THE BLOG

Tax Credit Cuts Are Just the Start of the Austerity Damage Being Done

25/09/2015 17:52 BST | Updated 25/09/2016 10:12 BST

Just before Christmas, families are likely to be, initially shocked, then very upset when they start receiving letters from HM Revenue and Customs (HMRC) telling them what will be happening to their tax credits next year.

When George Osborne revealed the first Conservative Budget for 18 years he got a cheer from his fellow Tory MPs. Iain Duncan Smith even punched the air with both fists. A sure warning sign of what was to follow.

Speaking after the election, David Cameron told the nation that his government would be on the side of those 'who work hard.' But six months on a very different story is emerging. And it is the incomes of hard-working families that are to be hit once again.

Next April, three million low to middle income households face a savage cut to their incomes - the equivalent in some cases of more than 10% of their take home pay. A contract cleaner recently burst into tears when she realised what the changes meant for her family, and I am sadly not short of other heartbreaking stories.

It is the ordinary people who do the vital jobs that keep our public services running effectively that are most in the firing line. They are cooks, cleaners, refuse collectors and teaching assistants, the people who drive buses for children with special needs, PCSOs, traffic wardens, admin staff, benefits assessors, care workers, healthcare assistants, medical secretaries and nurses.

And the people who work in shops, restaurants, offices and who make businesses tick over day to day in the private sector will suffer too.

The figures are 'eye wateringly painful' to quote Guto Bebb MP. A family with one child on £20k could lose £2,000. And for a family with two disabled children on £32k the loss is over £3,000. In some cases mortgages will be at risk, especially if interest rates rise next April.

Tragically for many, they will still be worse off in April 2020 than they are now. Families will be beside themselves when those HMRC letters start landing on doormats from December. This may be the first time they find out how much the government is going to be taking away from them.

But the tax credits example is only one aspect of the Conservative's drive for austerity. November's spending review is set to take £29bn out of public service budgets. Even Conservative MPs are said to be worried about the impact there will be on councils and local services.

The health service is struggling due to huge financial restraint and staffing shortages. Local councils are already announcing tens of thousands of redundancies ahead of what they fear will be an awful financial settlement later this year. In February 2015 an independent commission warned that local authorities were on a 'cliff edge' and that services which have been 'part of everyday life' for many years 'may not be there much longer'.

UNISON's austerity audit shows the damage that has already been done. Many more facilities will close, thousands of jobs will be cut, services that don't have to be provided by law like pest control, children's centres, youth services, non-statutory allotments, museums and sports facilities will either simply disappear or only be available to residents who are prepared to pay for them. Expect councils to draw the boundary of what is a statutory requirement forservices even tighter than they do now.

But it is not too late. The Chancellor could take a different path. Nothing dreadful would happen if the government delayed the date of reaching budget surplus until 2021/22. Mrs Thatcher never achieved it in her time in office. The government's deficit reduction plans have already been delayed twice and the world hasn't fallen in. Running a budget surplus from 2021/22 instead would make only a marginal difference. But the social cost of the pressing ahead with austerity is substantial - especially for the millions of ordinary families whose incomes will be hit hard by the tax credit grab.