Posted on July 23rd, 2015
Firstly, I should introduce myself. I am a young mother. I am married, we have a mortgage on as nice a house as we could afford (£135,000) in a good area. We’re fairly average, I would say. We’ve recently had our second baby – so forgive me if my spelling isn’t spot on, I’ve had a few sleepless nights! Everything is going fine, but when she was about a week old, the budget came out. And suddenly her future is looking a lot less rosy.
Despite both of us being in reasonably secure jobs, working hard, saving hard, we’re going to find ourselves fairly soon in difficult financial straits. This doesn’t sit well with either of us. We don’t consider that we have an extravagant lifestyle – what new parent has the time to go out for fancy dinners or to the cinema? Let alone the money. We’ve been on a permanent austerity drive since before we were married (at least 5 years). Every month my husband works out exactly how much is needed for bills, petrol, the mortgage, savings… we budget a reasonably modest £200 a month for food. We make packed lunches to take to work.
We have two cars, but considering we work at different ends of the town, we need them. They are both about twelve years old and neither of us has ever had a new car. We don’t think we will ever have a new car as we don’t want to get into debt to finance it. Ironically, for people who don’t even use our single credit card unless we have the cash ready to pay it off, we are going to be driven into personal debt to pay off the country’s deficit. And we’re not alone.
I am currently in a minimum wage job, working in a care home. The fact that people get paid so little to work such long hours while looking after the country’s elderly and frail is bad enough as it is – but that’s a different article! When Mr Osborne announced that he was raising minimum wage and giving me a pay rise (something which my company has previously refused to do, for at least three years) I was quite relieved. I was on £6.50 per hour, 30 hours per week. The increase in the Minimum Wage to £7.20 gives me an extra £1092 per year, straight away. The increase in the personal allowance gives us £80 per year, between myself and my husband. My husband gets a 1% pay rise, because he’s not an MP, which gives us £226.
But then I realised it was a case of watching this hand, while the other does something totally different. Thankfully, our second child was born in the nick of time, it seems. Thank goodness we weren’t planning on having any more! If only the NHS would consider sterilising women under thirty when the women themselves decide their families are complete… but again, that’s a different article. I only mention it here to show how seriously we take our children. I am not one of those mothers that go about having eight or nine offspring out of reckless irresponsibility, only to then demand that the state support them all.
We aren’t affected by the family element (£500 per year) or the child element (£2500 per year) for 3 or more children being scrapped, as they only apply to new claims. But from April Tax Credits start reducing faster. Right now, they start reducing after you’ve earned £6420 per year, every pound above that knocks 41p off your annual award. This will change to start reducing after £3850, every pound above that knocking off 48p from the annual award.
That’s quite a major change. I haven’t seen a lot of talk about it, but it will drastically affect anyone working with a low enough income to get Tax Credits. Our joint income next April is going to be about £34,585, including the ‘bonuses’ from the budget. In our case the Tax Credit changes knock off £3205 for the year.
Budget bonuses = £1400.00
Budget kickers = -£3205
Total effect per year = -£1805
That’s £150 per month, or to put it another way, everything we manage to save each month – the £100 we put into our ISAs, the £50 we put into our children’s. All of it.
What the Tories have actually done is punish those who they claim they are helping – hard-working ordinary families. The changes effectively eliminate our saving power. We managed to tuck away a modest £150 per month into ISAs. This is in theory supposed to pay for upgrades to our house – like gas central heating (we currently have a single electric storage heater in the living room), or eventually an extension so that we can give both our children separate rooms. But in reality this usually covers us for emergencies, like the car handbrake snapping or the washing machine packing up. We were supposed to start saving up for a far-distant family holiday, but that’s right out the window as our finances are squeezed.
The only saving grace is that we have a year’s notice before the changes kick in. We will be prepared. Some of those affected weren’t so lucky.
I know that we are much better off than a lot of families. I know that some people have no other option but to turn to payday loans companies, their already maxed-out credit cards or even (that well-known source of steady income) excessive gambling, in a desperate attempt to make ends meet. We could always sell a car, or do some more overtime, and there is always that pay rise to £9 an hour that I was promised; in a few years. That, and four years of 1% pay rises my husband will get, will net us around £3421 per year. That means, by the end of this parliament, we will be £1616 per year better off. If inflation is zero, and our insurance, food, gas, electricity and mortgage don’t go up. If our cars last. If we can manage the hit until then.
This year, we will manage. But this time next year, it won’t be the baby causing the sleepless nights. Thank you, Mr Osborne.