The Impact Of Spending Cuts And Tax Rises On Families
It has been well documented that the British coalition government will be making many spending cuts and tax rises over the next months and years
. Many of these will affect families, either directly or indirectly.
JOB CUTS
There will be a number of job cuts in the public sector, but there will also be a knock on affect meaning some private sector jobs will be at risk. For examples, if public road maintenance is cut then it will affect those who supply this industry. Job cuts have a very obvious negative effect on people; it means they have less money coming in, something that could have a major impact on many families. The planned public sector pay freeze will impact peoples earnings as well, as pay will be reduced in real terms. This will not have as much affect as those losing their jobs, but will still be a problem for some.
VAT RISE
From January 2011 VAT will be increasing from its current level of 17.5% to 20%. This will affect most things people buy. This will mean families generally have less money. Most food and childrens clothes are exempt from VAT so the prices of these will be unchanged, but childrens items such as toys, prams and cots will rise in price.
INCOME TAX
Income tax will affect people in different ways depending on how much they earn. High income families will take a hit with the rate at which people begin to pay 40% tax on their earnings set to rise. Low income families could benefit though with the rate at which people start to pay tax rising by 1,000 to 7,475. This will bring some people out of paying tax altogether.
CHILD BENEFIT & CHILD TAX CREDITS
There will be a child benefit freeze for the next three years, meaning as with some public sector pay, this will be reduced in real terms. Although this will be fairly minor it may impact the least well off families.
Child tax credits are due to be reduced for families earning a total of over 40,000, which may alter the lifestyle some are able to live. There will be an increase in child tax credits though for low income families with it increasing by 150 per year for each child.
HOUSING BENEFIT
In future housing benefit will be limited to a maximum of 400 per week. Large families living in expensive areas could be affected, for example a family who require a five bedroom house and live in an affluent area of London.
PUBLIC PROJECTS
Many public projects will have their budgets reduced or will be scrapped altogether. Depending on the projects this will impact all sorts of different people. Some that have already come under threat are playgrounds and other community project that benefit children, so families could be affected in this way.
The cost of bringing up children is ever rising and according to a survey by the Liverpool Friendly Society is now on average 193,772 for one child from birth to the age of 21. This means that even minor cuts and tax increases could have an impact on many families.
Andrew Marshall (c)
by: expo09
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