Since the announcement in the Summer Budget and the Welfare Reform Bill, there have been few issues as contentious as the Government’s plans to cut tax credits. They have sparked uproar across the country, far outside the Westminster bubble in which the Tory Government lives, and out into the homes of millions who will be hit by these cuts. This includes thousands in Bradford, and many constituents are still writing to me describing their outrage and anger at the cuts.
I feel their anger is well justified, for before the General Election, in front of the nation, the Prime Minister promised that when George Osborne cut £12 billion from the welfare budget, he would not cut tax credits. Because of this promise, thousands voted Conservative, feeling secure in the assurance that their family and incomes would be safe. However as we know now, it was not to be the case, and within weeks the Chancellor pushed forward with plans of how he would lower the tax credit threshold, how he would decrease the amount awarded, how he would limit tax credits for children, and how he would ultimately threaten the financial stability of millions of households already teetering on the edge, for whom the cuts to tax credits will be the final straw.
Cameron and Osborne have taken their new voters who thought they could trust the Tories as fools, leaving them feeling used and cheated, which was shown all too clearly on Question Time recently when a woman who declared that she had voted Conservative because she was taken in by their false promises, cried out that she now faces financial hardship because of the cuts, despite working hard. When the Tories treat their own voters and the general public as nothing more than disposable tools who can be bought with lies then thrown away within weeks, it is no wonder that there is anger.
Nevertheless, it is not solely because of the Tories’ lies and deceit that people are angry and I know that they are angry like me, it is because these cuts will have the widest, most devastating impact seen in a generation, and so great will the damage be, even Tory backbenchers are objecting to their own Government’s policy. The number of people claiming tax credits shows just how far the cuts will hit. In April 2015, there were 4.5 million families in receipt of tax credits in the UK, of which close to 3.3 million were in work. Of this figure 2.71 million have children with 5.26 million children in in-work families in receipt of tax credits. These numbers alone are staggering, caused by the Government’s repeated refusal and failure to tackle the endemic problem of low pay and insecure hours in our labour market. Locally, the figures are just as bad if not worse, with 15,500 families in my constituency of Bradford East in receipt of tax credits, of which 11,000 are in work. 9,300 of these in-work families have children, with 20,700 children in the constituency overall who will suffer as a result of the cuts. And there is no doubt that they will suffer - the independent House of Commons Library predicts that the changes will hit almost all of in-work families claiming tax credits, leaving them an average of £1,300 worse off each in the 2016-17 financial year.
For many in Bradford and all across the UK, this money makes the difference between whether their children get childcare or not, whether their families eat or not, whether they heat their homes or not, or even whether they are able to make it to the next week or not. Tax credits are such a vital lifeline to many in order to keep their heads above the poverty line, that when they are cut, the Resolution Foundation expects 200,000 children to be dragged screaming into poverty overnight. For comparison, that’s the equivalent of over a quarter of the population of Leeds suddenly finding themselves struggling to pay their day-to-day expenses. To build a better society and a more stable, secure future, we must not go around afflicting the most vulnerable in society, the ones who cannot defend themselves, and I am proud that I and the rest of the Labour Party are at the forefront of opposing these brutal, unreasoned and ideological attacks.
With 10% of the household weekly incomes for a Pakistani and Bangladeshi household and 6% for black households comprised of tax credits, compared to 2% for white households, it is also evident that these cuts will have a truly catastrophic effect on those from a BME background, as they will see even more of their incomes suddenly disappear. The fact that these people are often employed in low-skill roles limiting their capacity to move between jobs and ascend to higher paid roles also limits their capacity to offset the cuts by working. So bad is the effect that this will have on BME communities, the Runnymede Trust, an independent think-tank specialising in promoting a successful multi-ethnic society, claim that the cuts will increase racial inequalities, destroying all of the hard work that the last Labour Government did to provide equal opportunities and an equal future for everyone.
But the changes won’t just rip apart our communities by increasing racial inequalities and creating a bigger gap between the lowest and the highest paid, they will destroy the economies of our towns and cities by suddenly pulling millions out of the pockets of our citizens which would have been spent in the local economy. The poorest in society are the ones that spend the most by proportion of their income, and although they will not be driving growth though investing in businesses and buying the latest products, they keep our local economies ticking over as local businesses rely on the spending power of local people. They provide businesses with consumers for basic goods such as food, drinks, other everyday items, and once in a while, even luxury items and experiences, but because of the cuts, providing that the £1,300 figure is equally spread across all 15,500 households, the economy of Bradford East is set to lose out on £20 million. That’s £20 million that will no longer be spent in our corner shops, our supermarkets, our clothes stores, our cinemas or anywhere else for that matter. For the whole of the Bradford local authority, the figure could be close to £75 million, further fuelling the spiral of deprivation that hangs over Bradford. If it wasn’t always before, the Chancellor’s economic strategy is now rapidly falling apart, as it is nothing short of bad economics to assume that Bradford and other towns and cities can survive such a tremendous amount of money no longer being spent in them.
Despite the Government’s repeated protestations, these is nothing else in the Chancellor’s budget will alleviate these cuts; his living wage is a lie that will not provide enough to live on, his rise of the Personal Tax Allowance a gimmick that is already above most of those who will be hit, and his promise of additional hours of free childcare will be too little to help the majority who need it. He thinks he can get away with these cuts, but he is wrong. The tide is turning against him and he has exposed the lie of the Tories being the “new workers’ party”, showing them for what they really are - ideological austerity extremists entirely out of touch with ordinary people and their lives.