WBG responds to the Spring 2021 Budget announcements
Date Posted: Wednesday 3rd March 2021
Speaking in response to the Spring 2021 Budget, WBG Director, Dr Mary-Ann Stephenson said today:
The Covid-19 pandemic has exposed and exacerbated inequalities within our economy and society. Women, particularly the poorest women, Black and minority ethnic women, disabled women, lone parents and young women have been badly hit. This Budget was a missed opportunity to address these inequalities.
Far from putting us in a better position to deal with Covid-19, as the Chancellor claimed, the austerity policies of the last ten years have made us less able to cope. Years of cuts and underspending on health, education, local government and public services left our social infrastructure weakened and made us more vulnerable to the impacts of the pandemic. The Budget did little to address this.
On social care
Yet again the Chancellor was silent on social care. The underlying problems caused by years of underinvestment in the care sector have been made worse by the impacts of Covid-19. Even before Covid-19 1.5 million people had unmet care needs. We need urgent action to ensure good quality care for people who need it. The number of unpaid carers has increased from 4.5 million to 13.6 million in the last year.
Our work has shown that investment in care should play a critical role in the recovery. Investment in the care sector could create 2.7 times as many jobs as investment in construction, and ensure proper care for the millions of people with unmet care needs.
There was nothing in the Budget on childcare despite the crisis in the sector. 58% of local authorities expect some childcare providers in their area to shut permanently. 46% of mothers being made redundant said that lack of childcare was a factor in their selection for redundancy and 72% have worked fewer hours and cut their earnings due to lack of childcare. Childcare is a vital form of infrastructure, enabling parents to enter or stay in employment.
On incomes and poverty
The decision to extend the £20 uplift to Universal Credit (UC) for only another six months, rather than make it permanent, will leave millions of families facing a cut to their income at a point when unemployment is expected to peak.
The rise in UC last year was effectively an admission that Social Security levels are too low. There is no excuse not to make the increase permanent and to extend it to the 2.2 million people still claiming contributory and other benefits that pre-date UC, 75% of whom are disabled. At the same time, the Government should end the benefit cap which is costing the average family affected £63 a week, and the two- child limit, which is a measure that penalises children for being born into larger families. Taken together this would lift 200,000 children out of poverty.
Even with the uplift, our social security system is among the least generous among OECD countries in relation to lost earnings. In the longer term our social security system needs fundamental reform to ensure that it can prevent poverty, end destitution and provide security of income at an adequate rate to allow people to live with dignity and agency.
There was nothing in the Budget to address the problems of Statutory Sick Pay (SSP). The low rate of SSP has led to reports that people are avoiding getting tested for Covid-19, because they can’t afford the time off work and 15.5% of women and 10.6% of men in employment do not earn enough to qualify for SSP at all. As the lockdown restrictions lift it is vital that people are able to afford to isolate if they become ill. The failure to address the problems with SSP is not just a problem for workers, it is bad for public health, which in turn is bad for the economy.
We welcome the decision to extend the furlough scheme until September, which has prevented unemployment for many. But there are bound to be job losses as the furlough scheme ends, so furlough needs to be combined with investment in training to help those who are likely to lose their jobs find new work.
Violence Against Women and Girls (VAWG) services
The £19 million for ‘domestic violence programmes’ falls far short of the £393 million, including £173 million for refuges that Women’s Aid estimate is needed to provide sufficient funding for a ‘safe and sustainable’ national network of women’s domestic abuse services.
We have a housing crisis in this country which the Budget did little to address. The cut in stamp duty has had an inflationary impact on house prices, which have increased by 4.7% over the last year. Extending the cut risks pushing them further out of reach of many. The Government guarantee on 95% of mortgages will not help those who cannot afford to buy because of the gap between high prices and low earnings. In both cases it would be better to invest in building more social housing.
We have long argued against above inflation increases to the personal tax allowance, introduced by successive governments since 2010. 63% of the benefit of increases to the personal tax allowance and higher rate tax allowance have gone to men. So, we are relieved that the Chancellor has moved away from this policy, by freezing exiting allowances. Income tax is the fairest tax that we have and in the longer term, a better way to raise more revenue from personal tax would be to have more progressive tax bands and increase tax rates for those on higher incomes.
We have also argued against the cuts to Corporation tax since 2010 from 28% to 19% so welcome the move by the Chancellor to reverse some of these cuts. As Corporation Tax only applies to profits it is unlikely to damage companies that are currently struggling with the impact of Covid-19.
We said before the Budget that given rising unemployment and falling demand, the costs of the pandemic should not be paid for by immediate tax rises or any further austerity cuts in public services. However, there is an urgent need to reform the tax system to make it fairer, more progressive and able to raise more revenue. We need to recognise that tax is the necessary financial contribution that individuals and companies make to a well-functioning society.
Women tend to benefit particularly from the public spending that tax can be used to finance. But how public spending is financed at articular points in time has to depend on the state of the economy. The public expenditure needed to build a strong, healthy and resilient economy has to come first; when we have such an economy taxes can and may need to rise.
For more information contact The UK Women’s Budget Group:
Thaira Mhearban: firstname.lastname@example.org / 07366 58951/ Communications Officer
Dr Mary-Ann Stephenson: email@example.com / 07957 338582/ Director
Further reading: For a comprehensive analysis of the impact of Covid-19 on women’s economic position check out the latest WBG research here.
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About Women’s Budget Group
The Women’s Budget Group (WBG) is an independent network of leading academic researchers, policy experts and campaigners. Our vision is of a caring economy that promotes equality between women and men.