By Ann Czernik
Within months of the general election, the Conservative party has suffered a damaging series of defeats on plans to introduce radical reforms of the Working Tax Credit scheme. Earlier in the week, the House of Lords controversially voted to halt the cuts until the government produces a scheme to compensate low-paid workers for three years. On Thursday, MP’s and backbenchers worried about the backlash to the tax credit cuts voted on a backbench motion calling on the government to “reconsider the effect on the lowest paid workers of its proposed changes to tax credits due to come into force in April 2016, to carry out and publish analysis of that effect, and to put forward proposals to mitigate it”
Official figures show that the majority of areas with the highest levels of recipients of working tax credits have significant percentages of Asian families. The UN’s committee on the covenant on economic, social, and cultural rights (CESCR) announced that it plans to ask the British government how its austerity measures affect, in particular, disadvantaged and marginalised individuals and groups. There is a focus on the impact upon ethnic minorities.
A spokesperson for the UN said that “CESCR will be reviewing the UK and six other countries next June as part of its regular cycle of examinations. It is not an investigation or inquiry launched in response to a particular situation or in response to a third party request. As the UK has ratified the International Covenant on Economic, Social and Cultural Rights, it undergoes periodic reviews of its record.”
The UN told Asian Sunday that “The UN is not able to impose sanctions. The process is ongoing and cyclical. The Committee, as with all States, will ask for the UK to make sure its report is widely circulated and that in its next report (in about five years), it details what action it has taken. “
The UN spokesperson emphasised that “An important part of the process is civil society: so non-government agencies can monitor how their country’s government does, and can use the Committee’s recommendations as a tool to hold the authorities accountable and for advocacy”
The UN will report its findings on the 24 June 2016.
Asian Sunday asked the Treasury for comment on the impact of the proposed cuts on ethnic minority communities.
A Treasury Spokesperson said “The Chancellor has made clear that the government will listen about how we make a transition to a higher wage, lower tax and lower welfare economy he wants to see and will announce his proposals at the autumn statement. But the end goal is clear – this country cannot have an unlimited welfare budget that squeezes out other areas of public expenditure”
Top of the worst hit list, will be the constituencies of Bradford East and West where over 40 per cent of the population are Asian.
The proposed changes will see £millions disappearing from local micro- economies which play a vital role in the British Asian economy.
Dave Green, Leader of Bradford Council said “There are a number of economies in Northern England with similar profiles. I’d be interested to know if the government has done an equalities impact assessment. Any proposal we have in our budget has to have an equalities impact assessment and I would have thought that government had to as well. The tax credit cuts are going to affect our Asian community disproportionately. For disabled people, there is a struggle to earn the average wage. So the equalities impact, I’d be very interested in seeing what has been produced by government.”
In Bradford, MP’s and Council leaders say that the proposed changes could de-rail the cities recovery and impact upon community cohesion.
Labour MP for Bradford East, Imran Hussain defied his party to vote against the Welfare Bill in July. Tax credits are a vital lifeline for 15,500 households in Bradford East and 57,300 households in the whole of Bradford. Hussain said that “The estimate that on average families would lose up to £1,300 a year is simply shocking, as is the impact that this will have on BME communities whose incomes are constituted more of tax credits than other groups. We also have to think about the impact that this will have on our children with the estimation that 200,000 children will be sucked into Dickensian levels of poverty by the cuts.”
Bradford West MP, Naz Shah says “The Tories are choosing to cut working families’ tax credits while millionaires have been given a tax break. These cruel cuts will have a huge impact on Bradford. More than 14,000 households in my constituency alone receive tax credits, the vast majority of whom are in work. These utterly unjustifiable cuts to household incomes hit the very people the Tories claim to want to help. The people this will hit hardest of all in Bradford West will be the 31,400 children living in households having their incomes slashed by David Cameron and George Osborne.”
Baroness Hollins explained to the House of Lords during Monday’s debate what the importance of the tax credit system is in upholding fundamental principles of government. Hollins contrasted the position of two women working in a call centre. She said “One is single working 35 hours a week, who from April earns £13 000 a year for herself. The other, a deserted mother with two young children, managing 25 hours a week, earns £9 000 a year for the three of them. The Government are completely right that we should certainly not subsidise employer’s low pay but no employer could pay the deserted mother twice as much per hour to make up for her family’s circumstances. The employer cannot do that and it is not reasonable to ask it to do so. That is the job of tax credits. They reflect family circumstances which an employer cannot reasonably do”
The Welfare Bill introduced an important and far reaching change to the principles of the welfare system. Tax credits will eventually be replaced by Universal Credit. The Welfare Bill limits the child element of universal credit to a maximum of two children. In future, Britain’s support for working families through the tax system will not reflect family circumstances.
Even if the proposals are watered down, the changes will not protect those on Universal credit. The Lords amendment will only offer transitional relief to families who currently count on tax credits.
For anyone who believes that the disquiet amongst MP is due to compassion, the words of Baroness Hollins should clarify the underpinning principle that the Lords defended with their amendment. She said “This is about honouring our word – the Prime Minister’s word – which work must always pay.”
By the end of 2019, the National Audit Office projects that only 9 per cent of existing tax credit claimants will still be in receipt of tax credits. The introduction of Universal Credit means that tax credits will largely have disappeared.
Britain has the biggest families in Europe. The average family now has three children and Asian families traditionally have four or more. The Welfare Bill removes any financial support for those additional children. The government are proposing a raft of proposals to mitigate the effects of the cuts but it is unclear exactly how the long term changes would impact on families, communities and the economy.
The cuts are not de-railed, they are simply delayed. The impact of the proposed changes has only been considered in terms of individual poverty and deprivation. No-one has raised the devastating effect that the government’s proposals could have on struggling communities with a low wage, high welfare economy or on the self – employed.
Areas like Bradford which have high levels of working tax credit recipients are working class, impoverished constituencies and the effects could sink local businesses
Green says that “If you look at the level of public sector cuts, of which the tax credit cuts are one part. The changes to council tax benefit of a few years ago were another part. The attacks on child benefit are another part. If you add tax credit cuts to the massive cuts facing local government then what you have got is the making of a perfect storm.”
Hussain is determined and said ““I now hope that the Government listens to the strength of feeling about these cuts amongst MPs and people across the country and uses the Chancellor’s forthcoming Autumn Statement to either cancel or mitigate these cuts, and I will be unyielding in my requests to the Chancellor to do so.”
