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Budget 2017 for benefits: what welfare changes is Philip Hammond planning?

Everything we know so far about the Chancellor’s plans for the benefits system.

The Chancellor Philip Hammond will announce changes to welfare when he delivers his Budget. What do we know?

How has Theresa May’s government approached welfare so far?

Outside No 10 on 13 July 2016, Theresa May put equality at the heart of her first statement as Prime Minister. She claimed that she would put herself, “squarely at the service of ordinary working-class people”. She dedicated her speech to those who, “can just about manage but you worry about the cost of living and getting your kids into a good school”, telling the nation: “If you’re just managing, I want to address you directly.”

This meant that progressives looked to the first Autumn Statement from her Chancellor Philip Hammond last year to see if she would turn her rhetoric into action.

There wasn’t much, however, for the “just about managing” (nicknamed “Jams”) when the new government announced its first plan for Britain’s finances. The Chancellor eased the planned cuts to Universal Credit slightly, by slowing the pace at which your benefits are reduced the higher above the allowance you earn. He said the welfare cap would remain, but promised there would be no more welfare cuts this parliament.

A four-year freeze on tax credits and benefits such as Jobseeker’s Allowance and income support has been in place since April 2016 last year, and £12bn worth of cuts to the welfare budget were planned for this parliament in the 2015 Tory manifesto pledge. The government wants to stick to making these savings. A £3bn-a-year reduction in the work allowance – the amount benefit claimants can earn before their benefits start being withdrawn – has only really been reduced by about £700m by Hammond.

Hammond inherited harsh welfare policies from George Osborne’s regime, whose austerity programme hit low-income households the hardest – cutting working-age benefits to add to the burden of wage stagnation and rising living costs. He’s not done much so far to ease this pain.

So what are they planning for the Budget?

We can’t expect a huge amount of easing up on benefit freezes in the coming Budget. Here’s what we’re likely to see:

Jobseeker’s Allowance freeze

This is an Osborne legacy, but the unemployment benefit will continue to be frozen at £57.90 a week for under-25s, and £73.10 for those who are 25 and older. Since April 2013, this went up 1 per cent a year. The freeze was announced in the 2015 budget, and came into force last year. Remember, the rate of inflation is increasing, so this could be a big squeeze in the next year.

No automatic entitlement to housing benefit

The government recently announced its plan to remove the entitlement to housing benefit for some 18-21 year olds. Centrepoint warns that this could lead to 9,000 young people being unable to access accommodation and at risk of homelessness. The Guardian suggests Hammond might u-turn on this.

Child benefit freeze

Another continued freeze, at the existing rate of £20.70 a week for the first child and £13.70 for ensuing children. Again, inflation going up means this will feel increasingly tighter. Another part of the Osborne plan.

Child tax credit limited to two children

If you want to claim child tax credits for children born on or after 6 April 2017, you can only do so for two children. If you already claim them, your claims won’t be affected. You also won’t receive what’s known as the “family element” (around £40.40 a month) if your children are born after that date. This is another Osborne policy, announced in 2015 to start this year.

Universal Credit freeze

Universal Credit rates will be frozen for 2017-18. The Osborne plan was the cut the work allowance by £3bn each year – a plan Hammond slightly softened by reducing the taper rate in the Autumn Statement.

So that’s a huge squeeze on living standards for May’s beloved “ordinary, working-class people” then?

Yep.

How do they justify it?

Not very well. The government talks a lot about the rise in what it brands the “national living wage”, which is actually the minimum wage, and also about raising the personal tax allowance. The former isn’t enough to live on if in-work benefits are being restricted (it is lower than the actual living wage, as calculated by the Living Wage Foundation). And the latter disproportionately benefits higher earners.

Anoosh Chakelian is senior writer at the New Statesman.

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Labour is launching a stealthy Scottish comeback - thanks to Jeremy Corbyn and the Daily Mail

The Scottish Labour strategy is paying off - and hard evidence that it works may be more plentiful come 8 June 2017

When I suggested to a senior Scottish Labour figure earlier this year that the party was a car crash, he rejected my assertion.

“We’re past that,” he said gloomily. “Now we’re the burnt-out wreck in a field that no-one even notices anymore.”

