The impact on women of the 2013 Spending Round

Background

Since June 2010, the Women’s Budget Group (WBG) has been tracking the impact of the coalition government’s economic policy on women and gender equality. The 2013 Spending Round continues the dominant trends we have identified:

• Women are harshly affected by cuts to public services and social security entitlements.
• The shift of employment from public sector to private sector worsens women’s labour market position.
• Women benefit the least from opportunities arising from the government’s investment in physical infrastructure.

The mix of fiscal consolidation is now not the 80/20 per cent spending cuts/tax rises that the coalition government promised, but an even more unbalanced 85/15 per cent. WBG thinks that tax increases should now be explored instead of further public spending cuts. But instead the government is freezing council tax, and increasing the personal tax allowance in real terms. The cost of increasing the personal tax allowance to £12,300 in 2015/16 would be over £10bn, according to a recent written answer; and by the end of 2015/16, council tax revenues will be some £3bn lower than they would otherwise have been.

Cuts to public services and social security entitlements:

• The 10% cut to the local government budget will have a devastating impact on jobs and services crucial to women. The WBG is particularly concerned about the impact these cuts will have on the most vulnerable women who need various local services, including the 1.2 million victims of domestic violence each year.
• The plan to make unemployed and precariously employed people wait 7 days before giving them access to Universal Credit is expected to save £250m per year. The details are not yet clear; but this measure could hit women particularly hard, as they are often the ones in low-paid, insecure jobs and are more likely to have children dependent on their incomes.

The WBG calls on the coalition government to stop and reverse these cuts, which put the poorest and most vulnerable women, and their children, at risk of deep poverty, physical harm or worse.

Shift of employment from public to private sector:

• The Chancellor says that every job loss in the public sector is offset by three created in the private sector. But the WBG has found that women are not benefitting equally from new employment in the private sector. Instead 63 of every 100 new (net) jobs created since 2009-10 went to men and just 37 to women. What is more, the new jobs are lower paid, more precarious and more likely to be part-time; and the gender pay gap in the private sector remains at 25% for hourly pay and nearly 44% for weekly earnings. Any further public sector job cuts will push more women into low quality jobs or unemployment. For those who stay in the public sector, the loss of pay progression will harm the lowest-paid workers and entrench existing gender pay inequalities.

The WBG calls for urgent action to secure equal opportunities, pay and conditions for women in private sector employment, and put a halt to further deterioration in the public sector. As investment in physical infrastructure begins, measures should be proposed to promote women into new job opportunities, develop targeted recruitment strategies, and tackle unequal workplace cultures.

Investment in physical rather than social infrastructure:

• The Chancellor announced £50bn investment in infrastructure projects, but once again the priority is on physical infrastructure: new roads, two rail links, and guarantees for new nuclear plants. As the WBG has pointed out before, this type of investment mainly creates jobs for men, unless specific measures are introduced targeted at recruiting women. The Chancellor made no mention of new investment in social infrastructure, such as care for children and elderly people. Developing social infrastructure would create more new jobs than construction (especially for women), respond to urgent and expanding social need, and provide a larger stimulus to the economy. The Chancellor says that he has protected NHS spending; yet he made no allowance for health service costs rising faster than inflation, and the increased demands of an ageing population and a rising birth-rate.

The WBG calls for an emphasis on investment in social rather than physical infrastructure. This would create more additional jobs, respond to urgent and expanding social need, and provide a larger stimulus to the economy.

The WBG is also concerned about the Treasury’s failure, once again, to produce an adequate equalities impact assessment of this latest spending round.

The Equalities Impact Assessment produced by the Treasury is misleading and superficial. Under ‘gender’ the assessment highlights how women benefit from two specific coalition government measures, but provide no assessment of the gendered impact of spending cuts. In this response to the Spending Round 2013, WBG provides a quantitative assessment of the cumulative gendered impact of the Coalition government’s fiscal policy since 2010, plus a gender assessment of measures specific to the Spending Round 2013.

The WBG calls on the coalition government to take seriously its requirement to pay due regard to the impact of its spending decisions on gender equality.

The full impact analysis can be found here.