Budget 2014: giveaways for men paid for by women?

In their latest budget the government says it wants to reward “makers doers and savers”, surely a phrase that applies to women just as much as men.Yet, the Coalition have done very little to address gender inequality, in terms of taxes and benefits, according to Professor Diane Elson of The Women’s Budget Group. Whilst men are set to do much better in terms of increasing personal allowances, savings, transferable tax allowances, pensions and the right to buy scheme, women continue to bear the brunt of cuts in benefits and tax credits.

Photo credit: Kat N.L.M

The government’s 2014 budget claimed to be ‘for the makers, doers and savers’, a new report from the UK Women’s Budget Group, ‘The impact on women of Budget 2014: No recovery for women’ shows that it has little to help low income women.

Not only are women much less likely to benefit from the tax giveaways in the budget; they are also a disproportionate number of those worst affected by the government’s continued austerity drive, according to the Women’s Budget Group, a network of over 200 academics and activists.

The benefits to the lowest earners eligible for tax, the majority of whom are women, are likely to be marginal.. (whilst) the personal tax and benefit strategy since 2010 has cumulatively raised just over £3bn from men (21 per cent) and £11.6bn from women (79 per cent).

Marginal benefits

This is clearly shown by contrasting one of the budget’s biggest giveaways with the measures announced for social security. The increase in the personal tax allowance will cost the government £12bn a year, and will only benefit those whose incomes are high enough to pay income tax (57 per cent of whom are men).

This measure offers nothing for the 21 million people, 63 per cent of whom are women, already below the income tax threshold. The benefits to the lowest earners eligible for tax, the majority of whom once again, are women, are likely to be marginal, given accompanying reductions in means-tested benefits and tax credits.

By contrast, the government announced a further £12bn in cuts to social security in the first two years of the next parliament. Women are more likely to be reliant on benefits for their income, and so will be disproportionately negatively affected by this measure. Furthermore, the cap on ‘welfare’ spending was confirmed in the budget.

The new figure of £119.5bn for 2015-16 will include the newly announced ‘tax-free’ childcare from autumn 2015, as well as the increases in help with childcare costs under Universal Credit. This means both that those in receipt of benefits will continue to have their income squeezed, and that support for childcare – a necessity for many mothers in getting back to work – will compete with other social spending that is vital for low income mothers, such as housing benefit.

Analysis produced by the House of Commons Library corroborates this assessment of the government’s austerity-centred economic strategy, estimating that the personal tax and benefit strategy since 2010 has cumulatively raised just over £3bn from men (21 per cent) and £11.6bn from women (79 per cent).

Other measures in the budget accord with this picture. The increase to the ISA allowance will disproportionately benefit men, given that they tend to have higher savings than women. The Transferable Tax Allowance in income tax overwhelmingly benefits men (beneficiaries are 84 per centmale) whilst threatening the independent tax principle. Cuts in beer duty and the freezing of alcohol duty, not funded by increases in other taxes, will benefit men more than women, since they drink more alcohol than women.

Reforms needed

The reforms to rules for private pensions are likely to be attractive to women. Ending compulsory annuitisation means that those with lots of small ‘pension pots’, particularly the case for women, will no longer be forced to buy annuities at exceptionally poor rates. Moreover, the right to take the pension as cash from 55, might help women who are unemployed to survive financially until pension age.

However, these measures are no substitute for proper reform of a pension system which leaves many people, particularly women, with an inadequate pension in old age. The budget introduced changes in rules that will benefit some women in the short term, but what is needed are state pensions that provide adequate financial security for those, so often women, who have lacked the opportunity to acquire good private pensions due to caring commitments.

A lack of investment in social infrastructure, such as publically provided high quality care services, continues. The government’s plans to introduce a ‘tax-free’ childcare scheme, increase the childcare support in Universal credit and extend early years education to 40 per centof 2-year-olds are welcome, but these measures are a long way off ensuring the supply of sufficient, good quality affordable places and well-qualified childcare workers. Increased subsidies are likely to increase already over inflated prices.

Help to buy no help for women

Budget 2014 also includes a range of policies impacting on housing that will affect men and women differently. The extension of the Help to Buy scheme will not benefit some of the poorest, such as lone parents (predominantly women) who are underrepresented as owner-occupiers. The scheme is also expected to increase house prices which in turn will raise rents (already rising faster than inflation) and increase the amount paid out in housing benefit.

Without more new housing, and reform of the housing market, an increasing share of the limited funds allocated to social security will go to private landlords, meaning even more pressure on women, who are more likely to be benefit recipients. The ‘bedroom tax’ is adding to this strain; only 6 per cent of people subject to the measure have moved to accommodation with fewer bedrooms, meaning that many women who can least afford to do so are receiving lower housing benefit.

Diane Elson is Emeritus Professor of Sociology at the University of Essex

Further information

The UK Women’s Budget Group is an independent voluntary network of individuals from academia, NGOs and trade unions.

The impact on women of Budget 2014: No recovery for women’ was produced by Jerome De Henau and Diane Perrons, using analysis provided by the Women’s Budget Group Management Committee and Policy Advisory Group. It was edited by Rebecca Omonira-Oyekanmi, Polly Trenow and Diane Elson.

 

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