Financial News

  • 11 March 2013, 15:53

'Mummy Tax': Benefit Changes Criticised

The new Archbishop of Canterbury has chosen Mother's Day to fire a warning to the Government over planned cuts to welfare.

In his first significant intervention since being appointed, the Most Rev Justin Welby is among 43 bishops who have written an open letter condemning changes to the benefit system.

He warned that "children and families will pay the price" if the plans go ahead in their current form.

The Welfare Benefits Up-rating Bill will cap benefit rises at 1% a year until 2016.

Work and Pensions Secretary Iain Duncan Smith, who is attempting to steer the reforms through Parliament, has said they are needed to help get spending "back under control" and create a fairer deal for taxpayers.

But the archbishop, who will be formally enthroned at Canterbury Cathedral on March 21, said the legislation would remove the protection given to families against the rising cost of living and could push 200,000 children into poverty.

His predecessor, Dr Rowan Williams, was strongly criticised for expressing his views about Government policy.

Faith and communities minister Baroness Warsi told Sky's Dermot Murnaghan: "The Government takes seriously the concerns the church raises.

"But we are in very difficult circumstances and we have to make some tough decisions. And at a time when people's incomes are frozen and not going up in line with inflation, it is also right that we look at the possibility of freezing benefits."

Meanwhile, the Prime Minister had a Mother's Day card delivered to his door by campaigners for new mums whose benefits are about to be capped.

Labour has accused the Government of imposing a "mummy tax" and said the welfare reforms are part of a series of austerity measures which unfairly target mothers.

Shadow minister for women Yvette Cooper MP told Sky News: "It's like David Cameron and George Osborne have a blindspot about women because they're paying three times more than men in tax and benefit and pay and pension changes.

"That is so unfair when women earn less and own less than men.

"It shows that the Prime Minister and the Chancellor just don't get it and it's outrageous that new mums are hurt hardest."

Around 340,000 women claim either statutory maternity pay or maternity allowance every year.

Until now their benefits have gone up in line with inflation, which currently stands at 2.7%, according to the Consumer Price Index.

But from next month new mothers' benefits will go up by just 1% every year as part of a three-year cap on welfare increases.

So by 2015 critics have calculated the benefits will be effectively cut by 180 because they will not increase by as much as the cost of living will.

Schools minister, Liberal Democrat David Laws MP, defended the planned welfare reforms and said the Coalition had tried to help those on lower incomes.

He told Murnaghan: "We've had a public sector pay freeze. We've also had a 1% cap in the future on public sector pay. So we've have had to take difficult decisions not just for some of those on lower incomes but for everybody in society.

"And actually we've tried to help some of those on lower incomes by raising the tax free personal allowance and also exempting some of the lowest paid public sector workers from the effects of the pay freeze."

A spokeswoman for the Department for Work and Pensions said: "In difficult economic times we've protected the incomes of pensioners and disabled people, and most working age benefits will continue to increase 1%.

"This was a tough decision but it's one that will help keep the welfare bill sustainable in the longer term. By raising the personal allowance threshold, we've lifted two million people out of tax altogether, clearly benefiting people on a low income."

Single mum-to-be Helen Mockridge has one clear suggestion for a better way to reduce the deficit.

"Taxing really rich people, obviously, that's where the money should come from," she said.

"For me it's a real no-brainer and it makes me really angry that certain parts of society are very, very wealthy and the gap between rich and poor is getting bigger.

"That's where the money should be coming from, not from single mothers or the disabled or any other vulnerable group."

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