George Osborne has laid out how he will make £12bn welfare cuts. Photo: Getty
Show Hide image

Budget 2015: what welfare changes did George Osborne announce, and what do they mean?

The Chancellor launched his raid on the welfare budget with a number of ideological, damaging measures that would harm the young and vulnerable.

When the Chancellor stood up to make his speech about the Budget, most people watching were waiting for the welfare section. The government's toughest and most terrifying plan is to cut the welfare budget by £12bn, and ministers have left us (and, probably for a time, themselves) guessing about how specifically they will make these cuts.

George Osborne gave us a pretty good idea in his Summer Budget announcement, and the new measures he has announced are overtly ideological. He referred to claiming benefits as a lifestyle choice ("the benefits system should not support lifestyles and rents that are not available to the taxpayers who pay for that system") and framed his benefits changes with the mantra: "The best route out of poverty is work."

His announcements will save £12bn by 2019-20 – a slower pace of welfare cuts than pledged in the Tory manifesto.

Here are his main welfare announcements:

A "youth obligation" for those aged 18-21 that says they must either earn or learn, rather than going straight onto benefits after finishing school.

These young people will participate in an "intensive regime of support from day one" of their benefit claim", and after six months will be expected to apply for an apprenticeship or traineeship, gain work-based skills, or go on a mandatory work placement, otherwise they will lose their benefits.

Scrapping the automatic entitlement to housing benefit for 18-21 year olds (with exceptions for the vulnerable and "other hard cases").

It hasn't been outlines what these vulnerable and hard cases are, but the clear danger of this policy is forcing young people to live with abusive parents/households they would prefer to escape for reasons of safety and wellbeing. Crisis, the homeless charity, predicts that this suspension of housing benefit will result in an increase in homelessness. Its chief executive Jon Sparkes comments: "Under-25s already make up a third of homeless people and there is a real danger these changes could make things even worse. For many young people, living with their parents simply isn’t an option."

New Employment and Support Allowance claimants in the work-related activity group will have their claims aligned with the Job Seekers' Allowance rate.

The ESA is the benefit that replaced the Incapacity Benefit, and provides for people who are ill or disabled and unable to work. There are two categories: support, and work-related activity. The latter group is when you have regular assessments and are considered capable of work at some point in the future, or beginning to move into work immediately. Reducing ESA (WRAG) to the Job Seekers' rate is a 30 per cent cut, and will hit claimants who are unable to work.

A freeze in working age benefits for four years (including tax credits and Local Housing Allowance, and excluding maternity pay and disability benefits – PIP, DLA and ESA Support Group).

A continuation of the two-year freeze announced at Tory conference last September.

Rents paid in the social housing sector will to be reduced by 1 per cent a year for the next four years.

It has been pointed out that this will reduce Housing Associations' incentives to build and is yet another squeeze on local government finances.

The income threshold in tax credits will be reduced from £6,420 to £3,850.

Finds out what this means here.

The rate at which a household’s tax credits are reduced as they earn more will be raised, by increasing the taper rate to 48 per cent, and the income rise disregard will be reduced from £5,000 to £2,500.

The Social Mobility and Child Poverty Commission says any cuts to tax credits will cut the incomes of 45 per cent of working families. Punishing those in work doesn't quite square with Osborne's insistence that it should pay to work, and it will hit the low-paid hard.

Lowering the benefits cap from £26,000 to £23,000 in London, and £20,000 in the rest of the country.

This has long been on the cards, to bring household benefits income in line with the average household income. Many in Labour support this cut, including acting leader Harriet Harman.

Charging market rate rents to those on higher incomes living in social housing (families earning over £40,000 in London, or £30,000 elsewhere).

Restricting tax credits and Universal Credit to two children for families who have a third or subsequent child after April 2017.

This is another measure that will hurt the poorest families. The children's charity, Children's Society, says: "The announcement to limit child tax credits to two children is effectively a two child policy for the poorest families."

