The whirlwind that’s about to hit Oldham

Veteran Oldham MP Michael Meacher writes about the impact of Government cuts on the day-to-day lives of Oldham people

The full force of the cuts about to hit Oldham over the next few months will be the biggest since perhaps the 1930s.

The Government insists they are necessary to reduce the nation’s budget deficit. Certainly the deficit has to be reduced, but not at the expense of growth and not in a manner which is grossly unfair.

The cuts about to be imposed fail on both these counts.

The problem with endlessly squeezing benefits, public expenditure, jobs and businesses is that it contracts the economy and actually causes public borrowing to increase rather than fall.

That is why the Government is now having to borrow no less than £227 billion more than it originally planned in 2010.

People are really suffering from the cuts, yet the cuts are not solving the problem — they’re actually making it worse.

Nor are the cuts being imposed fairly. The poor who didn’t cause the financial crash are being hit far harder than the rich who did.

The North is being hit far harder than the South, urban areas than rural areas, and Labour councils than Tory councils.

Benefits are being cut by £21 billion, yet at the same time 8,000 millionaires in the UK are being handed an extra £2,000 a week from ending the 50p income tax rate. The sheer injustice of this destroys the integrity of our nation.

How will Oldhamers be affected?

Housing benefit cuts in April will particularly affect pensioners, families on low incomes, disabled people (many already traumatised by assessments of their alleged capability for work), the long-term sick, and the jobless.

A so-called bedroom tax will hit those classified as “over-occupying” their property. People with one bedroom more than they are supposed to need will have their housing benefit cut by 14 per cent, and with two bedrooms more than they need a cut of 25 per cent.

This will affect about 2,000 households in Oldham.

Moving to a smaller property will be difficult because of the housing shortage (there are 8,500 on the waiting list in Oldham) and because of the priority given to homeless people.

A universal credit is being introduced which limits the total of all benefits that can be received.

This will affect about 200 families in Oldham, will add pressure to already tight budgets for many large families, and will increase the risk of rent arrears.

The Council Tax Rebate scheme is now being cut by 10 per cent, but pensioners who are nearly half of these claimants are exempted so that persons of working age will now have to pay 20-25 per cent of their council tax bill which is likely to be £3.50-£6 per week.

It is expected that 17,000 people of working age will have to pay this extra amount. Further, if these extra tax payments cannot easily be collected, it is likely that the outstanding arrears will have to be redistributed to other council tax payers.

In addition, the Government has just announced that not only is public-sector pay being held down to a 1 per cent increase over each of the next three years when inflation is running at 2-3 per cent, but benefits and tax credits are also being restricted each year to the same 1 per cent increase.

That means that a quarter of Oldham’s population is about to suffer, on top of cuts already made, a further cumulative cut each year in their standard of living.

As a result of all these measures it is estimated that the poorest 10th of households will in cash terms be an average £3,995 a year worse off, or £76 a week, some 32 per cent of their annual income.

It should be noted that many, if not most, of these cuts will affect people in work since a high proportion of working people today are in poverty, defined as having an income less than 60 per cent of the median wage which is about £390 a week.

The Government has also just announced that the 50 councils with the biggest cuts (including Oldham and Rochdale), where a third of children live in poverty, face spending reductions on average of £160 per head of population.

By contrast, the 50 councils with the smallest cuts in the prosperous southern shire counties, where child poverty is less than 10 per cent, will have their expenditure reduced by only £16 per head of population.

Despite this cascade of unjust privations imposed on the poor so that the rich can escape almost scot-free, Oldham is fighting back.

The council has managed to secure a 28 per cent cut in bus fares from First Bus, and has also organised a very effective scheme for cutting fuel bills by getting big discounts from the energy companies through collective action to secure bulk purchases of energy.

In Parliament too, there is constant pressure on ministers to withdraw, or at least pare back, these huge unjust cuts, to reverse a prolonged austerity programme which is counter-productive and patently failing, and to replace it by a proper jobs and growth strategy which can really get Britain back to work.