The Chancellor insists a benefit squeeze is fair on people who go out to work and pay tax, but Labour says the majority of people affected by the welfare cuts are in work.
The main cut to benefits is all working age benefits, including tax credits and child benefit, will go up by 1% a year, less than the rate of inflation, for the next three years.
This is as Osborne announces austerity measures will be extended to 2018 as he is set to miss key debt-reduction targets, which could result in the loss of the country’s AAA credit rating.
I think people getting ready to go out to work, they are frustrated that they pay their taxes, that they work long hours and a lot of that money, frankly too much of that money, goes into a welfare system that supports out-of-worklessness.
But Labour’s Shadow Chancellor, Ed Balls, points out that the majority of people affected by the move were not unemployed – and a working family with children on £20,000 a year would lose £279 a year from April:
[Mr Osborne] somehow wants to attack people he thinks are workshy and feckless but if you look at the facts 60% of the people who are affected by that 1% freeze are in work.
MPs are due to vote on the benefit squeeze and Labour has not yet announced whether it will oppose the move.
Shadow Chief Secretary to the Treasury, Rachel Reeves, said:
We need to see the detail. I just don’t think it can be right to be cutting the support for those people on modest incomes and those people who through no fault of their own have lost their jobs.
Gillian Guy, chief executive at national charity Citizens Advice, said:
The government can’t keep hitting the same people over and over again.
Let’s not forget, below inflation benefit increases will not just hit people who are out of work. It will also hurt working families in low paid jobs who have already been hit by wage freezes and cuts in working hours.
People on basic benefits and looking for work already have to survive on just £10 a day – less if they’re under 25.
Many thousands of people already battered by the impact of the recession are on a financial cliff edge.