So they sneaked in another budget because…well they could. You will know I am not into politics and all that jazz, let alone understand it. I just know it rather seems to me that unless you were either born into money, could go onto further education ( and get one of those super duper high paying jobs that everyone else is after) or have won the lottery…life will be hard. Even harder if your not the typical 2.4 children, two parent family. Majority of single parents will probably never earn enough to come off all benefits. They will never have to dread each budget to see how much worse off they will be…or how much they are blamed for the current or any financial climate.
So has the delightfully named Summer Budget been a ray of sunshine or a typical British summer and a wash out?
The three main cuts have been:
- £6 billion cut to tax credits, the new universal credit and housing allowances ( April 2017) – New claimants will lose credit entitlement for more than 2 children, loosing on average £3,670 a year.
- Cuts to work allowances – at the moment credits start to be withdrawn once family earnings go above £6,420. That number will fall to £3,850. Oh and they will be at a faster rate too.
- A 4 year freeze in working age benefits- this is estimated to hit 13 million families and also hits the very same child benefit that David Cameron promised to protect.
All the headlines were boasting up the gains to working families as Osborne also raising the income tax threshold and the new shiny National Living Wage. These gains don’t make up for the above losses though. They didn’t shout about that bit so much.
So how about some examples to make more sense of it all. Well according to the figures at Resolution Foundation..
- A low earning single parent with one child, working 20 hours a week at £9.35 an hour, will be £1,000 a year worse off. That is, the gain associated with the increase in the personal tax allowance is more than offset by reductions in benefit entitlement. To offset this fall in disposable income would require an increase of £3,400 in earnings – equivalent to a one off 35% rise in earnings, 15 years of steady 2% pay rises, or increasing their hours by 7 hours a week.
- A low earning dual-earner couple with two children both earning £9.35 an hour will be £850 a year worse off. They would need a one-off rise in earnings of 10 per cent to recover these losses, equivalent to 5 years of steady 2% pay rises or a 5 hour increase in the second earner’s weekly working time.
- A middle earning dual-earner couple without children where both earn £15 an hour will be £350 better off as a result of increases in personal tax allowance.
So I am about to fall into the Single Parent one child bit as my eldest finishes college soon. What have I got to look forward too? Ah yes less money even though in theory will be earning more and if I want to make up that £1000 loss a year I need to earn an extra £3,400 to achieve it. That’s just lovely. And there are still people out there who believe single parents have it all handed to them on a plate. As a single mum who works two jobs which equates to more then full time and still is worse off then all the other family types I wish someone would hand me one of these magical plates.
The data nerdy bit ….
|The Impact of Key Tax and Benefit Changes on Different Family Types|
|Gross household earnings||Net household income after taxes and benefits||Net Change in household income||Gross household earnings required to offset losses|
|before Budget||before Budget||after Budget|
|Single (no kids) full time, low earnings – works 35 hours a week at NMW||£15,050||£11,950||+£2,200|
|Single (1 child) part time low earning, renter – works 20 hours a week at £9.35, rent £100 a week||£9,750||£18,550||-£1,000||£3,400|
|Couple (2 kids) low earning, renters – main earner 37.5, 2nd earner 16 hours, both at £9.35, rent £150 a week||£26,100||£31,450||-£850||£2,700|
|Couple (3 kids) low earning – main earner 37.5 hpw, second earner 16 hours, both NMW, rent £150||£23,000||£34,350||-£250||£1,650|
|Couple (2 kids( mid earning) – main earner £12 an hour, second earner 16 hpw at £9.95 , no housing costs||£31,250||£27,750||+£50|
|Couple (no kids ) mid earning – both work 37.5 hours at £15||£58,650||£45,350||+£350|
|Couple ( no kids) high earning – both work 37.5 a week main earner £35 and hour, second £15 an hour||£97,750||£69,650||+£800|
|Source :Social Market Foundation analysis|
|Couple with 2 children and one full time earning min or living wage|
|£6.50 ph||£7.20 ph||£9.35 ph|
|Source :Social Market Foundation analysis|