12 March 2020

A response to the Budget: concerns over the impact on families living in poverty

Paul Morrison, policy adviser for the Methodist Church with particular responsibility for issues around the economy including poverty and inequality, responds to some of the key Budget announcements. The Budget papers are available on the Government's website here.

Poverty

Despite large increases in spending, the direct effect of this budget will be to reduce the incomes of the poorest families in our society. This is clear from the Treasury’s own analysis. The gains from the budget are focused on families with middle and higher incomes.

Borrowing will fund big infrastructure projects as well as more day-to-day public services. It is hard to argue that we do not need to improve our transport and broadband infrastructure, but the 14.3 million people who are locked in poverty will only be able to benefit from them if we commit to tackling poverty. Sadly, this was a big spending budget that did not to make that commitment.

Coronavirus

The chancellor announced a number of measures to improve the cash flow of small and medium businesses to help them through coronavirus disruption.

The measures to help individuals affected by coronavirus appear much less comprehensive. The key question is  - will families with low incomes be able to make ends meet as they become unable to work, through illness or caring responsibilities?

It looks likely that many will face the impossible choice of doing the right thing and self-isolating, or continuing to work and having sufficient income to feed and house their family. The changes to Statutory Sick Pay, contributory Employment Support Allowance and self-employed Universal Credit announced in the budget are welcome but provide limited help and will not include many families most at risk

Government needs to think hard about how to expand the reach of these measures. For churches, an appropriate response must include generosity towards neighbours, perhaps directly but also by giving to foodbanks and other charities who will be called up to provide emergency aid.

Economy

The economic impact of Coronavirus loomed over the budget. What were poor economic forecasts around growth, tax revenue and productivity will need to be reduced further.

The government’s judgement is that interest rates will stay low, allowing borrowing to expand considerably. This is a major reversal from the past 10 years. The money is to be spent on infrastructure alongside additional day to day spending.

The plan is to return day-to-day spending per person to 2010 levels, but for that money to be spent on different things. Direct spending on families and children will be much less than 2010 while spending on pensions will be higher. Spending on services more targeted on low income groups such as social care and council services will be less, while spending on services aimed at the entire community such as police and the NHS will be greater.  

Environment

Our partner churches across the globe are clear that climate change is affecting people’s lives today. We recognise that tacking the climate emergency must be a priority and the UK, historically a major contributor to greenhouse emissions, has a particular responsibility.

The budget announcements concerning the environment were mixed. Taxes have been increased on red diesel but reduced in real terms on petrol. More money for public transport has been provided, alongside a much larger investment in roads. Investments in new cleaner technology may have long term effects but this does not appear to be a budget that has grasped the urgency of the climate emergency.

The Comprehensive Spending Review in July will be the next opportunity for the government to demonstrate that it understands the urgency and scale of the climate challenge, and churches and church members will continue to press for the dramatic changes that are required.

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