SCOTLAND’S poorest children will be hit by a £425 million spending cut when a fresh wave of austerity is unveiled in today’s Budget, Nicola Sturgeon has warned.
Chancellor George Osborne will set out the detail of a further £12 billion in cuts when he publishes the first Budget from a majority Conservative Government in decades.
He has already warned that he will seek to “make savings” in the system of tax credits for people on low incomes – but the First Minister warned this will “hit Scotland’s poorest children and families hard”.
New analysis by the Scottish Government shows that, if the Chancellor cuts child tax credits back to 2003 levels in real terms, the poorest fifth of Scottish families with children will lose on average nearly 8 per cent of their income.
This would mean a total impact of £425 million lost across the country with 60 per cent of Scottish children affected by the changes, according to the analysis published today.
The First Minister said it is “a frightening indication” of the impact of the expected cuts.
“The UK government has already warned that tomorrow’s budget will continue their austerity approach, which we are clear is not just unfair but damaging to the economy – undermining attempts to stimulate growth,” she said.
“Tax credits form an important part of the tax and welfare system, designed particularly to support working families on low incomes.
“If, as we expect, the UK government targets tax credits for cuts in tomorrow’s budget, it will hit Scotland’s poorest children and families hard. It is a frightening indication of the potential impact of the expected cuts in tomorrow’s UK budget.”
More than 500,000 children in Scotland benefit from tax credits. Two-thirds of the £2bn expenditure on tax credits in 2013-14 went to low-income working families with children and only 5 per cent to households without children.
Labour shadow Scottish Secretary Ian Murray said: “The Tories came to office claiming that this government would be on the side of working families. Before the budget has even been published it is becoming clear that, once again, it is working people who will bear the brunt of this government’s cuts.
“With their proposed cuts to tax credits, the budget risks cutting the feet from under people who do the right thing, go out to work every day and try to do the best by their families.
The Chancellor says the system – which costs an estimated £30bn – is too expensive and he will seek to make savings in today’s budget.
The savings are needed to address the shortfall between public spending and taxes raised to fund them – the deficit. This is currently about £88bn.
Mr Osborne has already warned that welfare will be capped around the UK at a rate below the a new London rate of £23,000. The BBC is also facing an effective £500 million cut as the corporation takes on the role of funding free TV licences for over 75s.
Mr Osborne will unveil proposals to give mayors and councils in England the freedom locally to relax laws preventing big stores opening their doors for more than six hours on Sundays, although this has already met with opposition from unions.