UK Budget Assessments
2014 Autumn Financial Statement: Full Budget Analysis
Date Posted: Sunday 4th January 2015
2014 Autumn FS
Each year the Women’s Budget Group analyse the financial statements announced by the government. Over the last four years we have warned against austerity and its impact on gender equality and this year is no different.
The message from the Chancellor in his Autumn Statement 2014 was that austerity is working and although the economy growing again, we need to continue to tighten our belts. What has concerned the WBG is that whilst the Chancellor may be focussed on eliminating the fiscal deficit, he has failed to see the real problems of the care deficit, the deficit in affordable housing and the deficit in high quality paid work, all of which impact particularly on women.
In order to tighten our belts, the Chancellor has proposed yet more cuts to public spending, cuts that will last throughout the next parliament and result in total government spending as a proportion of national income being reduced to a ratio not seen since the 1930s. Yet successive rises in the personal allowance have undermined the government’s ability to raise revenues to pay for vital public services which women (and men) need.
Consistently social security has been framed as a “burden” or a “cost”, yet there are positive arguments for social security provision – spending on the security of society – not least in terms of supporting caring and helping with the costs of caring, that are particularly relevant to women.
Again, the Women’s Budget Group are disappointed to see that the Autumn Financial Statement comes with little or no assessment on the impact on gender (or any other) equality. The purpose of this document is then to provide a gendered perspective on the announcements made on 3rd December 2014 and to make recommendations about how the government could use financial statements to improve women’s economic equality.
Of the announcements made in the Autumn Financial Statement 2014, the Women’s Budget Group are particularly concerned that:
- The new test to show people are involved in ‘genuine and effective’ self-employment to claim working tax credits will discriminate against women and others with caring responsibilities.
- Although welcome, the increased eligibility for tax and National Insurance exemptions for care workers and their employers is insufficient to deal with the care deficit. Women are the majority of paid and unpaid care workers and are also the majority of its recipients.
- Raising of the personal tax allowance will mainly benefit men (57 per cent).
- The rise in personal tax allowance comes at the same time as working-age social security benefits and tax credits are being uprated by only 1 per cent, a fall in real terms.
- Because the higher earnings tax threshold was raised by slightly more than the personal allowance, higher income taxpayers (except for those with incomes of £121,200 or above), disproportionately men, will gain more than basic rate taxpayers.
- Those on means-tested benefits and tax credits will have most of any gain from the raising of the personal allowance clawed back in reduced benefits. Among those gaining anything, women will be disproportionately represented among this group.
- The money the government has “saved” from cutting vital public services has not gone to reducing the deficit but instead has been given away to income tax payers in the form of higher allowances which has clear gender effects.
- The reform to the Stamp Duty Land Tax will only benefit people who can afford to buy houses and flats, and not to those who rent. Women are under-represented among buyers and over-represented among renters, as compared to men. Lone parents (mainly women) in particular are the category least likely to be owner-occupiers and most likely to rent.
- As the cost of living continues to increase, the benefits level become increasingly inadequate. The cost of items which make up the bulk of purchases by low income groups are rising faster than many others.
- The welfare cap announced in 2013 will continues to hit women harder than men. The WBG believes that social security spending should not be singled out for an arbitrary cap, which is a crude mechanism that fails to differentiate between varying reasons for additional spending, and which frames increases in benefit spending as negative or a sign of failure.
- The abolition of employer National Insurance contributions for apprentices will does not help tackle the gender segregation in apprenticeships which keep women out of the full range of higher skilled occupations, including traditionally male- dominated ones.
- Restricting the above measure to apprentices under the age of 25 discriminates against women, who are more likely to take up apprenticeships later in life.
- Putting more money into academy chains, who are not bound to follow the national pay and conditions framework, risks encouraging lower pay, including inferior maternity pay, poor working practices and increased instances of discrimination among teachers, the majority of women are women.
- The rise in the personal tax allowance is misguided because it is resulting in a loss to government revenue (more than £12 billion per year compared with 2010), it reduces the impact of increased employment levels on the deficit and it is badly targeted to the poorest (those earning below the threshold) gain nothing.
The Women’s Budget Group recommends:
- That all new measures from the Treasury are fully and robustly assessed for their impact on gender equality.
- New funding is needed for social care, not just spreading supposedly ring-fenced NHS budgets. Of particular concern is the chronic underfunding of community health services, which are frequently the necessarily link between front line and domiciliary care services.
- That self-employed women and women business owners should be supported, specifically:
- Reforming the apprenticeship system which continues to be the most gender segregated of all educational provision should be a priority.
- The rules for VAT exemption should be extended to micro-businesses selling digital products, which are predominantly led by women.
- The part-time self-employed should be included in active labour market and business support strategies rather than penalised.
- The New Enterprise Allowance start-up period should be extended. The current requirement that participants replace benefits with self-employed earnings within three to six months discriminates against women who may take longer to establish their business if they are have caring responsibilities.
- The gender impact of the government’s business finance investment programme should be assessed to ensure that women’s businesses benefit from a fair share of government supported business investment.
- Regional policy should be aimed at rebalancing of the UK economy in the long-term away from (male dominated) finance and towards investment in social infrastructure. Investing in social infrastructure has to be key to developing an inclusive regional policy that works for women.
- A full and transparent gender audit is needed to assess how much of the UK’s reported ODA expenditure is actually working towards securing gender equality and poverty reduction amongst the world’s most impoverished people. Both using Overseas Development Aid for the promotion of gender equity and spending 0.7 per cent of GDP on it are commitments enshrined in law.
Plan F uses feminist economic policy to put care and quality at the heart of the regeneration of the UK economy. It requires tackling the deficit by:
- preventing the UK becoming a low-wage, low-productivity economy by labour market policies that ensure that real wages and productivity grow in line with each other. It is only in such circumstances that we can get upward convergence in men’s and women’s wages .
- providing good public services and investment in social infrastructure financed by progressive taxation, rather than cuts in public spending and tax give-aways. Investing in social infrastructure, including child and adult care, would create jobs, fill a growing social need and increase productivity.