Gordon Brown's Gay Unfriendly Budget

With the current debate raging in the media and in Parliament around Alistair Darling's budget and his decision to remove the 10p rate on income tax, I thought I would resuscitate this post I originally published on 27 march 2007 as an interesting angle on the controversy.

Last week, with the approval by both Houses of Parliament of the Sexual Orientation Regulations was of course a very important and much publicised time for the LGB community. That same week might however have other less obvious and less auspicious consequences for at least some members of our community.

The big news for the Country, last week also came from Parliament. Gordon Brown, Prime Minister in waiting and current Chancellor of the Exchequer was delivering his budget for 2008 and to some extend two to three years beyond that. The big headline, widely reported in the media, for what everybody assumes to be Brown's last budget, was the announcement by Brown at the end of his speech of a cut of 2p in the basic income tax rate.

However, Brown had also made clear right from the start of this same speech that the budget would be a balanced one: ie no cuts. This prompted commentators to say that Brown was giving from one hand and taking from the other. And indeed, along with the 2p cut, came the dissappearance of the "10p starter rate".

Although fairly few figures are available, it is often claimed that members of the LGB community earn on average more than straight people. According to a 2006 survey of 1,118 readers of Diva and Gay Times by the marketing consultancy Out Now:

Men had spent on average £626 and women £519 on holidays and mini-breaks. Gay men also spent more than lesbians on clothing, £374 compared with £249, as well as furniture and fittings, where they typically spent £300 to women's £263.

That reflects the fact that the typical gay man working full-time earns an average £34,168, compared to £24,783 for a lesbian. Both figures, though, are much higher than the salaries earned by the average male and female British worker of £24,236 and £18,531 respectively.

Among the respondents, 40 per cent of the women and 25 per cent of the men were professionals; 11 per cent of the women and 13 per cent of the men were managers; five per cent of the women and six per cent of the men were senior managers; and eight per cent of both sexes were clerical and office workers. (source: the Guardian).

Moving away from the headlines of the high earning capabilities of the community, we learn here that 8% of our community (identified as clerical and office workers) are likely to have a low income. Perhaps it was conducted on a very specific segment of the population (readers of magazines who can be expected to be from the higher and more affluent stratas of society), the survey does not mention manual workers and people with little qualification or the unemployed and the retired who are also all likely to be at the lower end of the pay ladder.

The limitation of the population polled may also provide ground to dispute that fact that LGB people generally earn more than their heterosexual counterparts.

A 1995 study (Poverty - Lesbians and Gay Men: The Economic and Social Effects of Discrimination) found that 21% of respondents were living in poverty and over half (57%) of respondents said they found it difficult to make ends meet. In her 2001 book Money, Myths, and Change: The Economic Lives of Lesbians and Gay men, University of Massachusetts economics professor Lee Badgett finds that "Gay/bisexal men [...] earn 17 percent less than heterosexual men with the same education, race, location, and occupation."

From December 5th 2005, LGB people who receive benefits, and live with their partner are treated in the same way as heterosexual people. They have been re-assessed as a consequence of their relationship. This has affected a significant number of people, who have been vocal in their objections to this joint income-assessment. This has indicated that there are LGB people in the UK who come from low-income backgrounds (Poverty and social exclusion, Stonewall).

On the whole most people will find themselves better off as a result of Gordon Brown's exercise in juggling with the figures. However, the Institute of Fiscal Studies said that about 2 million people on lower wages - such as single people with no children earning between £12,000 and £18,500 - would lose out, as they would be harder hit by the abolition of the 10p starting rate.

In view of what I discussed above, "single people with no children earning between £12,000 and £18,500" sounds worryingly like that might include a not insignificant part of the LGB population. I am myself one of these people.

If we consider that there are an estimated 3.6 million gay and lesbian people in the UK, this change in the budget will affect several hundred thousand people in our community.

Even the optimistic Out Now survey, cited above, only mentions 64% of the lesbian and 52% of gay men responding; some of whom, as we have seen, will be low earners. It is therefore, I think not, unreasonable to think that that could affect up to 1/3 of our population. That would be about 1 million people. Half of the people the IFS estimates will be hit by the new measure.

Of course, across the whole community, an increasing number of people are getting civilly partnered (more than 15000 couples so far with another 28,000 ceremonies set to happen over the next year). This move may soften the fiscal blow somewhat for those.

Regardless of whether many members of the LGB community are affected or not, it is rather worrying, to say the least, that a Labour government should put itself in a position where it actually penalises the vulnerable and members of minorities, for what could very easily be percieved as a PR exercise for the impending Prime Minister.

And that is not mentioning how we will suffer through so-called stealth tax.