Posted: 06 December 2013

This year’s autumn statement: The good, the bad and the ugly

Yesterday George Osborne, chancellor of the exchequer, delivered his autumn statement, announcing changes that will have an effect on families with children.

Some news was good (extending free school meals and maintaining investment in improving homes to reduce energy bills for low income families) and some was not so great (freezing work allowances for universal credit, and changing the way that tax credit overpayments are recovered).

This blog takes a point by point look at how families are affected.

Free school meals

In September the government announced that all infants would be entitled to receive a free school meal beginning next school year.

As we we said at the time, this is a fantastic move and will mean that 200,000 more children in poverty will be entitled to receive a free school meal.

The autumn statement gives further details on how the government will fund the meals, including finding welcome capital investment to improve school kitchens.

However, there is still a lot that needs to be done to make the offer successful. Then the government needs to ensure that the other 500,000 children living in poverty who won’t be covered by this offer, can get free school meals in the future.

Home improvements for low income families with children

In our recent Through Young Eyes report, too many children live in cold homes. There have been a lot of concerns recently that schemes to improve the homes of low income families with children, in order to reduce their energy bills, might be radically scaled back.

The autumn statement indicates that investment in these schemes is to be maintained until 2017.

Universal credit work allowances

Universal credit claimants can keep a certain amount of earnings before they start to affect their benefit entitlement. This is a key part of what ensures that families remain better off when they move into work.

However, the level of these work allowances will be frozen for the next three years.

Compared to increasing these with costs of living, this will make it harder and harder to make work pay, and to afford basic costs of living in work.
This measure will affect all households in receipt of universal credit, with earnings in excess of their work allowance. Changes to uprating now will continue to affect households every year beyond 2017, since it will reduce the base level from which further uprating is applied.

Changes to tax credit overpayments

Tax credit claimants sometimes get paid too much in tax credits as a result of an error in their payments, or as a result of a change in household circumstances. This can mean that families receive their whole year’s entitlement before the end of the year.

Normally if this overpayment is discovered during the course of a year and a family has already received their entitlement for the year, ongoing payments would be reduced by 25%.

New rules in the Autumn Statement mean that payments will stop altogether. It will make it much harder for families who have been overpaid tax credits to make sure they are able to manage their money.  This is likely to lead to many families resorting to high cost credit to meet their additional needs.

A mixed bag for children and families

The autumn statement is a mixed bag for children and families, but one thing is certain: measures that have been taken over the course of the last few years, combined with rapid increases in basic costs of living, are leading to hundreds of thousands more children living in poverty over the course of the coming years.

The government need to make a profound reassessment of their policies to make sure that these families get the support they urgently need.

By Sam Royston - Policy team

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