Tory MP Shailesh Vara yesterday made the comments that cutting the lowest paid people’s income by £1600 doesn’t matter, because they will save £10 every time they fill up their cars. Not only is that factually completely incorrect, it’s irrelevant to people too poor to own a car anyway. Mwhahaha.
In fact that was just the highlight of his ignorance. He was attempting to contrast the cuts in in-work benefits with the positive changes that the Tories have brought in. But how does this stack up for someone on minimum wage today?
People will save because of the raising of person allowances
In the Autumn Budget, George Osborne raised the personal allowance from £10600 to £10800, so another £200 will be tax free. This saves people £40 a year as long as they are in full time employment (40 hours a week). If you work 30 hours a week, it has no impact as you don’t pay tax anyway. Of course it could be argued that the change was just in line with inflation, but that would be churlish.
The new national living wage will increase incomes
From April (after the benefits cuts), the minimum wage will go up from £6.70 to £7.20. For someone working full time, that is an extra £1040 before tax. After tax, it’s £707 a year
Doubling free childcare
David Cameron committed to increase free childcare for 3 and 4 year olds from 15 hours to 30 hours as long as all adults in the household are in work. This hasn’t materialized yet, and nurseries have claimed that they won’t be able to support it at the rates the government would pay them, so whether this is any help in reality to the small amount of households it covers remains to be seen.
Tax free childcare from 2017
From 2017, if both parents are working, the government will top up every 80p that you spend on childcare by another 20p. This replaces a scheme where you can pay for childcare out of your pay packet before deductions. Unfortunately the new scheme is actually worse for most people – including basic rate taxpayers, so this one is a net negative.
£10 saved when filling the cars
When Labour were in power, they put in place a tax escalator on fuel of 2p a year. This was to help the environment, which thankfully we have stopped doing. Mwhahaha. In the last budget, George Osborne suspended the tax escalator, meaning that this year motorists save 2p per litre COMPARED TO A TAX THAT NEVER HAPPENED. So this isn’t a saving in your pocket – just the government saying they might have taken more money from you but decided not to. Also, most people who are impacted by the universal credits cuts can’t afford a car, so the savings are zero. And for those who do somehow have a car, the increase avoided is £1 per tank at best – perhaps £50 a year.
So, the “savings” that Mr. Vara touts as offsetting the £1600 cut in benefits are very much less than the amount lost. In fact, depending on personal circumstances, the money saving measures that he is so proud of could actually be costing people even more money. Mwhahaha.