Here’s the full welfare section of George Osborne’s 2015 Budget speech:

For Britain is home to 1% of the world’s population; generates 4% of the world’s income; and yet pays out 7% of the world’s welfare spending.

It is not fair to the taxpayers paying for it.

It needs to change.

Welfare spending is not sustainable and it crowds out spending on things like education and infrastructure that are vital to securing the real welfare of the people.

We’ve already legislated for savings of over £21 billion in the last parliament; capped benefits for out of work families; and started to introduce Universal Credit.

Universal Credit will transform the lives of those trapped in welfare dependency and deliver real social justice – it’s the result of the herculean efforts of my RHF the Work and Pensions Secretary.

But to live within our means as a country and better protect spending on public services, we need to find at least a further £12 billion of welfare savings.

Let me set out the principles we follow – and how they will be applied.

First, the welfare system should always support the elderly, the vulnerable and disabled people.

We will honour the commitments we made to uprate the state pension by the triple lock and protect the other pensioner benefits.

The BBC has agreed to take on responsibility for funding free TV licences for the over 75s and in return we were able to give our valued public broadcaster a sustainable income for the long term.

In the last Parliament we increased payments to the most disabled people and we will not tax or means-test disability benefits.

We will increase funding for domestic abuse victims and women’s refuge centres.

And we are also going to use the remaining funds available in our Equitable Life Payment Scheme, as it closes, to double the support we give to those policy holders on Pension Credit who most need this extra help.

The second principle we will apply is this.

Those who can work will be expected to look for work and take it when it is offered.

The best route out of poverty is work.

Our economic plan has created a record number of jobs, and now a third of a million fewer children are being brought up in workless families.

It is not acceptable that in an economy moving towards full employment, some young people leave school and go straight on to a life on benefits.

So for those aged 18-21 we are introducing a new Youth Obligation that says they must either earn or learn.

We are also abolishing the automatic entitlement to housing benefit for 18-21 year olds.

There will be exceptions made for vulnerable people and other hard cases, but young people in the benefit system should face the same choices as other young people who go out to work and cannot yet afford to leave home.

To make sure work pays for parents, I can confirm that, from September 2017 all working parents of 3 and 4 year olds will receive free childcare of up to 30 hours a week.

Once again, a promise made: a promise delivered.

As a result we now expect parents with a youngest child aged 3, including lone parents, to look for work if they want to claim Universal Credit.

All part of our progressive goal of securing full employment in Britain.

We also want to increase employment among those who have health challenges but are capable of taking steps back to work.

The Employment and Support Allowance was supposed to end some of the perverse incentives in the old Incapacity Benefit. Instead it has introduced new ones.

One of these is that those who are placed in the work-related activity group receive more money a week than those on Job Seekers Allowance, but get nothing like the help to find suitable employment.

The number of JSA claimants has fallen by 700,000 since 2010, whilst the number of incapacity benefits claimants has fallen by just 90,000. This is despite 61% of claimants in the ESA WRAG benefit saying they want to work

For future claimants only, we will align the ESA Work-Related Activity Group rate with the rate of Job Seekers Allowance.

No current claimants will be affected by this change and we will provide new funding for additional support to help claimants return to work.

The third principle that we apply to welfare is this: the whole working age benefit system has to be put on a more sustainable footing.

In 1980, working age welfare accounted for 8% of all public spending. Today it is 13%

The original Tax Credit system cost £1.1 billion in its first year.

This year, that cost has reached £30 billion.

We spend more on family benefits in Britain than Germany, France or Sweden.

It is, in the words of the RHM for Birkenhead the new Chair of the Work and Pension Select Committee, simply “not sustainable”.

As Alistair Darling has said, the sheer scale of Tax Credits is “subsidising lower wages in a way that was never intended.”

So those who oppose any savings to Tax Credits will have to explain how on earth they propose to eliminate the deficit, let alone run a surplus and pay down debt.

