Emergency Budget: Osborne’s plans ‘will hurt poorest families’

Children, young people and families are in line to bear the brunt of the measures announced in the Budget to reduce the country’s deficit, sector leaders have warned.

Despite assurances from Chancellor George Osborne that low-income and vulnerable families will feel the least impact of cuts, professionals have voiced concerns that the combination of measures, from rises in VAT to cuts to child tax credits, will pose a significant challenge to the poorest families.

Dr Katherine Rake, chief executive of the Family and Parenting Institute, said: “With the Child Trust Fund being abolished, child tax credits being cut for many ordinary families and child benefit frozen for three years, parents might be forgiven for suspecting they are in the frontline for cuts.

“Each separate announcement on the likes of raising VAT and cutting tax credits might sound manageable. But when considered together as a package, it’s clear this Budget will mean significant pain for families.

“The poorest families will feel the impact most acutely. But middle-income families will feel the squeeze too, especially as many work in the public sector, in schools and hospitals.”

Bob Reitemeier, chief executive of the Children’s Society, said: “We believe the new government has tried to be fair. The Chancellor claimed this Budget will not increase child poverty, but sadly we believe we are still in danger of creating the new poor. Hiking up VAT, ending payments like the Health in Pregnancy Grant and slashing child tax credits at a £40,000 joint income threshold is all going to put pressure on a lot of families already struggling to make ends meet. The freezing of child benefit for three years is a big blow for very vulnerable families. We are also concerned about the amount to be clawed back from the Welfare Bill over the next five years as the Chancellor aims to find savings of £40bn.”

Anne Longfield, chief executive of 4Children, said: “We welcome the retention of child benefit as a universal means of support for all families. The poorest families will also benefit from the increase in income tax personal allowance and the rise in the children’s element of tax credits.

“However, the increase in VAT will come as a blow to low-income families who already pay a larger proportion of their income on VAT. The impact of the withdrawal of tax credits from hundreds of thousands of families with incomes above £40,000 should not be underestimated.”

Philip Parkin, general secretary of education union Voice, said: The Budget will seriously diminish the public sector and gives Voice great concern for the future of education. Dedicated teachers, teaching assistants, childcarers and other public sector professionals are being made to pay for the folly, incompetence and greed of politicians and the City. 

Children and adult learners will suffer as services wither and die, courses are cut and buildings crumble. Economic recovery and the long-term prosperity of the country will be damaged by the decline in further and higher education and by the rise in unemployment.

Sally Copley, head of policy at Save the Children UK, said: “The £2bn extra cash to help the poorest families via child tax credit was the rabbit that Osborne pulled out of the hat. It’s a welcome move and we’re glad it’s targeted at those who need it most.

“But we fear this benefit will be wiped out by Osborne’s other tough measures. Most importantly, a 20 per cent VAT rate means the poorest parents will see their bill rise to at least £1,600 a year, affecting already overstretched budgets and driving some into the arms of loan sharks.

“Freezing child benefit for three years will also hurt the poorest families most, rather than their richer peers. And while raising the personal allowance lifts a million out of income tax, it doesn’t affect the three million who fall below the threshold already.”