There has been so much macro-analysis of the emergency budget this week that we wanted to see how it will impact on local people in the London borough of Newham where we work. It’s difficult to analyse the changes as they are going to be introduced over the next few years, and we won’t see the detail until the 20th October when the Comprehensive Spending Review is published.
Newham has worked hard to get off the bottom of the league tables when it comes to multiple deprivation, but we have seen the consequences of the recession over the last two years as demand for our services has soared – those seeking debt advice have doubled, and those seeking employment support have tripled in last 18 months.
So here’s a snapshot of what these changes mean for local people in east London.
Benefits and Tax Credits
- The three year freeze (should read ‘cut in real terms’) of Child Benefit will affect 41,035 families in Newham who receive Child Benefit (a total of 79,320 children), a powerful tool in the fight against child poverty. Newham has one of the youngest populations in the country so we will be affected disproportionately.
- We welcome the increase of Child Tax Credit by an extra £150 per year. This will help the 38,600 Newham families who are currently in receipt of Child or Working Tax Credits (highest take-up in London) offset the cuts of their Child Benefit.
- Even though the government cut the free schools initiative being trialled (very successfully) in Newham and other boroughs, we are heartened to hear of Newham Council’s commitment to continue with it anyway.
- A total of 1,910 people (18.8% of those on JSA) have been claiming JSA for longer than 12 months in Newham, many of whom we help back into work through our very successful employment programmes. We recently submitted a paper to DWP proposing how the new Work Programme must be designed so that it doesn’t leave behind those who most need its support – read a copy here.
- We are concerned about the Housing Benefit being withdrawn from people on Jobseekers Allowance after 12 months. Particularly if at this point they have to go on the compulsory Work Programme. It’s contradictory and may lead to a massive increase in homelessness, debt or cash-in-hand work.
- Key out-of-work benefits are claimed by 30,440 residents (18.3% of the local population). Through delivering an advice service to 9,000 people each year and our research and campaigning work we know that fundamental reform of the benefit system is an absolute imperative. So we were heartened to hear that changes are underway, including work incentives which we’ve been lobbying for. We look forward to working with DWP over the summer as it prepares a new Welfare Reform Bill.
Housing
Current LHA rates for Newham top out at £350 for a 5-bedroom house, so Newham residents won’t be affected by the cap.
Tax
We welcome the government following up on one of our policy recommendations to increase the personal tax allowance threshold. This latest increase to £7,475 will take about 10,500 local residents out of the tax system (15.8% of Newham’s working age population), putting more money into the pockets of those who need it most.
However the VAT increases will adversely affect those poorest in our society. The richest 10% spend £1 in every £25 of their income on VAT. The poorest 10% spend £1 in £7.
Jobs
Where are the jobs? The assumption in the budget is that the private sector will fill the deficit by providing more jobs. And that it will be easier for people on benefits to move into work. But again where are the jobs now?
- In Newham there are 46 jobs for every 100 people of working age. Compared to 94 for London, and 83 nationally. In other words, people either don’t work, or have to travel outside the borough for work.
- Nine JSA claimants are competing for each unfilled job vacancy in Newham, compared with a national average of 5:1. And there are 10,196 people are claiming JSA in Newham. That’s an awful lot of competition from just one of the 33 boroughs in London.
- The types of work available to people in Newham are in the service sector (representing 89.9% of all jobs in the borough). Often insecure and temporary (32% are part time), low paid (21% get paid less than £7 an hour) and low skilled (24.2% fail to reach level 4 at Key Stage 2 – average of English and Maths).
Public Sector
Newham residents rely more heavily upon their public services than other more affluent areas. Some local services are already at bursting point as demand outstrips supply. When these are cut where will local people turn to?
- 36% of jobs in Newham are in the public sector (top 10% in the country). Newham Council has already had to cut £30million (c.7%) from this year’s budget. However if we are to see departmental cuts of 25% over the course of this parliament and a council tax freeze, how may of these jobs will go in Newham? Public sector funding also supports a diverse voluntary sector, delivering a wide range of services. The prospect of 25% cuts is not good for those who work in the sector, or for those they support.
It’s early days to see how this budget will actually impact on local people in east London. But we do know that as belts have tightened in the past it has often been those with least that suffer most. Let’s hope this coalition government’s rhetoric of fairness and support for the most vulnerable actually plays out into reality.
The consultation process for the Comprehensive Spending Review should be launched today (24th June) and the timetable runs through to the autumn – so get involved, we will be.
Note: Current data sources have been used where possible, and can be provided upon request.
A new campaign launched today calls on government to help people trapped into low paid cash-in-hand work when they could be helping the UK economy. 
I’ve just watched the BBC’s 
Last Saturday 
On May 16th 1968 Ivy Hodge went into the kitchen of her flat on the 17th floor of the Ronan Point tower block and struck a match to light the stove for her early morning cup of tea. The naked flame sparked a gas explosion, collapsing one whole corner of the building like a pack of cards.
“There are 66 words in the Lord’s Prayer; 42 laws of cricket; but housing benefit regulations runs to 967 pages, five parts, six schedules and 40 statutory instruments.”