Simon Read: Hardship and bankruptcies loom as unfair cuts hit home

The full horror of the effect of the Coalition Government's unfair spending cuts will hit home in coming months as hard-up families find it tougher than ever to get by.

Public sector who are losing their jobs are most at risk.

"The number of personal bankruptcies and those seeking IVAs is likely to rise sharply again over the next two years," warns Alec Pillmoor, of Baker Tilly Recovery and Restructuring. "By the end of next year the total could reach 40,000 in a quarter for the first time."

Gillian Guy, Citizens Advice chief executive, warns of an "explosion of homelessness" after the cutbacks to housing benefit and the "extraordinary" decision to raise the single room rate to 35-year-olds.

Those living on a financial knife-edge look set to suffer even further under the current government, and the decision to hit the poorest hardest is shameful.

For instance, the plans to scrap child benefit for higher-rate taxpayers will affect 1.5 million children in single-income families, according to the TUC. Of those families losing their child benefit, more than 100,000 have at least three children, and would therefore lose at least £2,500 a year.

In the short term, millions of us will need to tighten our belts even further just to survive, but it's important not to ignore the long term. The Coalition's decision to bring forward by six years theraising of the state retirement age to 66 will affect millions of people, effectively everyone under the age of 57.

If you have a decent nest-egg locked away already to pay for your retirement, then having to wait an extra 12 months for the state pension may not be too much of a problem.

But for the majority of people these days who have no adequate pension planning in place, the move should make them think a little more seriously about how they will plan for their retirement years.

Women are worst hit by the Government's change of plan. Over the next 10 years, women's state pension age will increase by six years, from 60 to 66 while, in the same decade, men's state pension age will increase by just one year.

Number crunchers at Fidelity have calculated that a 45-year-old woman turning 60 in 2025 will miss out on around £46,976 in basic state pension as a result of the changes. This is based on the current basic state pension, £97.65 per week, rising by 2.5 per cent each year.

The same 45-year-old woman who decides to save for herself so that she could still afford to retire at 60 on the equivalent of the state pension would need to save an extra £175 per month from now for the next 15 years to have a pot of £49,681.

Women are also likely to be the biggest losers from public sector job cuts. Analysis by The Independent shows that around 350,000 women will lose their jobs over the next four years, compared to just 150,000 men.

The figures underline the importance of having adequate savings, both for the long-term and for more immediate needs. Of course, if your family budget is already under pressure, it may simply be impossible to set aside cash now for future needs. In the coming weeks I'll be counselling advice from money experts on how to survive the cutbacks.

s.read@independent.co.uk

Osborne urged not to cut fuel allowance

george osborne has been accused of misleading people about cuts to the winter fuel allowance, after he stated in his Spending Review that "Winter Fuel Payments will remain exactly as budgeted for by the previous government."

The National Pensioners Convention (NPC) says this in fact means that in the winter of 2011-2012 the £250 per household currently paid to those over 60 but under 80 will drop to £200, and the £400 paid to the over-80s will fall to £300. This despite a pledge in the Coalition Government's programme to protect the allowance. "The winter death rate among older people is a national scandal and getting worse," says Dot Gibson, NPC general secretary.

"Last winter over 36,700 pensioners died of cold-related illnesses – a staggering 13 pensioners every hour."

Around 3 million pensioner households are already are living in "fuel poverty" – that is, spending more than 10 per cent of their income on fuel bills. "People need to be reassured that they will not be financially punished for keeping warm in winter," says Gibson.

She urged the Government to give the over-60s confidence "that they will be able to pay their bills, by immediately ruling out any changes to the winter fuel allowance."