Tax cuts for UK workers, but food banks show scale of social crisis

UK finance minister Jeremy Hunt has announced a $13 billion tax cut for 27 million workers, the second large reduction in under four months before a national election expected later this year. The cut comes in the form of reduced levels of National Insurance, the UK's social-welfare levy.

But with critics saying the country's public services are in a very large hole after years of underfunding, there's some cynicism among those at the bottom end of the income scale. That's been magnified by comments by some economists that public services could buckle under the weight of further expected public service cuts.

CGTN correspondent Paul Hawkins went to visit a small food bank in West London, which helps up to 300 families a week. Known as 'Dad's House', it's funded by private and corporate donors, and also provides legal advice, mental health support, alcohol and drug testing, and much more.

Such food banks have become more prevalent in recent years amid the country's ongoing cost-of-living crisis.

One client, John, told CGTN that Dad's House had been a lifeline to him and his family. 

"When I came down here, the guy said to me, You know, you'll never go hungry again," he said. "Every week I know I have food here, guaranteed….and every week I do need it."

A former railway worker, John is now unemployed because of a knee operation. 

On Wednesday (March 6) Hunt announced a 2 percent reduction in the rate of social security contributions for employees and the self-employed, and said this would help encourage people back to work and deliver a high-wage, high-skill economy.

The cut, effective from April, would be worth about $572 a year for an employee and $445 for someone self-employed. In November, Hunt announced a 2 percentage point cut to the main rate for employees and a 1 percentage point cut for self-employed workers.

Hunt said the two tax cuts taken together were worth 900 pounds ($1,145) to the average worker. But that's little use to John, who is struggling to make ends meet without work. 

Another client, Zahia, said Dad's House helped her stay afloat. The government boasts that it's spent $104bn supporting those who are struggling. But with UK interest rates and inflation falling slower than elsewhere, organizations like Dad's House are seeing increasing numbers of clients needing help despite earning what used to be considered decent salaries.

Dad's House founder Billy explained: "Parents are more anxious than they were because of the cost of living crisis everyone is facing just now. Whether it's gas or electric, some families are in inadequate accommodation where there's so much down there to use another disposable income to fill and their pre-payment electricity meters, which costs a fortune." 

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Despite the announced cut, many Britons are paying more tax now than at the time of the last election, in large part because the Conservative Party has frozen the thresholds for basic and other income tax rates.

Paul Johnson, director of the Institute for Fiscal Studies think tank, said overall tax had "still risen a lot over this parliament" and low earners would lose out more from frozen tax thresholds than they gain from national insurance cuts.

Sahil Dutta, Lecturer in International Political Economy at London's City University, told The Guardian: the budget "will mean more of the cuts that have already bankrupted councils and led to decayed youth centers, parks, libraries and community arts provision. These have left us a sicker and sadder nation than even a decade ago, with millions of people on long-term sick leave. Rather than confront these challenges, the budget retreats to the Conservative (government's) safe space."

With spending on public services forecast to fall and no political parties promising to reverse that, organizations like Dad's House are increasingly vital.

Paul said he was "very scared" of the future, a sentiment shared by John. "My future seems to be at a stalemate. I can't see anything other than continuing what I'm doing at the moment, which is surviving."

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