Today's blog post is written by Phil Mawhinney, a research and policy analyst working working on Runnymede's financial inclusion programme. He recently wrote Runnymede's "Seeking Sound Advice" publication which looks at how government money advice services are used by BME people.

In yesterday's ‘emergency budget’ Chancellor George Osborne set out the coalition government’s plans for reducing the budget deficit and public debt. Some measures in the package – made up of 77% of public spending reductions and 23% tax increases – will have a heavy financial impact on disadvantaged black and minority ethnic people. The axing of the Saving Gateway, a faster-than-planned increase in the state pension age, cuts to welfare spending and likely increases in unemployment are just some of the coming changes.

Osborne said the government ‘simply cannot afford to extend’ the Saving Gateway, a scheme in which people on lower incomes receive 50p from the government for every £1 they save and which received parliamentary approval last year. Given that this scheme enables many BME people on lower incomes to protect themselves and their families from hardship and to rely less on credit and debt, as well as its relatively low cost at an initial annual expense of £160 million, you might have thought that the government would happily invest in encouraging a culture of saving among people often portrayed in the media as feckless. It is doubly disappointing given the earlier scrapping of Child Trust Funds, which enable families to save into a tax-free investment account into which government makes contributions of at least £500.

Pensions are likely to be a red-hot issue in the wake of the budget, with fiercely-protected public sector pensions due for a squeezing. Osborne announced that the rise of the state pension age to 66 will happen faster than previously planned. Having to work later into life may be particularly difficult for BME people, who experience higher-than-average rates of ill health. This is particularly true among Pakistani and Bangladeshi people. The announcement that the basic state pension will be re-linked to earnings and uprated annually by the higher of earnings, prices or 2.5% from 2011 will be welcome news to the many who rely on the state pension, including BME people who are less likely than White British people to have a private pension.

Announcements on the need to cut welfare spending were prefaced by the slightly ominous theme of ‘increasing the incentives to work, and reducing the incentives to stay out of work.’ The chancellor detailed many cuts and alternations to a myriad of tax credits and benefits, sometimes with apparent regret. These include the introduction of a medical assessment for the Disability Living Allowance (DLA) from 2013, with the aiming of reducing the number of claimants. At first glance this may seem reasonable though it is worth noting that recent CAB evidence highlights grave concern at the number of people undergoing a similar assessment for Employment and Support Allowance unexpectedly being found fit for work. It raises key concerns over the new DLA assessment: what kind of body will run it? how effectively will it measure work fitness? will they be thorough, accurate and fully recognize mental health issues? Bearing in mind ethnic inequalities in health, a ruthless, hastily-designed assessment may threaten the financial security of many ill BME people and families.

The chancellor repeatedly said that cuts in welfare spending would act as ‘incentives to work’. This is a bit troubling – reducing the financial support to people who are ill or out of work will not automatically make it easier for people to find work, not least if work is simply not out there. Indeed, the government has already cut the Future Jobs Fund, which would have helped support many people into work, particularly young unemployed people, of which roughly half are black. BME people across all backgrounds are more likely to be unemployed and, judging by Harriet Harman’s immediate response, it looks like unemployment will be a main theme in Labour’s reaction to the budget. They will also clamour against the increase of VAT from 17.5% to 20%, arguing that this is a regressive move that will take proportionately more money from the poorer in society. This will impact significantly on BME people, who tend to have lower incomes, and may form the centrepiece in ferocious political arguments  over whether, as the Chancellor claims, we really are ‘all in this together.’