PRESS RELEASE 21 March 2000

Has Brown delivered for working families?

The Low Pay Unit welcomes the Chancellor's fourth budget. It has been a good budget for low income families in particular, with a rise in the minimum income guarantee for working families to £214, including increases in allowances for children under 16 of £4.35. The Unit is concerned however, that low paid workers without dependent children have been overlooked in this budget.

The Budget has benefited low income families in 3 main areas.

1. Welfare to work

• New job grants for the long term unemployed starting at £100
• 4 week benefit transition payments for mortgage interest payments and Housing Benefit
• local special action teams matching unemployed to jobs in local area
• lone parents on income support - £15 benefit top-up for attending training, and earnings disregard increased to £20

We welcome the budget's focus on welfare to work, but are concerned that measures such as the Special Action Teams are sensitive to the problems of skills mismatch in high unemployment areas. Welfare to work policies must work together with lifelong learning and training measures in order to be most effective.

2. Family Friendly Policies

• Surestart grant increasing from £200 to £300
• Changes to WFTC, including making the benefit more responsive to changes in family circumstances.

The Unit welcomes this as a positive start for family friendly policies, and looks forward to further progress. In particular, we wish to see provision for paid parental leave, enabling fathers to participate more in parenting.

3. Financial and social exclusion

The Low Pay Unit welcomes the appointment of a working party with banks and post offices to provide basic banking services for the lowest paid. However, immediate action is also necessary to tackle punitive ATM charges as highlighted in the recent Cruickshank Report, which hit the poorest hardest.

A Missed Opportunity?

Whilst there is much in Budget 2000 to be commended, in some respects it is a missed opportunity to continue reforms to tax and NI in order to create a genuinely progressive system of taxation. For example, key measures which would have benefited low paid workers in particular, would have been to widen the lower rate (10p) tax band to £2,800, and 'crediting in' for contributory benefits for people earning below the Lower Earnings Limit (£66 pr week). This would ensure that a full-time worker earning the minimum wage and no more, would only pay lower rate income tax and not basic rate tax.