And yet, just as the election campaign has seen Jeremy Corbyn transformed from an outdated jalopy into Chitty Chitty Bang Bang magically soaring in the polls, Scottish Labour is beginning to look roadworthy again.

And it’s all down to two apparently contradictory forces – Corbyn and The Daily Mail.

Kezia Dugdale’s decision to hire Alan Roden, then the Scottish Daily Mail’s political editor, as her spin doctor in chief last summer was said to have lost her some party members. It may win her some new members of parliament just nine months later.

Roden’s undoubted nose for a story and nous in driving the news agenda, learned in his years at the Mail, has seen Nicola Sturgeon repeatedly forced to defend her government record on health and education in recent weeks, even though her Holyrood administration is not up for election next month.

On ITV’s leaders debate she confessed that, despite 10 years in power, the Scottish education system is in need of some attention. And a few days later she was taken to task during a BBC debate involving the Scottish leaders by a nurse who told her she had to visit a food bank to get by. The subsequent SNP attempt to smear that nurse was a pathetic mis-step by the party that suggested their media operation had gone awry.

It’s not the Tories putting Sturgeon on the defence. They, like the SNP, are happy to contend the general election on constitutional issues in the hope of corralling the unionist vote or even just the votes of those that don’t yet want a second independence referendum. It is Labour who are spotting the opportunities and maximising them.

However, that would not be enough alone. For although folk like Dugdale as a person – as evidenced in Lord Ashcroft’s latest polling - she lacks the policy chops to build on that. Witness her dopey proposal ahead of the last Holyrood election to raise income tax.

Dugdale may be a self-confessed Blairite but what’s powering Scottish Labour just now is Jeremy Corbyn’s more left-wing policy platform.

For as Brexit has dropped down the agenda at this election, and bread and butter stuff like health and education has moved centre stage, Scots are seeing that for all the SNP’s left wing rhetoric, after 10 years in power in Holyrood, there’s not a lot of progressive policy to show for it.

Corbyn’s manifesto, even though huge chunks of it won’t apply in Scotland, is progressive. The evidence is anecdotal at the moment, but it seems some Scots voters find it more attractive than the timid managerialism of the SNP. This is particularly the case with another independence referendum looking very unlikely before the 2020s, on either the nationalists' or the Conservatives' timetable.

Evidence that the Scottish Labour strategy has worked may be more plentiful come 8 June 2017. The polls, albeit with small sample sizes so best approached with caution, have Ian Murray streets ahead in the battle to defend Edinburgh South. There’s a lot of optimism in East Lothian where Labour won the council earlier in May and MSP Iain Gray increased his majority at the Scottish election last year. Labour have chosen their local candidate well in local teacher Martin Whitfield, and if the unionist vote swings behind him he could overhaul sitting MP George Kerevan’s 7,000 majority. (As we learned in 2015, apparently safe majorities mean nothing in the face of larger electoral forces). In East Renfrewshire, Labour's Blair McDougall, the man who led Better Together in 2014, can out-unionist the Tory candidate.

But, while in April, it was suggested that these three seats would be the sole focus of the Scottish Labour campaign, that attitude has changed after the local elections. Labour lost Glasgow but did not implode. In chunks of their former west of Scotland heartlands there was signs of life.

Mhairi Black’s a media darling, but her reputation as a local MP rather than a local celebrity is not great. Labour would love to unseat her, in what would be a huge upset, or perhaps more realistically go after Gavin Newlands in the neighbouring Paisley seat.

They are also sniffing Glasgow East. With Natalie McGarry’s stint as MP ending in tears – a police investigation, voting in her wedding dress and fainting in the chamber sums up her two years in Westminster – Labour ought to be in with a chance in the deprived neighbourhoods of Glasgow’s east end.

Labour in Scotland doesn’t feel like such a wreck anymore. Alan Roden’s Daily Mail-honed media nous has grabbed attention. Corbyn’s progressive policies have put fuel in the tank.

After polling day, the party will be able to fit all its Scottish MPs comfortably in a small hatchback, compared to the double decker bus necessary just a few years back.

But this general election could give the party the necessary shove to get on to the long road back.

James Millar is a political journalist and founder of the Political Yeti's Politics Podcast. He is co-author of The Gender Agenda, which will be published July 21 by Jessica Kingsley Publishing.

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