Death by £1000 cuts?

This report from UK think tank Resolution Foundation looks at the history, economics and politics of cutting benefits for millions of households next April.

The first Conservative Conference of a new parliament begins. It comes on the back of a surprisingly emphatic election win, but with rumblings beginning about the Chancellor’s plan to take £1,000 away from millions of low-income households in just six months’ time. At that conference it is George Osborne, not Rishi Sunak, that gets up to deliver the Chancellor’s speech. Because it is now five years almost to the day since the Evening Standard’s Editor-in-Chief was defending plans to cut tax credits by over £1,000 a year on average. And it was George Osborne that was forced into a rapid U-turn one month after the conference, scrapping the cuts in his November 2015 Autumn Statement as Conservative MP after Conservative MP realised that legislating for a huge income hit to their poorest constituents wasn’t the best politics or economics. Five years on Rishi Sunak now finds himself in exactly the same position, heading (virtually) to his conference with plans to reduce the headline generosity of benefits by £1,040 for millions of households in April 2021. The similarities are overwhelming, even if the economic and political context has been transformed. And just like George Osborne, the current Chancellor is all but certain to find himself U-turning in the months ahead. This note explains why.

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