Getty
Show Hide image

What welfare changes did Philip Hammond make in his Budget 2017?

The Chancellor offered nothing new to help ease the Tory squeeze on benefits.

You could be forgiven for believing this Chancellor is more sympathetic towards benefit claimants than his predecessor. While George Osborne used arbitrary cuts to the welfare budget as an ideological weapon against the state, hitting the most vulnerable, the current government has changed the rhetoric about those who have the least.

Who could forget the fawning over Theresa May’s first statement as Prime Minister by even the most progressive corners of the press? Her claim outside No 10 that she is “squarely at the service of ordinary working-class people” – and the dedication of her speech to those who “can just about manage but […] worry about the cost of living” – led to excitable cries of One Nation, blue-collar Toryism and even Milibandism.

But, as I have argued before, the Chancellor Philip Hammond’s first financial statement last Autumn showed that this rhetoric wouldn’t be backed up by a huge amount of policy. Hammond and May’s inheritance of Osborne’s severe welfare cuts continues to characterise their attitude towards benefit claimants.

The welfare cap is still there. The four-year freeze of working-age benefits continues. This means those claiming Jobseeker’s Allowance, Employment and Support Allowance, income support, housing benefit, Universal Credit, child tax credits, working tax credits and child benefit will be worse off, as inflation increases but their benefits remain flat.

Child tax credits and child benefit through Universal Credit will be limited to two children, and the government recently announced its plan to remove the entitlement to housing benefit for some 18-21 year olds.

Hammond’s only offer to those depending on the state to boost their income is to reduce the taper rate at which your benefits through Universal Credit are withdrawn as you begin to earn more – from 65 per cent to 63 per cent.

The Chancellor announced this in his Autumn Statement last November and has made no new announcements about benefits since. In fact, his only reference to welfare in his Spring Budget speech was to repeat his softening of the taper rate:

“The Universal Credit taper rate will be reduced in April from 65 per cent to 63 per cent, cutting tax for 3 million families on low incomes.”

But remember, this isn’t giving more money to claimants – it’s very slightly reducing the amount Universal Credit is being cut. According to the Independent, the planned £3bn-a-year reduction in the work allowance (which is the amount benefit claimants can earn before their benefits start being withdrawn) has only really been reduced by about £700m by Hammond.

And the Office for Budget Responsibility’s analysis of the Budget finds less expenditure on the new benefit regime of Universal Credit than the old welfare system – reflecting the fact that the new system is “less generous on average”, particularly for those who will be claiming the equivalent of tax credits and disability benefits.

Not exactly relieving those worries about the cost of living May was so sympathetic about on Downing Street last July.

Anoosh Chakelian is senior writer at the New Statesman.

Jeremy Corbyn. Photo: Getty
Show Hide image

Jeremy Corbyn: “wholesale” EU immigration has destroyed conditions for British workers

The Labour leader has told Andrew Marr that his party wants to leave the single market.

Mass immigration from the European Union has been used to "destroy" the conditions of British workers, Jeremy Corbyn said today. 

The Labour leader was pressed on his party's attitude to immigration on the Andrew Marr programme. He reiterated his belief that Britain should leave the Single Market, claiming that "the single market is dependent on membership of the EU . . . the two things are inextricably linked."

Corbyn said that Labour would argue for "tarriff-free trade access" instead. However, other countries which enjoy this kind of deal, such as Norway, do so by accepting the "four freedoms" of the single market, which include freedom of movement for people. Labour MP Chuka Umunna has led a parliamentary attempt to keep Britain in the single market, arguing that 66 per cent of Labour members want to stay. The SNP's Nicola Sturgeon said that "Labour's failure to stand up for common sense on single market will make them as culpable as Tories for Brexit disaster".

Laying out the case for leaving the single market, Corbyn used language we have rarely heard from him - blaming immigration for harming the lives of British workers.

The Labour leader said that after leaving the EU, there would still be European workers in Britain and vice versa. He added: "What there wouldn't be is the wholesale importation of underpaid workers from central Europe in order to destroy conditions, particularly in the construction industry." 

Corbyn said he would prevent agencies from advertising jobs in central Europe - asking them to "advertise in the locality first". This idea draws on the "Preston model" adopted by that local authority, of trying to prioritise local suppliers for public sector contracts. The rules of the EU prevent this approach, seeing it as discrimination. 

In the future, foreign workers would "come here on the basis of the jobs available and their skill sets to go with it. What we wouldn't allow is this practice by agencies, who are quite disgraceful they way they do it - recruit a workforce, low paid - and bring them here in order to dismiss an existing workforce in the construction industry, then pay them low wages. It's appalling. And the only people who benefit are the companies."

Corbyn also said that a government led by him "would guarantee the right of EU nationals to remain here, including a right of family reunion" and would hope for a reciprocal arrangement from the EU for British citizens abroad. 

Matt Holehouse, the UK/EU correspondent for MLex, said Corbyn's phrasing was "Ukippy". 

Asked by Andrew Marr if he had sympathy with Eurosceptics - having voted against previous EU treaties such as Maastricht - Corbyn clarified his stance on the EU. He was against a "deregulated free market across Europe", he said, but supported the "social" aspects of the EU, such as workers' rights. However, he did not like its opposition to state subsidy of industry.

On student fees, Corbyn was asked "What did you mean by 'I will deal with it'?". He said "recognised" that graduates faced a huge burden from paying off their fees but did not make a manifesto commitment to forgive the debt from previous years. However, Labour would abolish student debt from the time it was elected. Had it won the 2017 election, students in the 2017/18 intake would not pay fees (or these would be refunded). 

The interview also covered the BBC gender pay gap. Corbyn said that Labour would look at a gender pay audit in every company, and a pay ratio - no one could receive more than 20 times the salary of the lowest paid employee. "The BBC needs to look at itself . . . the pay gap is astronomical," he added. 

He added that he did not think it was "sustainable" for the government to give the DUP £1.5bn and was looking forward to another election.

Helen Lewis is deputy editor of the New Statesman. She has presented BBC Radio 4’s Week in Westminster and is a regular panellist on BBC1’s Sunday Politics.