7th September 2015
The Trade Union Congress (TUC) has claimed that as a result of the government’s actions the UK’s poorest working households will lose on average £460 a year by 2020 while the richest will be £670 better off.
Research from the TUC looked at the impact on annual incomes in 2020 on the back of changes due to be made to universal credit, benefits, minimum wage and tax allowances. It also includes gains from the Chancellor’s planned increases to the minimum wage.
The TUC found working households in the middle of the spectrum make a small gain on average but it is much less than the average gains that the wealthiest stand to receive.
The difference between the top and the middle shows up even more starkly in the decile analysis for all households, which shows that the average annual gain for the top decile in 2020, is £780, some 20 times the average gain for the fifth decile, at £40.
The research also looked at the impact of the changes across non-working households. It showed a similar pattern of large gains at the top, minor gains in the middle, and losses for the bottom, although these losses are not as great as when only working households are included.
The analysis assumes that all qualifying households have been transferred from tax credits to Universal Credit by 2020. However, if the transition to Universal Credit is delayed, the poorest deciles will face even larger losses worth hundreds of pounds more each year because of cuts the government is making to tax credits.
TUC general secretary Frances O’Grady said: “Even after the extra help from a larger tax allowance and a higher minimum wage, low paid families will still be made more than £8 a week worse off on average by 2020. And if Universal Credit is delayed, leaving families still on tax credits, their losses will be hundreds of pounds a year more.
“David Cameron needs to explain to low paid families why he is cutting their income by the same amount as a whole year of school dinners, but he’s giving the richest a cash boost worth a bottle of champagne every week. We need a recovery that works for everyone, not just those at the top. But by cutting support for low paid families, despite a growing economy, the government is shutting them out of the recovery.”