How does the Spending Review affect families?

The Chancellor, George Osborne, has announced the Government’s planned cuts and changes, so how will they affect you…

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The Government has revealed extensive spending cuts over the next few years, in order to sort out the country’s finances and save £81bn.

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“It is a hard road, but it leads to a better future,” said the Chancellor. However, critics of the planned cuts claimed that families were among those most likely to suffer. 

“The overall package of cuts could have a significant negative effect upon UK family life,” said Dr Katherine Rake, Chief Executive of the Family and Parenting Institute. “It seems that families with young children will particularly suffer. Evidence shows that financial pressures can increase conflict within couples, contributing to relationship breakdown.”

MadeForMums takes a look at some of the ways you may be affected – both bad and good!

Child Benefit

Good news: Rumours that Child Benefit might stop after the age of 15 proved untrue. Child Benefit will remain for 16 and 17 year olds, and even up to 18 or 19 if your child is in full-time education.

Bad news: As we already knew, Child Benefit will be withdrawn in January 2013 for families where one or both parents are earning over £44K. This is set to affect 1.5 million families and will save £2.5bn, the Government says.

Working tax credits

Bad news: One of the biggest stories for parents is the change to childcare payments through the working tax credit. At the moment, 80% of childcare is claimable under the child element of work tax credit. However, this is now to be cut to 70%.

Currently, families with two or more children can claim up to 80% of £300 a week (£240 a week) – this will reduce to 70% of £300 (£210 – a cut of £30 per week, around £1500 a year). Families with one child can currently claim up to 80% of £175 a week (£140 a week) – this will reduce to 70% of £175 (£122.50 – a cut of £17.50 per week, nearly £1000 a year).

Another change is that couples with children will have to work for at least 24 hours a week between them in order to be eligible for working tax credit.

Local family services

Bad news: Local councils will see a 7.1% cut in their budgets. This could mean local family services such as libraries and free council playgroups and children’s activities may be under threat.

Sure Start Children’s Centres

Good news: Despite concerns that Sure Start Children’s Centres might be forced to close, the Government has announced that it’s protecting Children’s Centres and these will be re-focused on to helping poorer families.

Nurseries

Good news: 15 hours of free nursery education for all three and four year olds will remain. As announced last week, two-year-olds from disadvantaged backgrounds will also get 15 free hours of nursery care.

Education

Good news: English schools are to get an increase in funding, with the budget rising from £35bn to £39bn for the next four years. The Chancellor also confirmed that there will be a £2.5bn “pupil premium” to be spent on teaching disadvantaged pupils.

Bad news: There will be a 60% cut in capital spending – ie, building new classrooms and school repairs.

Transport

Good news: £30bn has been set aside to invest in the transport system, including large rail and road projects.

Bad news: Get ready for a massive hike in rail fares over the next few years. Currently, train companies can only increase rail fares once a year by 1% above the rate of inflation (currently 4.8%). From 2012, train fares will be allowed to rise by 3% above the rate of inflation – equivalent to a rise of 7.8%. If this continues over four years, fares could increase by up to 30%.

Homes – social housing

Good news: Current tenants will see no change to their rent.

Bad news: New tenants of social housing will face much higher rents – which will be based on 80% of the market rate. The National Housing Federation warned that thousands of low-income families could end up paying an extra £9,000 a year. The Government aims to use some of the savings to build 150,000 new affordable homes over the next four years.

Arts & Entertainment

Good news: National museums and galleries will remain free and the BBC licence fee will not rise for the next six years.

Bad news: The BBC will have significantly less money to make TV programmes. The Arts Council budget is to be cut by 30%, which could mean arts venues, theatre groups and galleries around the country will suffer. The Arts Council claimed the cut would have “a significant impact on the cultural life of the country”.

Health

Good news: Health is one of the few departments not to have been cut and the health budget in England will rise by £10bn by 2014.

Bad news: The NHS is still facing a tough time. The budget rise is likely to be more than used up by increasing costs of our ageing population and increasing obesity. Unions claim we could see a rise in waiting lists and services being closed. 

Police and fire services

Bad news: The police budget is being cut by 20% by 2014-15. The Labour Party claimed the cut could mean fewer police officers on the street, but Home Secretary Theresa May defended the decision, stating “we can maintain a strong police service”. There’ll also be a 13% cut in funding for our fire services over four years.

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Do you think these savings are the right decisions or a cut too deep? Let us know…

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