Cuts and social policy

As the Government outlines what is to be cut to tackle the deficit, agendaNi takes a look at how the plans will affect child benefit, marriage and welfare policy.

Welfare

Osborne announced that cutting back on welfare measures will save the Treasury £7 billion a year.

Proposals are being drawn up to replace all working age benefits and tax credits with a single, simple universal credit. Its guiding rule will be that it always pays to work, and those who get work will be better off than those who don’t.

Savings will also be made by implementing:

• a one-year limit to contributory employment and support allowance for those in the work-related activity group;

• an increase in the age threshold for the shared room rate in housing benefit from 25 to 35, so that housing benefit rules reflect the housing expectations of people of a similar age not on benefits;

• alignment of the rules for the mobility and care elements of disability living allowance paid to people in residential care;

• a freeze on the maximum savings credit award in pension credit for four years.

Social Development Minister Alex Attwood said the cuts were “shocking but not surprising”. He said: “Whatever the merits of welfare reform, the price is up front benefit cuts. The need to protect those in disadvantage and the wider need to keep our society stable are not helped by that sort of proposal.”

Alliance’s Stephen Farry said the cuts are “very challenging” for Northern Ireland. He said changes in welfare payments “will impact upon the spending power within the economy, as well as providing difficulties for those households directly affected. There can be no room for any complacency.”

Marriage

Although no formal announcement was made in the June Budget, David Cameron has indicated that the Conservatives are keen to implement a tax break for married couples by 2015.

The Tory manifesto pledged an annual £150 tax break for basic-rate taxpayers but David Cameron has now hinted it could be extended to higher earners. That idea, though, is opposed by the Liberal Democrats.

Cameron said: “I have always supported the idea of supporting marriage through the tax system, specifically supporting the idea of a transferable tax allowance. The idea of a transferable tax allowance is in the Coalition Agreement.”

He added: “It’s something we would like to do this Parliament but I hope you will bear with me as I try to announce one policy at a time.”

However, Alliance’s Anna Lo has criticised the proposals, saying the move would favour some couples over others: “Such a scheme would favour married couples over single parents and couples who are unmarried. This is the type of Conservative policy that people were worried they might try to implement.

“This is a very difficult time for people trying to make ends meet and the Conservatives should be focusing on helping those who need assistance most rather than providing a measure that will benefit married couples only.”

Child benefit

George Osborne has announced that any household with a higher-rate taxpayer will lose child benefit from 2013, saving the Treasury £1 billion.

If both parents in a household earn less than £44,000 a year, they will continue to receive child benefit. However, families with one main earner or more than £44,000 will have their benefit stopped.

At present around 7.7 million families with children receive child benefit, costing about £12 billion a year. It is estimated that the changes will affect about 1.2 million families. Speaking at the Conservative Party conference, Osborne described the cuts as “tough ­­­but fair”.

Critics have said that single parents and couples on relatively modest incomes will be hit the hardest. Labour has said that child benefit should remain universal and that families who want to “get on” are being penalised.