The impact of
Osborne austerity

First published: 09/09/2010

When delivering his budget to the House of Commons in June, Chancellor George Osborne stated that his measures to tackle the UK’s budget deficit would be ‘tough but also fair’.[1] The budget, he claimed, would support ‘the most vulnerable, including children and pensioners.’[2] But rather than helping the poor, the Institute for Fiscal Studies described the government’s measures as ‘regressive’.[3] And the government has shown no awareness or concern for the impact of its budget on women. This is despite the fact that the Gender Equality Duty requires all public authorities to be proactive in tackling gender inequality and promoting equality of opportunity between women and men.

Feminist analyses of the budget are in no doubt that women are the main losers of the new Conservative-Liberal coalition government’s budget.[4] According to a report by the House of Commons library, more than 70% of the revenue raised from direct tax and benefit changes outlined in the budget is to come from female taxpayers.[5] And there is worse yet to come. All government departments, with the exception of the National Health Service and the Department for International Development, have been told to prepare for spending cuts of up to 40%. The impact of such harsh cuts on will not equitably on men and women.

A government committed to gender equality would use its budget to off-set the gender inequality which are features of UK markets, communities and families. Women in the UK continue to earn significantly less than men and they are more prone to poverty as mothers, employees and as pensioners. Women are more reliant than men on benefits and public services – for themselves and for the people they care for. They are also more reliant on the public sector as an employer: women make up 65% of public sector employees. The budget – and the departmental spending cuts to come – is not one that promotes gender equality. In fact, with few exceptions, the effects will be detrimental to women.

Overall the budget prioritises cuts in spending over raising tax revenue at a ratio of 77 to 23. There have been a handful of measures which benefit low-paid employees and poorer pensioners. For example, raising the personal tax allowance by £1000 will benefit low-earners and linking increases in the Basic State Pension to earnings, the Consumer Price Index (CPI) or 2.5%, which ever is higher, boosts the individual incomes of pensioners. At the same time, any increases in incomes will be quickly offset by cuts to benefits and public services elsewhere. A number of benefits have been scrapped, cut, frozen or reset to increase annually at a lower rate. Two one-off benefits - for pregnant women and new mothers - have been abolished completely. Also, the cost of day to day life and maintaining households is set to rise due to the headline tax increase: raising the rate of indirect taxation on expenditure (value added tax / VAT) to 20%. Finally, since women are more reliant on public services for themselves and for those they care for, they will feel the burden of cuts to support services and the cost of funding private alternatives. To highlight the unfair nature of the coalition’s gender blind budget, here is an overview of the impact on different groups of women.

WOMEN AS MOTHERS are particularly harshly hit. The budget is an attack on the independent income that women receive as mothers and primary carers for children. Child benefit is a universal benefit that is, in the vast majority of cases, paid to the mother. This payment has been frozen for three years and will be a cut in real terms which will be felt most harshly by the poorest mothers. Child Tax Credit (CTC) is means-tested according to household incomes but is paid to whoever is nominated the main carer in the family, most often the woman. The reduction in Child Benefit and Child Tax Credits for middle-income families therefore means a loss of independent income for women in those households who may have no or low independent incomes, making them more reliant on their husbands.

The increase in CTC for low-income families boosts the income of mothers if they are nominated as the main carer. However, the extra £150 will quickly be absorbed by the rising costs associate with a 20% rate of VAT. New mothers’ independent income will be hit by the scrapping of the health in pregnancy grant and the Sure Start maternity grant for second and subsequent children. The latter cut may discourage poorer women from having more than one child.

Lone parents, most of whom are women, are affected by the new requirement that they must look for work when their youngest child starts school at the age of five. For this policy to work it is essential that the government does not cut services for families, such as breakfast clubs, afterschool care and holiday play schemes provided by extended schools. However these services to working mothers may be vulnerable due to the squeeze on local authority budgets.

Cutting Housing Benefit by 10 per cent for people who have been claiming Job Seeker’s Allowance (JSA) for more than 12 months will increase the housing insecurity of lone mothers and their children, who are over-represented among unemployed mothers. This will be exacerbated by extending the requirement to seek work to lone mothers when their youngest child starts school.

WOMEN WHO ARE IN PAID EMPLOYEMNT may benefit from the higher personal income tax allowance. However, they will be particularly affected by a two-year pay freeze on public sector workers earning over £21,000 as women comprise about two-thirds of these employees. The flat-rate wage increase of £250 for lower-income public sector workers will not provide much compensation given cuts in other benefits and services and the rise in VAT. Further cuts in public expenditure will lead to public sector job losses. The Office of Budget Responsibility has estimated that 490,000 public sector jobs will go by 2015 and 600,000 by 2016.[6] Women are likely to be disproportionately represented among those who lose their jobs.

OLDER WOMEN are poorer and live longer than men. Linking the rise in the basic state pension to earnings, the CPI or 2.5%, whichever is the greater, will boost the incomes of many older women. However, they will suffer from cuts to caring and other social services, upon which they are more reliant than men, and for longer.

WOMEN WITH DISABILITIES will be hit by the medical examination for the Disability Living Allowance. Women suffer mental health problems which are harder to demonstrate and so they are more likely to fail the medical test. Women with disabilities will also suffer from cuts in the provision of public services.

MINORITY ETHNIC WOMEN are more likely to live in poor households and so will be harder hit than White women. Women of Pakistani and Bangladeshi origin are particularly prone to poverty, experience higher rates of unemployment and tend to have larger or extended families so the budget therefore affects them in a particularly harsh way. They will suffer from the capping of housing benefits for properties with more than three bedrooms, and will be hit by the decision to only pay the Sure Start maternity grant to the first child.

George Osborne was wrong when he claimed that the budget would be fair and protect the vulnerable. Most women will be affected detrimentally by the budget in some capacity as they rely on transfer payments, public services and public sector employment to a greater extent than men. But it is the poorest and most vulnerable women in British society who will feel the cuts most acutely. This is not a gender-neutral budget. Nor it is a fair one. And it is possible