We will take the following steps to put working age benefits on a more financially sustainable footing.

Since the crash, average earnings have risen by 11%, but most benefits have risen by 21%.

To correct that, we will legislate to freeze working age benefits for four years.

That will include Tax Credits and Local Housing Allowance. And it means earnings growth will catch up and overtake the growth in benefits.

Statutory payments like Maternity Pay and the disability benefits – PIP, DLA and ESA Support Group will be excluded from the freeze.

Mr Deputy Speaker, we are also going to end the ratchet of ever higher housing benefit chasing up ever higher rents in the social housing sector.

These rents have increased by a staggering 20% since 2010.

So rents paid in the social housing sector will not be frozen, but reduced by 1% a year for the next four years.

This will be a welcome cut in rent for those tenants who pay it and I’m confident that Housing Associations and other landlords in the social sector will be able to play their part and deliver the efficiency savings needed.

We also need to focus Tax Credits, and Universal Credit, on those on lower incomes, if we are going to keep the whole system affordable and able to support those most in need.

So from next year, we will reduce the level of earnings at which a household’s Tax Credits and Universal Credit start to be withdrawn.

The income threshold in tax credits will be reduced, from £6,420 to £3,850.

Universal Credit work allowances will be similarly reduced – and will no longer be awarded to non-disabled claimants without children.

The rate at which a household’s Tax Credit award is reduced as they earn more will be increased, by raising the taper rate to 48%.

The income rise disregard will be reduced from £5,000 to £2,500 – the same level at which it was originally set in 2003.

Taken all together, the freeze in working age benefits, the downrating of social rents, and the focus of tax credits and Universal Credit on the lowest income households will reduce the welfare bill by £9 billion a year by 2019-20.

The fourth principle we will apply to our welfare reform is this: the benefits system should not support lifestyles and rents that are not available to the taxpayers who pay for that system.

We have already introduced a cap on the total amount of benefits any out of work family can receive, at £26,000.

It encouraged tens of thousands into work.

We will now go further, and reduce the benefits cap from £26,000 to £23,000 in London, and £20,000 in the rest of the country.

We are also going to require those on higher incomes living in social housing to pay rents at the market rate.

It’s not fair that families earning over £40,000 in London, or £30,000 elsewhere, should have their rents subsidised by other working people.

And we’ll turn support for mortgage interest payments from a benefit to a loan. Another decision that most families make is how many children they have, conscious that each extra child costs the family more.

In the current tax credit system, each extra child brings an additional payment of £2,780 a year.

It’s important to support families, but it’s also important to be fair to the many working families who don’t see their budgets rise by anything like that when they have more children.

So this is the balance we will strike:

In future we will limit the support provided through tax credits and Universal Credit to two children.

Families who have a third or subsequent child after April 2017 will not receive additional Tax Credit or UC support for this child.

Support provided to families who make a new claim to Universal Credit after this date will also be limited to two children.

And we will make similar changes in Housing Benefit too.

There will be provisions for exceptional cases including multiple births.

In addition, those starting a family after April 2017 will no longer be eligible for the family element in Tax Credits.

Nor will new births and new claims be eligible for the first child premium in Universal Credit.

We will make similar changes in Housing Benefit, by removing the family premium for children born or claims made after April 2016.

This approach means no family sees a cash loss.

And as promised, child benefit will be maintained.

These changes to Tax Credits are not easy but they are fair, and they return tax credit spending to the level it was in 2007-08 in real terms.

When we came to office in 2010 this country had reached the point where a benefit that was intended to support lower income households, was instead available to 9 out of 10 families in this country.

Now, our properly focussed reformed Tax Credit system will provide support to 5 out of 10 families – a much more sustainable balance in our welfare system.

Taken together, all the welfare reforms I have announced will save £12bn by 2019-20 and will be legislated for in the year ahead, starting in the Welfare Reform and Work Bill that will be published tomorrow.

