Citizens Advice Scotland have said the increases in the minumum wage will barely off-set the rise in the cost of living for many vulnerable people.
CAS Chief Executive Lucy McTernan said,
“Obviously any extra money is welcome, but these things have to be seen in the context of the overall economic situation. And the reality is that the cost of living is going up so much that for most people such increases in minimum wage will be easily swallowed up.
“Every CAB in Scotland is still seeing huge numbers of people who need help with debt and other financial problems. The recession has left many Scots struggling to get by on low incomes. And people who are on minimum wage are already being hit hard – and disproportionately – by government cuts and changes to tax and welfare policies. (see below)
“Only this week for example many families have been hit by changes to tax credits. Those families with a child under one year old will lose £45 per month. And the amount of help people can get for childcare has dropped substantially as well. Meanwhile we’ve seen VAT go up and the cost of basic essentials like fuel remains high – one third of Scottish households are officially in fuel poverty.
“So while the increase in the minimum wage will provide help for some, it is easily outweighed by the overall cost of living, and of course it will do nothing at all for those who are unemployed or living on benefits. We in the CAB service see the real picture, which is that too many Scots are really struggling from one week to the next, and the trend of government policy is making things worse for those most in need, not better.
“Anyone who needs help with their finances can get free, impartial and confidential advice from their local CAB. We have also opened up new training opportunities for volunteers though, to help us cope with the high demand we are seeing. Such opportunities exist at CABs in all parts of Scotland, so anyone who is interested should get in touch with their local office now.”
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Recent changes to the tax and benefit system that are hurting those on low incomes:
From October 2010• Support for mortgage interest cut from 6.08% to 3.63%
From January 2011• Child Trust Fund scrapped• Health in Pregnancy Grant scrappedThese payments were previously universal (subject to immigration status).
From April 2011• ‘SureStart’ Maternity Grant limited to first child only• Child benefit rates frozen for three years • Housing benefit (HB) in private rents to be reduced for new claimants- capped nationwide- 4-bedroom limit- non-dependant deductions to increase- reduced from median to 30th percentileTax credits• Baby element (extra £545 a year) will be removed• Family element to be withdrawn from families earning more than £40,000 • Childcare costs to be cut from 80% to 70%• Basic and 30 hour elements of Working Tax Credit frozen for 3 years