Today, the Chancellor announced his spending and taxation plans for the UK in this year’s Autumn Statement. While we welcome the uprating of benefits in line with September’s CPI rate and the relinking of the Local Housing Allowance, the UK Government’s disregard for crumbling public services in favor of gender unequal tax cuts is a misguided approach. Further, the rollout of further punitive benefit sanctions to disabled, long-term sick and long-term unemployed claimants will disproportionately impact the most vulnerable people in Wales as the cost-of-living crisis continues to bite.
Read our analysis of the Autumn Budget and its impact on women in Wales below.
Tax
The centerpiece of the Chancellor’s statement was its announced cuts to UK National Insurance Contributions (NICs). In an effort to ‘reward work,’ the Chancellor has pledged to abolish the Class 2 NICs paid by self-employed individuals in the UK, and to reduce the Class 4 NICs, also paid by the self-employed, from 9% to 8% from April 2024. Seeing as the number of self-employed men in Wales (16.1%) is almost double that of self-employed women (8.3%)[1], these cuts will benefit men more than women.
So too, will the Chancellor’s plans to cut employee NICs from 12% to 10%. Due to persistent gender inequality and unpaid caring responsibilities, women throughout the UK occupy an unequal position in the economy. Women – particularly lone mothers, disabled women, ethnic minority and racialised women – are more likely to be economically inactive or working in part-time, low-paid and precarious work. Thus, while the announced NIC cuts will benefit those in employment earning above £12500, they will not support, for example, women who are economically inactive or on lower earnings as a result of unpaid caring responsibilities. In Wales, this accounts for 24.1% of economically inactive women.[2]
Public Services
Tax cuts also remove a crucial source of revenue for vital public services. Despite a crumbling public sector, in today’s statement the Chancellor neglected to include any additional investment in the UK public services – the NHS, social care and childcare sectors – which are on their knees as a result of cost and inflationary pressures. In Wales, where local authorities are facing a funding shortfall of £354 million in 2024-25[1], and where 70% of parents and guardians have no surplus income or savings left after allocating funds for childcare[2], this lack of funding is particularly disheartening.
From a gendered perspective, the lack of support will disproportionately impact women, who are more likely to rely on public services, to work in the public sector and to become providers of last resort when public services are cut.[3] The reductions in service provision that will follow today’s lack of investment therefore represent a ‘triple whammy,’[4] for women in Wales and across the UK, further entrenching the inequalities they face.
Social Security
The Chancellor’s commitment to uprating social security benefits in line with September’s CPI figure of 6.7%, as opposed to October’s 4.6% figure, is welcome and will help to support Universal Credit claimants in Wales, 57.1% of whom are women.[1] However, several gendered issues remain with Universal Credit – for example, its benefit cap, two-child limit and no recourse to public funds condition – and today’s statement represents a missed opportunity to reform the UK social security system to ensure it works better for women.
While we welcome the relinking of the Local Housing Allowance to cover the bottom 30% percentile of rents, its impact is severely curtailed by the fact that it will be refrozen again from 2025-26 onwards. This means that the much-needed relief it will provide to low-earning private renters is a short-term measure only.
Finally, we are extremely concerned about the increase in punitive sanctions for disabled, long-term sick and long-term unemployed benefit claimants. In order to ‘incentivize work,’ the Chancellor announced a number of alarming welfare reforms following on in close succession from his expansion of conditionality and sanctions in the Spring Budget 2023. As part of the UK Government’s ‘Back to Work’ plan announced today, treatment and employability support will be extended to claimants who are unemployed by reason of long-term health conditions or disabilities, or otherwise long-term unemployed. The plan will also, however, introduce stricter benefit sanctions and consequences for those who fail to engage with their job search requirements within six months or decline work offered to them, including stopping their benefits altogether.
As WWBG noted in a previous policy paper,[2] sanctions are an ineffective policy measure and do not result in most claimants finding long-term, sustainable employment. Conversely, they encourage exit rates off social security and into unemployment, or short-term, low-paid jobs.[3] Not only does this defect on the Chancellor’s stated aim of growing the UK economy, but it also perpetuates the very issues which have led to women’s economic inequality, further entrenching gender inequality. Sanctions are also ‘welfare-worsening,’[4] fueling undue stress and anxiety and depleting the incomes of the most vulnerable as costs remain high. Far from encouraging people into employment, these ‘welfare-worsening,’ impacts are likely to exacerbate long-term physical and mental health illnesses, piling more pressure on an already struggling NHS. As the majority of Universal Credit claimants in Wales are women, these impacts will also disproportionately impact women, particularly those who experience additional intersectional discrimination and disadvantage.
The Government’s decision to extend these sanctions to the most vulnerable claimants – those that are disabled and long-term sick – is morally problematic and endangers the human dignity and equal respect that social security is designed to protect. The reforms also fail to account for the fact that NHS waiting lists and other crumbling public services are a huge driver of the economic inactivity that the Chancellor is seeking to redress. Today’s lack of investment in the vital public services therefore represents a regrettable missed opportunity, and one that is likely to perpetuate inequality in Wales and throughout the UK.
[1] Chwarae Teg (2023), State of the Nation 2023
[2] Wales Women’s Budget Group (2023), Far From a Vital Safety Net: Benefit Conditionality, Sanctions and Women in Wales https://wwbg.org.uk/wp-content/uploads/2023/08/Far-From-a-Vital-Safety-Net-Benefit-Conditionality-Sanctions-and-Women-in-Wales.pdf [Accessed 22.11.23]
[3] Ibid.
[4] Ibid.
[1] Wales Fiscal Analysis (2023), The medium-term fiscal outlook for local government in Wales https://www.cardiff.ac.uk/__data/assets/pdf_file/0007/2779342/The-medium-term-fiscal-outlook-for-local.pdf
[2] Oxfam Cymru (2023), Little steps, big struggles: Childcare in Wales https://oxfamapps.org/cymru/wp-content/uploads/2023/11/Litle-Steps-Big-Struggles.pdf [Accessed 22.11.23]
[3] UK Women’s Budget Group (2022), The gendered impact of the cost-of-living crisis on public services https://wbg.org.uk/wp-content/uploads/2022/11/Gendered-impact-of-cost-of-living-crisis-on-public-services-1.pdf [Accessed 22.11.23]
[4] Ibid.
[1] Chwarae Teg (2023), State of the Nation 2023
[2] Ibid.