Anoosh Chakelian is deputy web editor at the New Statesman.

Getty.
Show Hide image

Angela Merkel's call for a burqa ban sets a disturbing precedent

The German chancellor's plan for a partial ban of the full-face veil is a clearly political move, which will do more to harm those women who wear it than protect them.

 

In these febrile times, women’s freedom and autonomy has become a bargaining chip in the poker game of public propaganda — and that goes double for brown, Muslim and migrant women. Angela Merkel should know as well as any other female politician how demeaning it is to be treated as if what you wear is more important than what you say and what you do. With the far-right on the rise across Europe, however, the German chancellor has become the latest lawmaker to call for a partial ban on the burqa and niqab.

We are told that this perennial political football is being kicked about in the name of liberating women. It can have nothing to do, of course, with the fact that popular opinion is lurching wildly to the right in western democracies, there’s an election in Germany next year, and Merkel is seen as being too soft on migration after her decision to allow a million Syrian refugees to enter the country last year. She is also somehow blamed for the mob attacks on women in Cologne, which have become a symbol of the threat that immigration poses to white women and, by extension, to white masculinity in Europe. Rape and abuse perpetrated by white Europeans, of course, is not considered a matter for urgent political intervention — nor could it be counted on to win back voters who have turned from Merkel's party to the far-right AFD, which wants to see a national debate on abortion rights and women restricted to their rightful role as mothers and homemakers.

If you’ll allow me to be cynical for a moment, imposing state restrictions on what women may and may not wear in public has not, historically, been a great foundation for feminist liberation. The move is symbolic, not practical. In Britain, where the ban is also being proposed by Ukip the services that actually protect women from domestic violence have been slashed over the past six years — the charity Refuge, the largest provider of domestic violence services in the UK, has seen a reduction in funding across 80% of its service contracts since 2011.

It’s worth noting that even in western countries with sizeable Muslim minorities, the number of women who wear full burqa is vanishingly small. If those women are victims of coercion or domestic violence, banning the burqa in public will not do a thing to make them safer — if anything, it will reduce their ability to leave their homes, isolating them further.

In the wake of the Brexit vote, racist and Islamophobic attacks spiked in the UK. Hate crimes nationally shot up by 42% in the two weeks following the vote on 23 June. Hate crimes against Muslim women increased by over 300%, with visibly Muslim women experiencing 46% of all hate incidents. Instances of headscarves being ripped off have become so common that self-defense videos are being shared online, showing women how to deflect the “hijab grab”. In this context, it is absurd to claim that politicians proposing a burqa ban care about protecting women: the move is transparently designed to placate the very people who are making Muslim women feel unsafe in their own communities.

When politicians talk about banning the burqa, the public hears an attack on all Islamic headscarves — not everyone knows the difference between the hijab, the niqab and the burqa, and not everyone cares. The important thing is that seeing women dressed that way makes some people feel uncomfortable, and desperate politicians are casting about for ways to validate that discomfort.

Women who actually wear the burqa are not invited to speak about their experiences or state their preferences in this debate. On this point, Islamic fundamentalists and panicked western conservatives are in absolute agreement: Muslim women are provocative and deserve to be treated as a threat to masculine pride. They should shut up and let other people decide what’s best for them.

I know Muslim women who regard even the simple hijab as an object of oppression and have sworn never to wear one again. I also know Muslim women who wear headscarves every day as a statement both of faith and of political defiance. There is no neutral fashion option for a woman of Islamic faith — either way, men in positions of power will feel entitled to judge, shame and threaten. Either choice risks provoking anger and violence from someone with an opinion about what your outfit means for them. The important thing is the autonomy that comes with still having a choice.

