Advertisement

Benefit cuts to fund tax cuts for the wealthy branded 'deeply cruel' by children's charity

British Prime Minister Liz Truss and Chancellor of the Exchequer Kwasi Kwarteng visit Berkeley Modular, in Northfleet, Kent, Britain, September 23, 2022. REUTERS/Dylan Martinez/Pool
Liz Truss and Kwasi Kwarteng say their mini-budget, which has sent the UK economy into chaos, will boost economic growth. (Reuters)

Leading children's charity Save The Children has said the government's reported plans to cut benefits in real terms to fund tax cuts for the rich is "deeply cruel".

Liz Truss's and Kwasi Kwarteng's mini-budget last week sent the UK economy into chaos after they made a spree of unfunded tax cuts, many of which were for the highest earners.

The move led to panic in global markets including sending the pound plunging to a record low against the dollar and forcing the Bank of England (BoE) to buy £65bn worth of government debt to save tens of millions of pensions.

Despite the severe backlash, however, the chancellor and the prime minister have staunchly refused to reverse their budget - instead indicating they are planning to slash public spending to pay for it.

Read more: What happened to the markets in the 60 minutes Liz Truss was on the radio?

According to reports, among the planned cuts is cancelling planned rises to benefits in line with September's inflation, which is 10% - and instead increasing them by 5.5%, in line with average earnings.

This is a move that could raise up to £5bn for the Treasury, paying for the tax cuts the government have made to put more money in the pockets of the highest earners.

In contrast the lowest earners, who work but still rely on Universal Credit to get by, will see a drop in their income at a time when the rising cost of living is putting immense pressure on their household budgets.

Kaysey from the West Midlands, who works and claims Universal Credit, says she is "disgusted" by the government's economic plans and said it is affecting her mental health.

rb
Rebecca said life has become "unsustainable" and that she feels "punished" by the government. (Save The Children)

"How they are expecting people to survive when wages and benefits are not even close to matching the rate of inflation is beyond me," she said.

"I’m really worried, which mentally is starting to affect me.

"Worrying about things that in 2022, when I work full time, shouldn’t even be an issue like using my heating, electric, filling my car up and even just wanting to take my daughter out for the day.”

Rebecca from Norfolk, who like Kaysey has a child and still has to claim Universal Credit despite being in work, says life in this country is becoming "untenable" and "unsustainable".

The news that the government is considering slashing real terms benefits by 10% said it has left her feeling like she's being "punished".

"Yet again the poorest and most vulnerable are being punished when a large majority - like myself, a single parent to one child - are working several jobs, cutting out meals, relying on food banks and charity and still struggling," said Rebecca.

Read more: Bank of England: What will the emergency action actually do?

“Life in this country is somehow becoming completely untenable and unsustainable for the poorest while easier and happier for the small percentage of very rich.

“I wouldn’t call it shocking, I’d call it shameful."

It comes as Save The Children urges the government to honour the pledge made by former chancellor Rishi Sunak to increase benefits in line with September's inflation.

“The last chancellor made a commitment to raise benefits in line with inflation, so this now feels like an active decision by the UK government to penalise those with the most to lose," said Becca Lyon, head of child poverty at the charity.

Abolishing the 45p rate of Income Tax will boost the take-home pay of the UK's highest earners (Yahoo News UK/Flourish)
Abolishing the 45p rate of Income Tax will boost the take-home pay of the UK's highest earners (Yahoo News UK/Flourish)

“Families we work with spend a greater proportion of their income on the essentials than wealthier people, therefore this increase in benefits was vital.

"Without it there will be less food, less money for the meter, and fewer warm clothes for children.

“No child deserves to be caught up in this economic experiment. We demand the government returns to its commitment to uprate benefits in line with inflation immediately.”

Commenting on the idea of real-terms benefits cuts to tax cuts for the wealthy, low and middle income think tank the Resolution Foundation said: "You couldn't make it up".

Read more: Pound wipes gains against dollar after Truss and Kwarteng's OBR meeting

"That saves the Treasury around £5bn a year permanently, but at very considerable cost to those on low-and-middle incomes: a typical working family on Universal Credit with two children loses over £500 a year," it said.

"Of course, it’s tax cuts that disproportionately benefit the top that makes this necessary (worth £55,000 for someone earing £1 million next year)."

It added: "This is permanently cutting benefits for the bottom to fund tax cuts for the top, in the most unequal large country in Europe. You couldn't make it up."

The Treasury has been approached for comment.

Watch: Treasury secretary suggests benefits may not be uprated in line with inflation