The Impact on women of Autumn Financial Statement 2012 and Welfare Benefits Uprating Bill 2013

You can read the full budget analysis here.

Executive summary

George Osborne delivered yet another blow to women’s rights and gender equality in the December Autumn Financial Statement (AFS). As 2013 begins, the government is introducing the Welfare Benefits Up-rating Bill, to implement the AFS measures on social security and tax measures

The Chancellor had the opportunity to mitigate the adverse impact on gender equality; instead women continue to lose out. The government’s strategy to reduce the country’s debt by cutting spending on benefits and services rather than increasing tax revenue has hit women hard. These policies adversely affect people receiving tax credits and social security, and those most reliant on public services. Women are over-represented in both these groups.

• The Chancellor’s decision to uprate most working age benefits and tax credits by just 1% for three years from April 2013 will have a devastating impact on people in poor and low income households. The Chancellor mislabels them “shirkers”. But these people are not shirkers: they are people in working households on low incomes, they are mothers providing necessary care for children, they are unemployed people desperately searching for suitable jobs in a context of high unemployment. Women are disproportionately hit by this cut in the real value of social security and tax credit payments. Women will pay about two-thirds of the money raised by this measure, and men one third, according to estimates made by House of Commons Library.

• When changes to income tax are also taken into account, women will be hit four times harder than men by the AFS measures, according the House of Commons Library’s research. Women pay 81% of the costs of the £1.065m raised in 2014/15. Cumulatively, women are paying over three quarters of the cost to household income from the net direct tax, benefit, pay and pension changes introduced by the government since June 2010.

• The Chancellor says the cuts to working-age benefits will raise revenue to fund two tax giveaways – the cancellation of the fuel duty increase and a further rise in personal allowance on income tax. The WBG has shown in previous analysis that these measures benefit more men than women. Women are less likely to drive cars than men. Women are more likely than men to be in part-time or low 3 paid employment. Among those who do not earn enough to benefit from the increase in personal allowance, 67% are women.

• Women’s unemployment – currently 7.7% – is at its highest level since 1994. The WBG is concerned that men and women are not benefiting equally from any new private sector employment opportunities that the Chancellor’s supply-side and rights-reducing strategy for recovery are supposed to deliver. The AFS announced further cuts to corporation tax, plans for Employee Ownership in return for a reduction in labour rights, and an extra £5bn investment in physical infrastructure. Yet the Chancellor failed to allocate more funds for essential social infrastructure, such as health, education, child and social care. Spending on social infrastructure create jobs for women as well as men, while providing vital services for communities.

Though the overall impact of the AFS is detrimental to the economic position of women, WBG acknowledges that the Chancellor did introduce some measures that are supportive of women and gender equality.

The WBG welcomes the announcement that pensioners’ benefits will be uprated by 2.5% under the “triple lock” guarantee. Lone women make up the majority of poor pensioners already being hit by cuts to health and social care. Older women have an income in retirement of just 57% of men’s because of an inadequate pension system that fails to cater for women who take time out of employment to care for children and parents.

We also welcome the decision to cap tax relief on pensions’ savings at £40,000 per annum and the reduction of the lifetime allowance from £1.5 to £1.25m, which will raise £1.1bn by 2017-18. However, the Chancellor should have gone further and capped all such tax reliefs at the basic rate; this would have saved £7bn. It remains unjustifiable that those on higher incomes gain far more from such tax reliefs than people on lower incomes.

The Chancellor says the burden of austerity must be shared. The WBG agrees but believes the Chancellor has fallen short of delivering the fairness implicit in this statement. In our response to the AFS, we demonstrate that the burden continues to fall on poor and low income women. These women are not “shirkers”. They work hard in low-paid jobs, try to cope with unemployment, raise families, and provide vital care for those unable to support themselves.

We urge the Chancellor to rethink his economic strategy. His plan A is not working. WBG proposes a plan F – a feminist economic strategy – to ensure everyone is fairly rewarded for the paid and the unpaid contributions they make to the economy, their communities, and to their families.

The WBG finds that women gain far more from greater public spending, as compared to tax cuts and advocates increased spending on public services, benefits, tax credits and state pension, all areas that help the poorest women, funded by increases in taxation on people and corporations that can afford to pay more.

You can read the full budget analysis here.