Austerity plans will hit families hardest

| January 4, 2012
Austerity plans will hit families hardest

The Family and Parenting Institute (FPI) today warned that families with children will be worst affected by the Government’s proposed changes to tax and benefits.

A study by the Institute for Fiscal Studies on behalf of the FPI suggests that the average income of families with children will fall by 4.2 per cent by 2015-16, representing a loss of £1,250 a year.

For families with four or more children, the average drop in income will be even higher at 5.2 per cent.

In comparison the study calculates that average household income will fall just 0.9%, or £215 a year.

Dr Katherine Rake, the FPI’s CEO said: “This research confirms that families with children are shouldering a disproportionate burden”.

Although the government will launch the phased implementation of Universal Credit benefit from 2013, the overall change for families will be negative, according to the report.

Universal Credit, which will replace Income Support, income-based Jobseeker’s Allowance, income-related Employment and Support Allowance, Housing Benefit, Child Tax Credit and Working Tax Credit, is designed to increase the incentive for people to work.

It is also expected to protect the incomes of the poorest families, however cuts to child benefit for high-earners, a reduction in tax credits and VAT at the higher rate of 20 per cent will all have a negative effect on family incomes.

The FPI’s report has prompted criticism of the Prime Minister’s pledge to create “the most family-friendly government ever” and confirms the charity’s earlier warnings that austerity cuts would hit already hard-pressed families.

Following the Chancellor’s Autumn Statement in November Dr Rake warned that the plans offered “old comfort for stretched family finances”, although she did welcome a promised increase in investment in childcare for two-year-olds.

The number of two-year-olds receiving free nursery care will be doubled, with an additional £380 million a year in funding by 2014-15.

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