The coalition’s benefit cuts: the pain to come

Benefit cuts will hit families far harder than the abolition of the 10p tax rate.

In this week's magazine, Gavin Kelly, chief executive of the Resolution Foundation and the former deputy chief of staff at No 10, has a piece on why a combination of rising prices, falling wages, higher taxes and lower benefits will lead to "the biggest squeeze on living standards since the 1970s".

Of particular interest is an accompanying graphic that compares the losses families will suffer as a result of the coalition's benefit cuts to those they suffered as a result of the abolition of the 10p income-tax rate. The results speak for themselves.

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Few of these cuts have received significant media attention but the scale of the losses could soon change that. The removal of the 10p tax band cost the average family £232, but the cut in support for childcare means half a million mothers on low to middle incomes will lose almost £500 a year on average, with the hardest hit losing a remarkable £1,300. The abolition of the Education Maintenance Allowance, which paid up to £30 a week to 16-to-18-year-olds from low- and modest-income families, will cost families up to £1,200.

The coalition's plan to raise the income-tax threshold by £1,000 to £7,475 will benefit low-to-middle-income earners by around £170. But, as Kelly notes, this is not enough "to offset the rise in VAT, let alone the far larger tax credit cuts". A study by Grant Thornton suggests that the VAT increasese will cost each household £517 a year on average.

The problem with the abolition of the 10p tax, of course, wasn't the losses per se, but rather Gordon Brown's insistence against all evidence to the contrary that there were "no losers". This government hasn't made a similar claim. But it has disguised the scale of the losses to come.

So, rather than any single "10p tax moment", I expect a slow-burning rage as voters are overwhelmed by successive tax rises and benefit cuts.

George Osborne has consistently emphasised those meaures that target workless families – an attempt to marginalise Labour as the party of the "undeserving poor". But many of these cuts will fall hardest on working families, those Nick Clegg today described as "alarm-clock Britons". Indeed, a TUC study found that working households will suffer a loss of about £9.4bn, nearly twice the level of losses for non-working households.

For too many people, as Kelly writes, the next few years will be a "tale of growth without gain". The government will need a better response than "There is no alternative" if it is to avoid permanently alienating these voters.

George Eaton is political editor of the New Statesman.

Ukip's Nigel Farage and Paul Nuttall. Photo: Getty
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Is the general election 2017 the end of Ukip?

Ukip led the way to Brexit, but now the party is on less than 10 per cent in the polls. 

Ukip could be finished. Ukip has only ever had two MPs, but it held an outside influence on politics: without it, we’d probably never have had the EU referendum. But Brexit has turned Ukip into a single-issue party without an issue. Ukip’s sole remaining MP, Douglas Carswell, left the party in March 2017, and told Sky News’ Adam Boulton that there was “no point” to the party anymore. 

Not everyone in Ukip has given up, though: Nigel Farage told Peston on Sunday that Ukip “will survive”, and current leader Paul Nuttall will be contesting a seat this year. But Ukip is standing in fewer constituencies than last time thanks to a shortage of both money and people. Who benefits if Ukip is finished? It’s likely to be the Tories. 

Is Ukip finished? 

What are Ukip's poll ratings?

Ukip’s poll ratings peaked in June 2016 at 16 per cent. Since the leave campaign’s success, that has steadily declined so that Ukip is going into the 2017 general election on 4 per cent, according to the latest polls. If the polls can be trusted, that’s a serious collapse.

Can Ukip get anymore MPs?

In the 2015 general election Ukip contested nearly every seat and got 13 per cent of the vote, making it the third biggest party (although is only returned one MP). Now Ukip is reportedly struggling to find candidates and could stand in as few as 100 seats. Ukip leader Paul Nuttall will stand in Boston and Skegness, but both ex-leader Nigel Farage and donor Arron Banks have ruled themselves out of running this time.

How many members does Ukip have?

Ukip’s membership declined from 45,994 at the 2015 general election to 39,000 in 2016. That’s a worrying sign for any political party, which relies on grassroots memberships to put in the campaigning legwork.

What does Ukip's decline mean for Labour and the Conservatives? 

The rise of Ukip took votes from both the Conservatives and Labour, with a nationalist message that appealed to disaffected voters from both right and left. But the decline of Ukip only seems to be helping the Conservatives. Stephen Bush has written about how in Wales voting Ukip seems to have been a gateway drug for traditional Labour voters who are now backing the mainstream right; so the voters Ukip took from the Conservatives are reverting to the Conservatives, and the ones they took from Labour are transferring to the Conservatives too.

Ukip might be finished as an electoral force, but its influence on the rest of British politics will be felt for many years yet. 

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