The independent Institute for Fiscal Studies (IFS) published an assessment of what the Conservative Government needs to do to get the economy back on track after announcing unfunded tax cuts and other changes in the mini budget. The IFS estimates there will be a £63 billion black hole in the public finances by 2026/7. It suggests one way of plugging the gap is ‘Indexing working-age benefits to growth in earnings rather than prices in the next two years would cut spending by £13 billion, with most of the losses being felt by working-age households in the bottom half of the income distribution.’[i]

Councillor and Deputy Leader Elaine Taylor said ’In other words people with the lowest incomes would suffer the most.  The Tories promised us six months ago that benefits would rise with inflation in April 2023 – this was one reason they gave for not increasing benefits this summer even though inflation was three times the amount of the April 2022 increase and people were already struggling to cope. Truss looks like she is rowing back on this and want to increase benefits by half of current inflation.’

The Women’s Budget Group has also looked at what this would mean saying ‘a further 112,000 lone parents – mostly women – risk being pushed into poverty by rumoured proposals to increase benefits in line with average wages instead of inflation. This would leave those hardest hit by the #CostOfLivingCrisis even worse off.’ They added ‘households headed by lone mothers stand to lose around £400 per year. Single mothers were already more likely to be skipping meals for financial reasons than couples with children.’

The Child Poverty Action Group (CPAG) has also analysed the impact of a lower than inflation rise ‘If benefits only go up with earnings next year, they will have only risen by 9% (3.1% and 5.4%) since 2021/22. This means that low-income households will receive 10% less in social security in real terms than they did two years ago (and even less if the £20 universal credit uplift is taken into account). Most of these people are working and will also lose out from earnings going up by less than inflation.

Households who are unable to work, due to caring for young children, disabilities or being in between jobs, would be pushed even deeper into poverty. The 10% cut would be the biggest two-year reduction in social security ever – at a time when families are in desperate need of more support.’ CPAG calculates that another 200,000 children would be pushed into poverty.[ii]

Councillor Taylor added ‘It is outrageous that the Government is even thinking about pushing children into poverty to reward the rich. Oldham has a low wage economy and finding a better paid job or more hours is difficult, especially as working parents have to pay some of the highest childcare costs in Europe. The benefits system is supposed to make sure people have enough money to meet their basic needs, but Tory cuts mean food banks and other charities are supporting working families. It doesn’t have to be like this, but the Tories just don’t understand what life is like for ordinary people. Oldham Labour is working hard to support people and has launched ‘We can help’ to do everything we can to get money into people’s pockets and make sure everyone can eat and keep warm this winter. At the same time, the Tory Government won’t commit to keeping a promise to make sure entitlements keep up with prices. Quite frankly, this is outrageous’

Oldham Council’s ‘We can help’ offer is up and running. If you are struggling to meet day to day costs help is available here: https://www.oldham.gov.uk/wecanhelp or phone the We Can Help Team on  0161 770 7007. People unable to use the phone can text 07860 022876 (line set up by the Breakthrough Trust).