancellor’s austerity plan, making up 61 per cent of all planned cuts by 2015.

Departmental spending was originally due to fall by £50bn by 2015. However, this was extended to £65bn by 2017 in the 2012 budget. Research by the Social Market Foundation has since found that as a result of recent poor growth, further spending cuts would be needed to satisfy the Chancellor’s fiscal rules, which would bring total departmental spending cuts to £80bn by 2018. The TUC analysis models spending cuts for every year up to 2017/18.

While unemployed people are likely to be the main target of welfare cuts announced next week, families – including those in work – are by far the biggest casualty of the far larger departmental spending cuts being carried out.

The analysis shows that couples with children will lose at least twice as much as those without children, and all working families will lose more than unemployed people without children. While out of work lone parents will lose the most from public spending cuts (losing the equivalent of over £9,000 a year by 2017), working lone parents are also among the hardest hit – losing the equivalent of over £7,000 a year.

Families are losing out the most because they make greater use of nursery and pre-school education, higher education and social care services, all of which are being cut back substantially over the next six years, says the TUC.

The TUC analysis shows that the biggest spending cuts are taking place in further and higher education, where budgets could be slashed by 66.5 per cent by 2018, followed by social housing (cut by 57.6 per cent), the police and non-elderly social care ( both cut by 48.9 per cent).

At a time when the UK is competing globally to attract high-skilled industries and better training is considered a key route out of low-paid work, slashing the higher education budget will cause considerable harm to our future economic prospects, says the TUC.

Despite the Prime Minister’s pre-election pledge to protect NHS spending, Families First shows that the health budget is set to fall by 2.2 per cent by 2018.

The government’s austerity plan is deeply regressive, says the TUC, with poor households losing out far more than the richest ones. Households on low to medium incomes will lose out the most, with funding for the public services they use being slashed by over £5,500 a year by 2018.

The richest ten per cent of households lose out the least, with the value of public services they use shrinking by less than £3,500 a year.

And while the average household will have seen the value of their public services fall by £1,500 by April 2013, this could represent just a third of the total cuts planned over the next six years, the TUC warns.

In fact, if the Chancellor sticks to his fiscal rule on the deficit, three-quarters of the potential reductions in health, nursery and pre-school education, further and higher education, transport and defence spending are still to come.

The majority of departmental spending cuts could now take place in the next parliament, unless the Chancellor’s prolonged austerity drive is abandoned, the TUC warns.

 


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