Chuka Umunna, Member of Parliament for Streatham, has slammed the Liberal Democrat – Conservative government’s Budget for hitting public sector workers and local families hardest, failing to address the issue of youth unemployment and failing to guarantee the future of vital local school building projects.
The measures announced by Chancellor George Osborne included a cut in child benefit in real terms, the abolition of the Health in Pregnancy Grant for new mums and Child Tax Credits set aside for parents of new-born babies.
According to HMRC statistics, last year 25,160 childen from 14,735 families in Streatham claimed child benefit and will now lose out as a result of its payments being frozen.
During the recession in the early 1990s, unemployment in Streatham was 56% higher than when Britain emerged from recession under Labour earlier this year. It is feared that the new government’s approach, in line with that adopted by the Conservatives in the 1980s and 1990s, could lead to higher unemployment.
The independent body set up by the new government to review economic policy, the Office for Budget Responsibility (OBR), has responded to the plans in the Budget by revising down its employment predictions by 100,000 and downgrading its growth forecast for next year from 2.6% to 2.3%.
Because public sector employment is disproportionately high locally, our area will suffer more heavily than others from the public sector pay freeze announced in the Budget. In Lambeth, public sector employment accounts for 36% compared to 23% in London as a whole.
In his Budget speech, the Chancellor failed to outline any measures to tackle Youth unemployment to replace the Future Jobs Fund which the Liberal Democrat Conservative government has axed.
Last week, Mr Umunna asked Chief Secretary to the Treasury Danny Alexander MP why the Future Jobs Fund had been abolished before its effectiveness had been evaluated and called for a fuller debate on the project once the information is available.
Youth unemployment in the Streatham constituency, which is demographically one of the youngest areas in the UK, has increased by 6.5% over the past year. In contrast, youth unemployment fell by 27.3% in Prime Minister David Cameron’s Witney constituency.
The Chancellor did not disclose whether local school building projects would still be going ahead, but announced that the Department for education would see its budget cut by 25%.
School building projects at three local schools, La Retraite, Dunraven, and Bishop Thomas Grant, which were planned under the former government have been thrown into doubt by the Liberal Democrat Conservative coalition which is yet to clarify its intentions.
The Budget was also silent on whether funds to improve local housing will be forthcoming.
The rise in VAT announced by the Chancellor from 17.5% to 20% will disproportionately affect those on low incomes.
Only weeks ago during the general election, Liberal Democrats campaigned against what they described as a ‘Tory VAT bombshell’ and in favour of “fairer taxes”.
However, VAT is a regressive form of taxation: according to the Office of National Statistics the richest 10% pay one in every 25 pounds of their income in VAT, whilst the poorest 10% pay one in every seven, so the VAT rise will hit the poorest much harder than the wealthy.
As Lambeth is the nineteenth most deprived local authority in England, the VAT increase will be felt disproportionately in areas like ours.
Chuka Umunna MP said: “This Budget places the bulk of the government’s deficit reduction programme on the shoulders of the poorest and most vulnerable in society. Cutting Housing and Child Benefit will disproportionately affect areas like ours.
“I am also deeply concerned about the impact of today’s Budget on local jobs. The government has adopted the same approach as the Conservatives in the 1980s and 1990s which led to such terrible unemployment and deprivation here.
“I find it shocking that the Liberal Democrats, whose leader visited my own constituency recently claiming to stand for fairness, have sold out on their beliefs in supporting this Budget and sanctioning the devastating affect that it will have on our area.”
“There is real danger of a double-dip recession and ¬by cutting too fast the coalition will hit growth. President Obama’s letter to the G20 last week urged governments to keep in place spending measures to help economies recover from the recession, but the Lib Dem Tory coalition has ignored this advice.”
On the Building Schools for the Future Programme, Mr Umunna said:
“The fact the Chancellor did not explain what the government’s plans are for vital Building Schools for the Future projects at the same time as imposing a 25% cut in the education budget will only serve to increase uncertainly among local parents, students and teachers.”
“I will continue to put pressure on the Liberal Democrat – Conservative government, demanding answers and making the case for these crucial projects going ahead as the previous Labour government planned.”
The charity Save the Children said:
“A 20% VAT rate means that the poorest parents will see their VAT bill rise to at least £1,600 a year – affecting already overstretched budgets – and driving some into the arms of loan sharks”.