New report warns welfare cuts hitting low paid

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Sunday, 29 June 2014 22:08

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  The publication of a new report from the Joseph Rowntree Foundation showing that the cost of living has increased by 28% since 2008 while average earnings have increased by just 9% underlines the need for Scotland to make its own choices, the SNP has said.
 
The report warns that for every £1 that low income working families have gained from increased tax allowances, they have lost £4 as a result of cuts to tax credits and child benefit.

The Joseph Rowntree Foundation warns that “for working families with children, if these [benefit] cuts continue, the opportunity to reach an acceptable living standard may not improve, even as wages start rising again in real terms.”

The report found that in 2014:
 
For a couple with two children:
 
• In 2008 if each parent earned £14,000 the family would reach an acceptable living standard.
 
• If their earnings had increased in line with the average since 2008, they would now earn £15,000 each.
 
• That is over £5,000 short of the £20,400 each they would need to earn today to reach an acceptable living standard.
 
For a lone parent:
 
• A lone parent with one child needs to earn £27,000 – more than double the £12,000 needed in 2008.
 
For a single person:
 
• A single person without children needs to earn £16,400 – up from £13,500 in 2008, but down slightly compared to 2013.
 
The report also found that ongoing cuts to tax credits have more than outweighed savings from higher tax allowances, increasing financial hardship for low-earning families with children.  The report states that cuts to child benefit and tax credits have “created losses double the amount of tax allowance gain for working couples, and nearly four times the amount for working lone parents.”
 
Commenting, SNP MSP Jamie Hepburn said:
 
“This hard-hitting report is the latest demonstration that Westminster has got it badly wrong when it comes to helping households cope with increased living costs.
 
“Less well-off working households are paying a heavy price for Westminster’s ill-judged attack on welfare and today’s report underlines just how big a gap between earnings and the cost of living is being created.
 
“It shows once again that Westminster simply cannot be trusted when it comes to making decisions on welfare.
 
“Scotland is brimming with resources and talent – and is richer per head than the UK, France and Japan – but while it is tied the Westminster system the most vulnerable people in society are hit hardest by Tory cuts.
 
“We need the opportunity to make our own choices in Scotland and ensure that decisions on tax and welfare reflect the priorities of people living here. Only a Yes vote will give Scotland the tools we need to make Scotland a fairer, more prosperous country.”