A law which treats women like children who cannot be trusted to make basic decisions about their bodies and clothing is a sexist law; a law that singles out religious minorities and women of colour as especially unworthy of autonomy is a racist, sexist law. Instituting racist, sexist laws is a good way to win back the votes of racist, sexist people, but, again, a dreadful way of protecting women. In practice, a burqa ban, even the partial version proposed by Merkel which will most likely be hard to enforce under German constitutional law, will directly impact only a few thousand people in the west. Those people are women of colour, many of them immigrants or foreigners, people whose actual lives are already of minimal importance to the state except on an abstract, symbolic level, as the embodiment of a notional threat to white Christian patriarchy. Many believe that France's longstanding burqa ban has increased racial tensions — encapsulated by the image earlier this year of French police surrounding a woman who was just trying to relax with her family on the beach in a burkini. There's definitely male violence at play here, but a different kind — a kind that cannot be mined for political capital, because it comes from the heart of the state.

This has been the case for centuries: long before the US government used the term“Operation Enduring Freedom” to describe the war in Afghanistan, western politicians used the symbolism of the veil to recast the repeated invasion of Middle Eastern nations as a project of feminist liberation. The same colonists who justified the British takeover of Islamic countries abroad were active in the fight to suppress women’s suffrage at home. This is not about freeing women, but about soothing and coddling men’s feelings about women.

The security argument is even more farcical: border guards are already able to strip people of their clothes, underwear and dignity if they get the urge. If a state truly believes that facial coverings are some sort of security threat, it should start by banning beards, but let's be serious, masculinity is fragile enough as it is. If it were less so, we wouldn't have politicians panicking over how to placate the millions of people who view the clothing choices of minority and migrant women as an active identity threat.

Many decent, tolerant people, including feminists, are torn on the issue of the burqa: of course we don't want the state to start policing what women can and can't wear, but isn't the burqa oppressive? Maybe so, but I was not aware of feminism as a movement that demands that all oppressive clothing be subject to police confiscation, unless the Met’s evidence lockers are full of stilettos, girdles and push-up bras. In case you're wondering, yes, I do feel uncomfortable on the rare occasions when I have seen people wearing the full face veil in public. I've spent enough time living with goths and hippies that I've a high tolerance for ersatz fashion choices — but do wonder what their home lives are like and whether they are happy and safe, and that makes me feel anxious. Banning the burqa might make me feel less anxious. It would not, however, improve the lives of the women who actually wear it. That is what matters. My personal feelings as a white woman about how Muslim women choose to dress are, in fact, staggeringly unimportant.

If you think the Burqa is oppressive and offensive, you are perfectly entitled never to wear one. You are not, however, entitled to make that decision for anyone else. Exactly the same principle applies in the interminable battle over women's basic reproductive choices: many people believe that abortion is wrong, sinful and damaging to women. That's okay. I suggest they never have an abortion. What's not okay is taking away that autonomy from others as a cheap ploy for good press coverage in the runup to an election.

This debate has been dragging on for decades, but there's a new urgency to it now, a new danger: we are now in a political climate where the elected leaders of major nations are talking about registries for Muslims and other minorities. Instituting a symbolic ban on religious dress, however extreme, sets a precedent. What comes next? Are we going to ban every form of Islamic headdress? What about the yarmulke, the tichel, the Sikh turban, the rainbow flag? If this is about community cohesion, what will it take to make white conservatives feel “comfortable”? Where does it stop? Whose freedoms are politicians prepared to sacrifice as a sop to a populace made bitter and unpredictable by 30 years of neoliberal incompetence? Where do we draw the line?

We draw it right here, between the state and the autonomy of women, particularly minority and migrant women who are already facing harassment in unprecedented numbers. Whatever you feel about the burqa, it is not the role of government to police what women wear, and doing it has nothing to do with protection. It is chauvinist, it is repressive, it is a deeply disturbing precedent, and it has no place in our public conversation.

 
 
 
 

Laurie Penny is a contributing editor to the New Statesman. She is the author of five books, most recently Unspeakable Things.