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The Brexit benefits timebomb is ticking for poor working families

The May Government continues Universal Credit and the benefits freeze. 

In her first speech as Prime Minister, Theresa May addressed the families who are “just managing”. 

She declared: “I know you’re working around the clock, I know you’re doing your best, and I know that sometimes life can be a struggle. 

“The Government I lead will be driven not by the interests of the privileged few, but by yours.”

What May didn’t mention is that such a family may be working all hours, but they are probably reliant on tax credits too. 

And for Mr and Mrs Just Managing, the years post Brexit will introduce a new reality – the creeping reduction in benefits. 

Theresa May’s Government could have abolished Universal Credit. The reform has been widely criticised – the shake-up of thresholds means that for certain groups, such as single mothers, it makes work less attractive. The roll out has been delayed, meaning that most politically sensitive demographics are still on the old system. 

But she didn’t. Instead, she has kicked Universal Credit into the long grass, with the final deadline now pushed back to 2022. The benefits reform will continue to roll out and start to affect families in larger numbers. 

For some families, this means losing all in-work benefits altogether. A forecast slipped out by the Office for Budget Responsibility predicted 690,000 households would lose out by 2020. By contrast, just 200,000 will gain it. 

Indeed, when George Osborne famously U-turned on tax credit cuts, savings were passed onto Universal Credit instead. Owen Smith, the Labour leadership challenger, has described Universal Credit as a “vehicle for austerity”. 

Another longstanding Osborne policy is also likely to start to bite. Unless May dramatically overhauls policy, the freeze on working-age benefits means that the Just Managings have little protection against inflation. 

When the current four year freeze began in April, the OBR estimated it would lead to a 6.1 per cent fall in real term value of benefits by 2020. 

But if Brexit triggers rising prices, as expected, the Resolution Foundation now predicts the value of benefits in real terms will slump as much as 12.5 per cent. 

Resolution's senior economic analyst David Finch said: “The impact of the four-year benefit freeze now in train has been little discussed – in part because of the tax credit furore and also because very low inflation means it hasn’t really bitten recipients yet. 

“But post-referendum that is likely to change, with expected higher inflation potentially doubling the freeze’s impact on spending power.”

Add in lower real wage growth, he added, and the squeeze on living standards will only tighten. 

May could reverse Osborne's policies - one of her first moves was to sack him after all. But the financial climate suggests she will have little money to play with, and she appears more likely to favour investing in spade and shovel infrastructure projects than topping up the wages of the working poor. 

Both Universal Credit and the benefits freeze are already in motion. May has not expended any political capital on them, but she will reap the savings all the same. Meanwhile, the Just Managings may find they are not managing at all. 

Julia Rampen is the digital news editor of the New Statesman (previously editor of The Staggers, The New Statesman's online rolling politics blog). She has also been deputy editor at Mirror Money Online and has worked as a financial journalist for several trade magazines. 

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The rise of the green mayor – Sadiq Khan and the politics of clean energy

At an event at Tate Modern, Sadiq Khan pledged to clean up London's act.

On Thursday night, deep in the bowls of Tate Modern’s turbine hall, London Mayor Sadiq Khan renewed his promise to make the capital a world leader in clean energy and air. Yet his focus was as much on people as power plants – in particular, the need for local authorities to lead where central governments will not.

Khan was there to introduce the screening of a new documentary, From the Ashes, about the demise of the American coal industry. As he noted, Britain continues to battle against the legacy of fossil fuels: “In London today we burn very little coal but we are facing new air pollution challenges brought about for different reasons." 

At a time when the world's leaders are struggling to keep international agreements on climate change afloat, what can mayors do? Khan has pledged to buy only hybrid and zero-emissions buses from next year, and is working towards London becoming a zero carbon city.

Khan has, of course, also gained heroic status for being a bête noire of climate-change-denier-in-chief Donald Trump. On the US president's withdrawal from the Paris Agreement, Khan quipped: “If only he had withdrawn from Twitter.” He had more favourable things to say about the former mayor of New York and climate change activist Michael Bloomberg, who Khan said hailed from “the second greatest city in the world.”

Yet behind his humour was a serious point. Local authorities are having to pick up where both countries' central governments are leaving a void – in improving our air and supporting renewable technology and jobs. Most concerning of all, perhaps, is the way that interest groups representing business are slashing away at the regulations which protect public health, and claiming it as a virtue.

In the UK, documents leaked to Greenpeace’s energy desk show that a government-backed initiative considered proposals for reducing EU rules on fire-safety on the very day of the Grenfell Tower fire. The director of this Red Tape Initiative, Nick Tyrone, told the Guardian that these proposals were rejected. Yet government attempts to water down other EU regulations, such as the energy efficiency directive, still stand.

In America, this blame-game is even more highly charged. Republicans have sworn to replace what they describe as Obama’s “war on coal” with a war on regulation. “I am taking historic steps to lift the restrictions on American energy, to reverse government intrusion, and to cancel job-killing regulations,” Trump announced in March. While he has vowed “to promote clean air and clear water,” he has almost simultaneously signed an order to unravel the Clean Water Rule.

This rhetoric is hurting the very people it claims to protect: miners. From the Ashes shows the many ways that the industry harms wider public health, from water contamination, to air pollution. It also makes a strong case that the American coal industry is in terminal decline, regardless of possibile interventions from government or carbon capture.

Charities like Bloomberg can only do so much to pick up the pieces. The foundation, which helped fund the film, now not only helps support job training programs in coal communities after the Trump administration pulled their funding, but in recent weeks it also promised $15m to UN efforts to tackle climate change – again to help cover Trump's withdrawal from Paris Agreement. “I'm a bit worried about how many cards we're going to have to keep adding to the end of the film”, joked Antha Williams, a Bloomberg representative at the screening, with gallows humour.

Hope also lies with local governments and mayors. The publication of the mayor’s own environment strategy is coming “soon”. Speaking in panel discussion after the film, his deputy mayor for environment and energy, Shirley Rodrigues, described the move to a cleaner future as "an inevitable transition".

Confronting the troubled legacies of our fossil fuel past will not be easy. "We have our own experiences here of our coal mining communities being devastated by the closure of their mines," said Khan. But clean air begins with clean politics; maintaining old ways at the price of health is not one any government must pay. 

'From The Ashes' will premiere on National Geograhpic in the United Kingdom at 9pm on Tuesday, June 27th.

India Bourke is an environment writer and editorial assistant at the New Statesman.

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