Sometimes when writing about the economy it's easy not to remember the human misery that lay behind data and statistics.
I attended the CAB meeting tonight and for example the CAB has seen mortgage arrears and secured loans has risen by 26% this year, the CAB is helping Mendip residents with £15million of debt. With average debt per client of £20/30,000
The resolution foundation this week reported on the Autumn statement by the government, it reports that scrapping the planned increases in Child Tax Credit and freezing more elements of the Working Tax Credit takes money from those who can least afford it, with more than three-quarters of the £1.2bn savings planned for 2012coming from the bottom half of the income distribution.
Cuts to the Child Tax Credit will mean families lose the extra £110 per child they had been expecting in 2012, and the freezing of the Working Tax Credit will reduce the incomes of working families by a further £100. Around 5.5 million families will lose as a result of the changes to Child Tax Credits with 2 million facing a double hit because of the Working Tax Credit changes.
The new announcements come on top of major cuts to tax credits previously announced in the October 2010 Spending Review and June 2010 Budget, including:
- a three year freeze in the basic and 30 hour elements of the Working Tax Credit from April 2011
- a reduction in the proportion of childcare costs parents can claim back through Working Tax Credits, from 80% to 70% from April 2011
- an increase in the rate at which tax credits are withdrawn, from 39 percent to 41 percent from April 2011
- the removal of the £575 families element from more middle income families from April 2012
Total cuts to tax credits announced by the coalition now amount to approximately £2.9 billion in 2012-13, around 10 percent of the total tax credit budget.
These families still have to pay their bills, with increases to food, fuel and energy bills with inflation running well above earnings.
The government have made a decision to switch taxes from companies onto individuals; a) The amount of taxes raised from the consumers & workers in the form of income tax, NICs & VAT is set to grow by 3.1% this parliament.
b) The amount of taxes raised from business through Corporation Tax, Business Rates & Oil and Gas is set to fall by a hefty 9.4% this parliament.
With the government reducing help for middle income families and raising their taxes it's no wonder consumer confidence is low and debt is on the increase.