Socialist Worker

Slasher Osborne's Budget Day massacre

Press and pundits focused on George Osborne’s minimum wage rise but missed the real story of the budget—the biggest assault on working class living standards for a generation. Nick Clark examines the budget

Issue No. 2462

A real Northern Powerhouse—Budget Day protest in Bradford

A real Northern Powerhouse—Budget Day protest in Bradford (Pic: Neil Terry)

George Osborne’s budget is a plan to steal money from the poor to give to the rich.

People in work will be worse off. Benefit claimants will have more money snatched from them. 

The last bit of money to support students going to university will go. But tax cuts will make the bosses richer.

Yet people took to the streets across Britain to demonstrate as the budget was unveiled on Wednesday of last week.

Osborne stole a slogan from the TUC—“Britain deserves a pay rise”—to announce a “compulsory living wage”.

It’s a con. Osborne’s “living wage” won’t start until next April and it will be £7.20 an hour. Bosses won’t have to pay it to any worker aged 25 and under.

And pay rises for public sector workers have been frozen at 1 percent for another four years. 

Yet again they face attacks on jobs and pay.

The actual living wage—the one set by the Living Wage Foundation—is currently £7.85 and £9.15 in London. It says this is the bare minimum someone working full time can realistically live on.

This assumes people are receiving tax credits and in-work benefits. Without them, the current living wage would be nearer £11 an hour. 


Yet Osborne wants to freeze working age benefits and tax credits for four years. 

And he has cut the household benefit cap—the total amount an entire household can receive in benefits—from £26,000 to £20,000. It will go down to £23,000 in London.

Protester Helen told Socialist Worker, “I’m not the sort of person who protests. But the austerity measures target the poorest people. A lot of people feel the same.

“I want to stand up and be counted. I think we should storm parliament. There are some things worth being arrested for.”

Tax credits came in for a battering. A single parent with two children working 16 hours a week on the minimum wage will gain just over £400 from the new “living wage”. But they will lose £860 from tax credit changes in 2016-17.

Some 13 million families will lose £260 a year from tax and benefits changes—three million are likely to lose £1,000 from tax credit changes.

A family with one earner on average wages will lose more than £2,000.

And Osborne has changed the rules so that money can be clawed back sooner.

Currently anyone receiving tax credits gets money deducted from elsewhere once those credits exceed £6,420. Osborne’s budget cut this to £3,850.

The “income rise disregard” is a buffer designed to stop families having their credits clawed back. This will be slashed from £5,000 to £2,000.

On top of that new claimants won’t be able to claim the family element of tax credits after April 2017. And child tax credits, worth £2,780 per child, will be limited to two children.


Protester Sharri told Socialist Worker, “I’m really angry about the attack on child tax credit. 

“My mum could not have survived without them.

“One of my friends is a single mother. It’ll be much harder for her to cope now. It’s made me think I don’t want to have children.”

Meanwhile social housing tenants who earn more than £30,000 will be forced to pay full market rent. In London that’s £40,000 a year.

Yet Osborne had big giveaways for the rich. He will raise the threshold for the 40p tax rate to £43,000 next year. Put simply this gives more well-off people a tax cut.

The income tax personal allowance will rise to £11,000 from next year—disproportionately benefiting the rich.

So in the financial year starting in 2020, if you earn £25,000 your income tax will fall by £380. But for someone earning £60,000, it will fall by £1,903.

Meanwhile, the Tories are cutting corporation tax again—to 19 percent in 2017 and to 18 percent in 2020. This tax on profits was 52 percent under Margaret Thatcher. 

Other perks include raising the inheritance tax threshold to allow homes worth £1 million to be passed on tax-free. 

And Osborne cut the bank levy—giving more money to the bankers.

Hardest hit won’t take another punch 

Disabled activists protest at parliament last week

Disabled activists protest at parliament last week (Pic: Socialist Worker )

The Tories want to cut a staggering £46.5 billion from welfare over the next five years. Some £640 million will be cut from Employment and Support Allowance.

New claimants in the “Work Related Activity Group” of disabled people will now get the same as Jobseekers Allowance (JSA)—a 30 percent cut. 

The Department for Work and Pensions has defined people in this group as being capable of work in the future. Disabilities bring various extra costs that vulnerable people will now find it even harder to cope with.

Lesley Sandland is a disabled claimant living near Huntingdon. She told Socialist Worker, “I am so angry with the Tory government for playing with people’s emotions over the budget. Every one of us who has a disability feels anxious.

“Some are increasingly depressed and a few feel on the edge of suicide.”

But disabled people greeted the budget with resistance and a protest at Downing Street.

Paula Peters from Disabled People Against Cuts announced, “We say to George Osborne, you know where you can stick your budget. We’re not gonna take any more cuts. David Cameron, get used to seeing us—we’re fighting back.”

War declared on young people

The Tories want to use the budget to put the final nail in the coffin of free education. A loan will replace the student maintenance grant.

The means-tested grant to help with students’ living costs is worth up to £3,387 a year. Any student from a household with an income of less than £42,000 is entitled to at least something.

Osborne’s cut affects all but those from the most well-off families.

Noga is a student from Sussex University. She told Socialist Worker, “They want to stop poor people going to university. Already people can’t afford the rents.”

The budget didn’t do much for young people not at university either. They won’t get the new “living wage”. And most people under 21 will no longer be eligible to claim housing benefit.

Student Deborah had to work full time while studying because she couldn’t afford her rent.

She told Socialist Worker, “It’s on minimum wage with illegal hours. We have to work through our breaks, but we still don’t get paid for them.”

And Osborne’s “youth obligation” will impose an “intensive regime” on 18 to 21 year olds on Universal Credit from April 2017. This could include forcing them on mandatory work placements.

As Deborah put it, “The Tories are attacking 18 to 25 year olds and I don’t know why.”

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