Budget June 2010: Welfare and benefits

Member News

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Response to state age changes

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We examine some key highlights affecting welfare and benefits policy, including reaction from ePolitix.com members.

Welfare and benefits

• Earnings will be re-linked with basic state pensions from April 2011
• There will be a two-year pay freeze for civil servants earning more than £21,000. Those earning less than this will receive a flat rate pay rise of £250 in both these years
• The government will increase the retirement age to 66 and consult on whether to phase it out altogether
• The uprating of benefits will be aligned to the consumer price index rather than the retail price index
• Tax credits will be reduced for families earning over £40,000 and the taper rate increased
• Child benefit will be frozen for the next three years
• Local housing allowances and mortgage interest support will be restricted and maximum limits set on housing benefit payments

Member Response: Unite joint general secretary, Derek Simpson

Unite warned that the following measures will hit working people and impede economic recovery:

-Freezing child benefit for three years, hitting low waged households hardest, -Freezing public sector pay, hitting some of the lowest paid in the land, for two years,
-Reducing investment grants for the struggling manufacturing sector to £25,000 and below,
-Increasing VAT from 17.5 percent to 20 percent, which will endanger the fragile consumer recovery,
-The 25% cut in public spending in next four years and
-£11 billion welfare benefit cuts over next four years.

Member Response: Age UK

We are delighted at the introduction of a triple guarantee to raise the basic state pension by the highest of earnings, prices or 2.5 per cent from April next year, and the corresponding increase for Pension Credit; both of which will help the poorest in later life. However, the rise in VAT will offset this progressive measure by hitting low-income pensioner households hard.

The projected 25 per cent cut to public services is concerning. A cut of this magnitude to older people’s care in particular will be disastrous. Money to support people to stay in their own homes will be very scarce, as councils will have no option but to support those with the greatest disabilities living in care homes.

While we welcome the consultation on phasing out the Default Retirement Age, there needs to be a definitive commitment and timetable for ending this unfair and unsustainable law.