Government criticised for autumn statement plans to impose three-year squeeze on range of benefits
Labour accused the government of imposing a “strivers’ tax” and a “mummy tax” on Thursday as it criticised government plans to impose a three-year squeeze on a range of benefits aimed at both those in and out of work.
In the autumn statement this week George Osborne announced that most benefits will rise by only 1% a year for the next three years.
The government said maternity pay would rise by £135 in 2015, but did not challenge the claim that this would mean a real terms cut due to the effect of inflation. It also insisted working people will benefit from lifting personal allowances by approximately £260 a year, or £5 a week, and this would be more than the impact of the benefit squeeze for the vast majority of households.
But the shadow minister for women Yvette Cooper said: “This real terms cut in maternity pay is effectively a £180 mummy tax on working women – and it’s bad for the whole family. Evidence shows women on low income are less likely to take their full maternity leave because they can’t afford to stay off work.”
The party’s Treasury spokeswoman Catherine McKinnell said: “In the budget the small print was the granny tax and in the autumn statement the hidden detail was George Osborne’s mummy tax, as maternity pay is cut in real terms.
“The government claims they are targeting the work-shy and benefit scroungers, but it’s just not true. They are hitting millions of working families, and mums taking time out from work to look after their newborn baby.
“And all this is happening on the same day that millionaires get an average tax cut of over £100,000. It’s completely unfair.”
The Tories and Liberal Democrats plan to challenge Labour to vote for the 1% yearly rise in an uprating bill probably in the new year. If they refuse to do so, the coalition will accuse Labour of not being serious about reducing the deficit.
The shadow work and pensions secretary Liam Byrne claimed the 1% rise over three years will save £6.7bn, and claimed only 23% of that saving will come from jobseeker’s allowance, employment support allowance (ESA) and income support.
He said “The rest of the balance will come from tax credits, maternity allowance, maternity pay, sick pay and housing benefits, which are all claimed by working people. The ‘strivers’ and ‘battlers’ whom the prime minister promised to defend at his party conference will pay the price for the government’s failure.”
Byrne also said £14bn had been taken out of tax credits, and the autumn statement will take another £5bn by 2016-17.
Steve Webb, the pensions minister, taunted Byrne by asking if he would abstain on the vote or reject the squeeze. Webb said: “He sounds sympathetic and angry, but when it comes to the crunch and there is a vote, he disappears and is not to be seen.” Webb said that disabled living allowance, attendance allowance, carer’s allowance and the support component of ESA will all rise in line with inflation.
In practice it is likely that Labour will vote against the uprating partly because they see the break between benefits and prices represents a historic change in the way benefits are paid.