Working families are paying the price for this uncaring government
8:55am Monday 21st May 2012 in News
This coalition government stated in the Queen’s speech that its priority was to increase growth in the economy and to reduce the deficit.
Recently, I spoke to a family in which both adults are working full time, earning between them £20,000 per year after tax. They have three children and are eligible for Working Families Tax Credit (WFTC). This benefit was recently cut by £50 per week for this family.
I have no doubt that something similar will be happening to thousands of families at this time, taking billions of pounds out of the economy, at least for the life of this government, thus reducing our potential for growth.
The few pounds gained by each low-paid person after raising the level at which income tax is paid cannot compensate poorer families for the partial loss of WFTC.
This benefit cost the Treasury £27 billion per year and kept hundreds of thousands of children out of poverty.
In contrast, the banks have been given at least £325 billion in quantitative easing since the credit crunch and there is little to show in the real economy, except a rise in commodity costs. These have increased the cost of basic household items across the globe and driven many countries into even worse poverty than they had before.
The recent budget reduced the amount of tax higher earners paid from 50p to 45p in the pound. In addition, contributions to a private pension fund were given a boost by raising the tax relief on contributions from 45p to 50p in the pound for higher rate tax payers.
I understand that this tax relief on higher rate earner’s contribution to pensions was costing the Treasury £17 billion per year and this will probably increase this year because of the higher tax relief.
This will encourage people to save — this seems strange when we are being encouraged to spend our way out of the recession, to grow the economy.
To cut a benefit such as WFTC, which has helped so many families out of poverty, at a time when essential household costs such as food and fuel are rising at an unprecedented rate — and, as a consequence, the real value of wages is falling — is truly shameful. It makes me think that this government is out of touch with the reality of ordinary people’s lives, or worse still, it does not care.
Cllr Freda HendersonWesthoughton