Today’s PMQs was bad-tempered as usual. I am often struck though at David Cameron’s willingness to say stuff that he must know isn’t true. Alongside the budget, the Treasury published a distributional analysis showing the impact on families not just of this budget but of the various changes introduced since 2010. You can download the full document here.
The following chart shows the Government’s own modelling of what they think the cumulative impact of their changes will be by 2015:
The chart shows every single section of society will be worse off as a result of this government’s changes, with an average “hit” of £757 per year. Moreover, although it is true that those at the top of the tree are bearing the largest burden, the next most significant “hit” is for those on the lowest incomes. Yes the changes in tax are positive, but these changes are more than wiped out by the changes to tax credits and benefits. The changes in public service spending have a massive impact on the poorest families.
And remember these changes are only the ones that the Government is intending to cause – they don’t take account of the fall in real wages which has occurred over recent years. Labour’s claim that wages have fallen by an average of £1,600 in real terms is backed up by the Institute for Fiscal Studies, who anticipate further falls in wages over the next couple of years and that the poor will again be hit harder than the better off.
The truth is that the Government’s welfare reforms hit working families harder than those out of work. As I am sure the Labour team will be emphasising in today’s debate, cutting welfare spending would be a good thing – but the way to do that is to get people back into work. It is this Government’s failure to tackle low wages, the impact of cutting public spending too far and too fast and the fact that house-building (particularly social rented housing) has fallen of a cliff that are the reasons for welfare spending going up. The Government is set to spend £13 billion more on welfare over this Parliament than George Osborne originally planned.
The bedroom tax is so badly thought out it will probably end up costing more rather than saving money – as well as causing huge misery for those affected. The single most important change to the welfare system in my view is the Compulsory Jobs Guarantee proposed by Ed Milliband, to get young people and the long-term unemployed to work. Everyone has something to contribute and I want to see a society which helps everyone to do so. It is in their personal interests and it is in our collective interest to do so.