This was promised as the Budget that would end austerity. No 10 said this morning that “the austerity that followed the financial crash is coming to an end,” along with pre-budget announcements of additional spending on mental health and roads as well as heavily trailed hints of additional money for universal credit. Ending austerity would be good news for ethnic minority women who have been hit hardest by cuts to benefits and public services.
But today, Philip Hammond promised that austerity is “coming to an end”, not that it has ended. For many of those hit hardest by austerity the chancellor’s speech, promising “jam tomorrow”, is not enough real change to improve their lives today.
Although there were commitments on investing more in the NHS and £650m extra for social care for 2019-20, this falls far short of the funding gap these key public services face. The green paper promised for social care needs to come up with grander plans that will plug a funding shortfall of at least £1.5bn by 2020.
Spending cuts since 2010 have affected the poorest families, with women hit harder than men and ethnic minority women hit hardest of all.
Much of the misery is a result of universal credit, now rolling out across the country. When all the cuts and changes to social security are taken together, low paid and unemployed black women stand to lose £5000 a year; even with income tax cuts and an increase in the national living wage taken into account.
We welcome an increase to the work allowance by £1000 per year as this hits black women particularly hard. But while the additional money to ease the transition to universal credit is welcome, the system itself is still flawed. Delays in payments have led to a dramatic increase in rent arrears in areas where universal credit has been rolled out, the two child cap still penalises third and subsequent children and payment to a single bank account will still leave women vulnerable to financial abuse.
And the cuts of the last eight years have left our public services in crisis. Funding for schools has fallen by 8 per cent in real terms. Nearly half of maternity units had to close to women in labour at some point in 2017.
Our joint research at the Runnymede Trust and Women’s Budget Group showed that the poorest black and Asian households are set to lose the most from the combined impact of cuts to social security and public services – about 20 per cent of their annual living standards by 2020. Lone mothers will experience a drop in living standards of 18 per cent – equal to £8,790 per year. In contrast, the wealthiest white men will lose only 1 per cent of their income.
At the same time, the last eight years have seen a series of tax cuts that will cost £44bn a year by 2020.
The uncertainty of Brexit is not reassuring. A good deal appears increasingly unlikely. Economists agree that Brexit is likely to have a negative impact on GDP, with a hard Brexit having the worst impact. So the promise of better times following next year’s spending review has to be taken with a large pinch of salt.
But the government does not have to respond to the economic shock of Brexit with further austerity. It could be preparing now by investing in infrastructure, not only physical infrastructure such as road, rail and telecoms but social infrastructure of care, health and education. Work by the Women’s Budget Group has shown that investing 2 per cent of GDP in the care economy would create twice as many jobs as the same investment in infrastructure as well as reducing the employment gap and addressing the crisis in care.
Moving away from austerity by investing in infrastructure and uprating benefits would help address the “burning injustices” of racial inequality, highlighted by Theresa May a year ago when she launched the race disparity audit. But one of starkest injustices facing Bame people is child poverty. While three in 10 children live in UK households in poverty, this rises to over half of all children in Bangladeshi, Pakistani and black African households.
Last week, the government announced a new set of measures to tackle ethnic inequalities in the job market. These are welcome policies that we have supported for some time: a consultation on ethnic pay gap reporting and race monitoring as part of public procurement standards. A reinstatement of binding child poverty targets is needed to tackle this urgent inequality.
If the prime minister is serious about tackling injustice, the end to austerity has to be more than a promise of jam tomorrow. It needs to start now.
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