“Giving Britain a pay-rise” was how Chancellor George Osborne described yesterday’s budget, but Northampton’s Labour group fear more benefits cuts will leave the poorer worse off.
The first fully Conservative budget for 19 years yesterday promised to introduce a new compulsory “living wage” for all workers aged over 25, starting at £7.20 an hour from April 2016 and set to reach £9 by 2020.
The personal allowance, at which people start paying tax, is also set to rise to £11,000 next year.
But the budget saw further chunks ripped out of the Welfare system.
The Tories will restrict tax credits and Universal Credit to two children, affecting those born after April 2017 and the income threshold for tax credits is to be reduced from £6,420 to £3,850. Households will also see total benefits capped at £20,000 a year.
Northampton Labour group’s shadow cabinet member for finance, Councillor Elizabeth Gowen (Lab Eastfield), believes the budget will harm the poorest people in the town.
She said: “I fear for the future of those people in Northampton who are really struggling to find work and those in low paid jobs.
“People will be harmed by a variety of measures in this budget. In particular, I believe, the freezing of working age benefits for four years, tax credits and Universal Credit being restricted to the first two children, 18 to 21 year olds not being automatically entitled to claim housing benefit and this new benefit cap of £20, 0000 will hurt our poorer residents.”
“The Labour Group is firmly opposed to these measures.”
Councillor Gowen also said the new living wage of £9 per hour by 2020 will “not be as helpful to Northampton people as George Osborne claims” as she says many are losing out through big reductions in tax credits.
Many Chronicle & Echo readers share the same view.
Bianca Todd, said: “The £7.20 an hour next April rising to £9 an hour in 2020 is hardly a living wage, it is an attempt at a survival wage, however let us be real - no one can survive on that as the cost of living goes up.
“I am a local employer and I think it is a disgrace that the government thinks so little of the working class that keep the country alive and kicking that they have not demanded a real living wage.”
Maria How added: “What worries me is if the employer has to put up their employees’ wage and can’t afford to do so or do not want to, that means they will have to let their employees go, which means the government will have to pay out more Jobseekers’ Allowance.”
The Office for Budget Responsibility (OBR) believes the raising of the minimum wage to £7.20 will result in a loss of 60,000 jobs across the country.
But many from Northampton have welcomed some of the headline measures announced by the Chancellor.
Chief executive of the Northamptonshire Chamber of Commerce Paul Griffiths, said the budget “has achieved a healthy balance of politics and economics which seeks to build on the UK’s recovery.”
But he added that the chamber’s endorsement of the budget came with a note of caution.
“Whilst there was a lot to cheer for the businesses throughout the area in this summer’s budget, there is a note of cautious optimism for businesses as they will want to see greater detail on how the Chancellor’s objectives of; a better road network; improved skills for the nation’s workforce; and more local decision making will be achieved.
“Businesses will have also noted that the Chancellor is gradually pushing the burden of supporting the low paid on to them from the state as Mr Osborne continues to address the UK’s budget deficit.