As many as six million poor households could be £ 1,000 worse under the Sonak scheme | Policy

A leading think tank said Rishi Sunak’s failure to announce an extension of more generous aid to low-income people threatens to leave six million poor families worth £ 1,000 a year worse off next April.

Resolution Foundation – which specializes in helping policies for middle and under-income earners – said terminating the advisor was a “huge mistake.” £ 20 weekly payment of tax credits and blanket credit.

The Think Center said that in some parts of the UK, one in three families will incur losses of £ 1,000 a year unless Sunak rethinks and continues with the financial assistance provided at the start The COVID-19 pandemic.

In her analysis of the treasury Winter Jobs PackageThe think tank said that design flaws in the new job support system mean that unemployment will rise over the coming months, leaving more people dependent on the benefits system.

She said that employers had little incentive to increase the wages of those who worked part-time because it was cheaper to hire one full-time worker than two in a short time. She added that there is likely to be “significant pressure” on living standards, which are concentrated in those parts of the country that have a high proportion of low-income families.

A planned withdrawal from a £ 20 per week increase in tax and blanket credits would reduce average income for the bottom half of the population by £ 600, an average calculated by including retirees and others who will not be affected by the change.

In Scotland, the southern England and the East Midlands, one in four families without pensions were to lose more than £ 1,000, rising to one in three in Northern Ireland, Wales, the West Midlands and northern England.

The research center said: “With the reduction of emergency support for the advisor, but far from the limit, the significant rise in unemployment in the coming months, families are now facing pressure on living standards from which they have been largely protected so far in this crisis.”

“Those who are flocking to mass credit will not only see many big knocks on their incomes, but the chancellor yesterday missed the opportunity to avoid another shock by extending the interim installment of mass credit beyond March.”

She added that an increase of £ 20 per week reflects the fact that unemployed support was not enough when Britain entered the crisis – and without reinforcement – it would not be enough in the future. Ending the increase could mean cutting an estimated £ 8 billion of disposable income in 2021-22, and hitting those groups and places that need government assistance to support spending and economic recovery in 2021-22.

“With Britain facing the brink of dangerous jobs next month as the job retention plan expires, the chancellor has rightly stepped in to announce new emergency support to help businesses and workers through a period of high infections and rising unemployment.”

But while the chancellor rightly aims to create a European-style short-hour work system, the design flaws mean that the new job support scheme will not fulfill its promise to drastically reduce high unemployment. These errors can be addressed by canceling the £ 7.5bn job retention bonus and using this money to ensure that the new support system gives companies the right incentives to cut working hours rather than jobs.

While families have so far been protected from the worst economic blow of the epidemic, this is about to change. The upcoming rise in unemployment rates will mean a significant pressure on the living standards of families this winter. ”