This article titled “Budget 2016: Labour attacks government’s Help to Save scheme” was written by Rowena Mason , Larry Elliott and Anushka Asthana, for theguardian.com on Monday 14th March 2016 11.04 UTC
David Cameron’s announcement of a new Help to Save scheme to be unveiled in this week’s budget is like stealing someone’s car and offering them a lift to the bus stop, Labour has said.
Owen Smith, the shadow work and pensions secretary, poured scorn on the proposal, arguing that it was the same as a previous Labour scheme scrapped by the government and does not compensate for cuts that are being made elsewhere.
He said many families were already struggling to make ends meet, with no cash left over at the end of the month, because of reductions in welfare made by the government that were set to continue in this parliament.
“It is right that there should be incentives to save, and that’s why a Labour government introduced the almost identical Saving Gateway that the Tories scrapped,” Smith said.
“Universal credit cuts will take £1,600 a year from over 2 million low- and middle-paid working families … new analysis shows that 2.3 million of the 3.1 million families on tax credits will see their in-work support fall as they are moved to universal credit, with some families up to £3,000 a year worse off.
“These cuts will mean families are going to struggle to have enough money to make it to the end of the week, let alone save for the future. If the Tories were serious about supporting low- and middle-paid workers in the budget they would listen to Labour’s calls to fully reverse the universal credit cuts.”
Cameron announced the Help to Save scheme ahead of Wednesday’s budget, saying the government would top up savings for low-paid workers who put money aside by up to £1,200. Under the plan, workers on tax credit or universal credit would get government top-up equal to 50% of the amount they save up to the value of £300 a year for four years. However, George Osborne, the chancellor, has fuelled speculation that the budget will also contain some nasty shocks when he said on Sunday that there was a need to “act now to make sure we don’t pay later”.
The government has already announced plans for sweeping changes to disability benefits that will be fiercely resisted by the Labour party and charities, which argue that the chancellor is using some of the most vulnerable people in society to balance his budget. Labour calculates that 200,000 people will lose out on the benefit altogether, while a further 400,000 will receive less money.
Osborne said the world was in a difficult and dangerous place, with more uncertainty than at any time since the global economic crisis of 2008-09. “That’s why I need to find additional savings equivalent to 50p in every £100 the government spends by the end of the decade, because we have got to live within our means to stay secure, and that’s the way we make Britain fit for the future,” he told the Andrew Marr Show on BBC1.
Osborne is expected to use the budget to:
- Raise money through a series of stealth taxes, including a significant increase in insurance premium tax that will hit motorists, homeowners and tourists.
- Crack down on a tax avoidance loophole that allows television stars to be paid “off the books”.
- Save £1.2bn by reforming personal independence payments to the detriment of over 600,000 disabled people.
- Raise the personal allowance rate at which people start paying tax by £300, bringing it closer to the £12,500 target by 2020.
- Raise the amount at which people are drawn into the 40p tax rate.
- Provide incentives to build new market towns and “garden suburbs”.
- Provide up to £2,000 in tax allowances for people who sell goods online or rent their home out for extra money.
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