The big Budget losers? Working families

IFS analysis finds that a million working families will lose £500 a year as new tax changes come in.

Amidst the clamour over pasties, jerry cans, and email surveillance, the Budget seems like a distant memory. But with the new financial year starting tomorrow, certain changes will come into force – and it is not looking good for middle-income families.

Despite the raft of negative headlines about George Osborne’s so-called “granny tax”, analysis published today by the Institute for Fiscal Studies (IFS) has found that pensioners stand to suffer the least.

In fact, it is families with children who will bear the brunt. Up to a million families with children stand to lose £511 a year under new tax and benefit changes.

More than 850,000 families on middle incomes – with an average income of £38,000 – will lose their entire child tax credit, which is worth around £545 a year. The picture is bleaker lower down the income scale. Up to 212,000 working couples with children, earning less than £17,000 a year, will lose all their working tax credit – worth up to £3,870 a year – unless they increase their working hours.

This is because of two changes to tax credits. The first is a cut in the income limit for child tax credit from about £40,000 to about £26,000 for a family with one child. The second is an increase in the number of hours that families with children must work to qualify for working tax credit from 16 to 24 hours a week.

Despite the increase in the personal allowance – which is incorporated into the IFS figures –these families will still see a net loss. Separate analysis by the Resolution Foundation suggests that the changes to working tax credit mean that a single earner on the minimum wage (£6.08 per hour) who works 20 hours a week will lose £3,910 – more than a quarter of their income.

It is a political tight spot for the coalition, which purports to be a family friendly government. The “squeezed middle” is set to be a potent battleground, both in upcoming local elections and in the next general election.

The Treasury highlighted the rise in personal tax allowance, and stressed that the analysis was commissioned by the Labour shadow chancellor, Ed Balls.

But in conjunction with the cut in the top rate of tax for those earning over £150,000 a year, this squeeze on ordinary families is difficult to defend. Indeed, reducing the 50p rate of tax presented a gift for Labour: tax cuts for millionaires as the rest of the population continues to suffer is a clear, media-friendly message. Polls already show that a majority of people think the cabinet is out of touch with ordinary voters; this will do nothing to help. So far, a loss of support for the coalition’s austerity has not been matched by an upsurge of trust in Labour on the economy. The question is whether these real cuts to the incomes of working families – the very demographic the coalition claims to defend – will lead to a shift in public opinion. It is certainly clear – once again – that the government cannot truthfully claim that its cuts are fairly distributed.
 

Ed Balls commissioned the IFS analysis. Photograph: Getty Images

Samira Shackle is a freelance journalist, who tweets @samirashackle. She was formerly a staff writer for the New Statesman.

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I can’t follow Marie Kondo's advice – even an empty Wotsits packet “sparks joy” in me

I thought I’d give her loopy, OCD theories a go, but when I held up an empty Wotsits bag I was suffused with so many happy memories of the time we’d spent together that I couldn’t bear to throw it away.

I have been brooding lately on the Japanese tidying freak Marie Kondo. (I forgot her name so I typed “Japanese tidying freak” into Google, and it was a great help.) The “Japanese” bit is excusable in this context, and explains a bit, as I gather Japan is more on the case with the whole “being tidy” thing than Britain, but still.

Apart from telling us that we need to take an enormous amount of care, to the point where we perform origami when we fold our underpants, which is pretty much where she lost me, she advises us to throw away anything that does not, when you hold it, “spark joy”. Perhaps I have too much joy in my life. I thought I’d give her loopy, OCD theories a go, but when I held up an empty Wotsits bag I was suffused with so many happy memories of the time we’d spent together that I couldn’t bear to throw it away.

After a while I gave up on this because I was getting a bit too happy with all the memories, so then I thought to myself, about her: “This is someone who isn’t getting laid enough,” and then I decided that was a crude and ungallant thought, and besides, who am I to wag the finger? At least if she invites someone to her bedroom no one is going to run screaming from it, as they would if I invited anyone to my boudoir. (Etym: from the French “bouder”, to sulk. How very apt in my case.) Marie Kondo – should bizarre circumstance ever conspire to bring her to the threshold – would run screaming from the Hovel before she’d even alighted the stairs from the front door.

I contemplate my bedroom. As I write, the cleaning lady is in it. To say that I have to spend half an hour cleaning out empty Wotsits packets, and indeed wotnot, before I let her in there should give you some idea of how shameful it has got. And even then I have to pay her to do so.

A girlfriend who used to be referred to often in these pages, though I think the term should be a rather less flippant one than “girlfriend”, managed to get round my natural messiness problem by inventing a game called “keep or chuck”.

She even made up a theme song for it, to the tune from the old Spiderman TV show. She would show me some object, which was not really rubbish, but usually a book (it may not surprise you to learn that it is the piles of books that cause most of the clutter here), and say, “Keep or chuck?” in the manner of a high-speed game show host. At one point I vacillated and so she then pointed at herself and said, “Keep or chuck?” I got the message.

These days the chances of a woman getting into the bedroom are remote. For one thing, you can’t just walk down the street and whistle for one much as one would hail a cab, although my daughter is often baffled by my ability to attract females, and suspects I have some kind of “mind ray”. Well, if I ever did it’s on the blink now, and not only that – right now, I’m not even particularly bothered that it’s on the blink. Because, for another thing, I would frankly not care to inflict myself upon anyone else at the moment.

It was all a bit of a giggle eight years ago, when I was wheeled out of the family home and left to my own devices. Of course, when I say “a bit of a giggle”, I mean “terrifying and miserable”, but I had rather fewer miles on the clock than I do now, and a man can, I think, get away with a little bit more scampish behaviour, and entertain a few more illusions about the future and his own plausibility as a character, when he is squarely in his mid-forties than when he is approaching, at speed, his middle fifties.

Death has rather a lot to do with it, I suppose. I had not actually seen, or touched, a dead body until I saw, and touched, my own father’s a few weeks ago. That’s what turns an abstract into a concrete reality. You finally put that to one side and gird up your loins – and then bloody David Bowie snuffs it, and you find yourself watching the videos for “Blackstar” and “Lazarus” over and over again, and reach the inescapable conclusion that death is not only incredibly unpleasant, it is also remorseless and very much nearer than you think.

And would you, dear reader, want to be involved with anyone who kept thinking along those lines? I mean, even if he learned how to fold his undercrackers into an upright cylinder, like a napkin at a fancy restaurant, before putting them in his drawer? When he doesn’t even have a drawer?

Nicholas Lezard is a literary critic for the Guardian and also writes for the Independent. He writes the Down and Out in London column for the New Statesman.

This article first appeared in the 05 February 2015 issue of the New Statesman, Putin's war