Hiiraan Online

George Osborne, the Conservative chancellor, unveiling his first budget in his new role on the 22 June 2010, said that the budget was “tough but fair” and that the action he proposed to take to tackle the country’s financial deficit was “unavoidable.” 

The key points of the Chancellors first budget were hard to stomach for many, especially those in the public sector. However, for the Somali and other new communities in the UK what would concern them the most will be these:

• A cut in pay or a pay freeze for all public sector workers. Plus the prospects of substantial redundancies and Public service cutbacks.

• A rise in VAT from 17.5% to 20% on most products.

§  Child benefit been frozen for the next three years.

§  Tax credits been reduced for families earning over £40,000 next year. However, low income families will get more Child Tax Credit - the amount per child will rise by £150 above the rate of inflation next year - at an annual cost of £2bn.

§  Housing benefit: New maximum limit of £400 a week for properties with more than three bedrooms, £250 a week for a one-bedroom flat, £290 for a two-bedroom property and £340 for a three-bed property, to save £1.8bn a year by the end of the Parliament.

§  Unemployed people will see their Housing Benefit cut by 10%, after 12 months of claiming Jobseekers Allowance from April 2013.

§  It will also be cut for people of working age who are in larger homes than their family size warrants but, from April 2011, disabled claimants who do not have a resident carer will be able to claim for an extra bedroom.

§  Health in pregnancy grant to be abolished from April 2011, the Sure Start maternity grant will be restricted to the first child.

§  Lone parents will be expected to look for work when their youngest child goes to school.

§  The government will introduce a medical assessment for Disability Living Allowance from 2013 for new and existing claimants.

§  Government spending on public services and Government Departments to fall. Most speculators say by 25% in most areas.

The welfare shake-up will save the government £11bn by 2014/15 but the Somali community needs to be and is concerned with the scale of these cuts because they are going to be affected disproportionately. This is because large sections of the Somali community in the UK are economically inactive and welfare dependant as a result of multiple deprivation rising out of their recent arrival to the UK. In most cities where the Somali community has a significant presence, they live in the most deprived areas and whilst there are educational opportunities, it is more difficult to come across employment opportunities. As a result of these difficulties, most Somali families and individuals are forced onto Welfare and because of the continuing difficulties of finding employment, many become long term dependants. Some members of the Somali community are registered as disabled with the Department for Work and Pensions and as a result they qualify for Disability Living Allowance which is a tax free benefit for children and adults who need someone to help look after them because of their physical or mental disability.

The Somali community in most cities where they have a large presence are among the biggest tenants of the social housing sector and because many of them are unemployed, they rely on the Local Councils to pay their rent through Housing Benefits. Somalis typically have large families in comparison to other groups residing in the UK and due to this they are given priority over other groups with fewer children in the housing allocation process. They also, because of their larger family sizes, are given bigger homes as is required to satisfy the anti overcrowding housing policies that exist at present.

The Conservative government has always favoured the conventional family unit over any other family structure, especially lone parenting. The Conservatives have always stressed that the family, made up of a father, a mother and their children, is fundamental for the stability and success of society as a whole. Lone parenting, they argue was encouraged by the last Labour government through favourable treatment through the tax and benefit system. The Conservatives want to address this by returning the emphasis on stronger families and family unity over single parenting through the tax and welfare system. This is clearly evidenced in the emergency budget which states that lone parents will be forced to find work as soon as their child reaches their first year of primary school.

Clearly, from the above, it is plausible to agree with the Think Tank, Institute for Fiscal Studies on their argument that the UK faces the “longest, deepest, sustained period of cuts to public services spending at least since World War II.”

This period of cuts will have a great impact on the Somali community living in Somalia as a large number of British Somali families’ support their next of kin and extended family members back home. Despite having very little themselves, most Somali community members who live in the UK and within the European Union as well as those who live in Northern America, like most other immigrant groups, send money that adds up to millions if not billions of dollars a year to their family members. This is one of the most common and important routes that money enters the poorest and worst governed places in the world. Remittance money is sent through many companies such as Dahabshiil which now operates an impressive international business with offices in nearly every major city in the world where Somalis live.

The money sent back home is a life line for the beneficiaries as it provides family members with the only real chance they have of survival and a decent life. It also pays for children’s schooling, medication and it generally covers as far as it is possible, the needs of the extended family. It is misleading to think that all Somalis send money home as many are unable to afford it or may not need to as their families are already in the developed world, but those who send also do not always send enough to cover the support needs of their beneficiaries. “I have four children and I have a large family waiting for me back home. They need $250 to live an ok life but I send them what I can. It may not be enough, but it is all I have,” Said a London Somali resident. Another added, “Because you live here in the UK everybody back home thinks you are rich. But they don’t know the reality. I wish I could make them come here and see how hard life is for us. They would be shocked with the personal sacrifices we make for them.”

Most Somalis who can afford it attempt to send a large enough amount of money back to their families so that they can start a business and reduce their dependency on their Western families support. However, although no statistics are available, the numbers that do this are few due to the widespread poverty that exists within the Somali community in the UK.

Somalia and the breakaway Somaliland, which has its own currency, both use the dollar as the substitute currency for their own ones due to its stability. However, as the global recession has hit both America and members of the European Union like the UK, Sweden and Holland hard all three currencies used within these countries have depreciated in value. The pound which was once valued highly against the dollar and the Euro is only now stabilising after months of economic uncertainty. This has made sending money back home for the Somali people very expensive and more difficult as many during this period also lost their jobs. “Before the recession I used to work and send my family back home around $300 a month. But now I am unemployed and unable to send a penny,” said one man in a local café. “I still send but how much I send is not enough because the recession is global and it affects them back home too.”

The recession and the weak British Pound  has hit remittance companies hard too as they depend on people sending money back home’s commission to operate and as less and less money is been sent back to relatives, many of the remittance companies are finding it difficult to operate. “I used to carry out many transaction a day most days and the net been sent in a day used to match that been sent in a week now. The economic crisis does not help and the fact that people are losing their jobs and benefits are going to be cut does not help the situation,” stressed one manager of a remittance company who did not want his identity to be made public. “I believe we will still send money back home but not as much as before.”

This would have been fine had there been some employment and industries back home in Somalia and Somaliland for people to seek work from or a government financially able to support their basic needs. The fact is that, despite the peace Somaliland enjoys, there are very few jobs and finding them is almost impossible as most businesses are family run. In addition to this the cost of living is constantly rising because of higher prices of exported goods such as rice and pasta which are the stable diets of the majority of the people.

The question is how will Somali people back home survive in the face of financial support been cut back by their families in the West and the government (or lack of) been unable to support them through economic regulation or direct financial aid?

The reality is that the financial special relationship that exists between people back home and their relatives in the west, especially those residing in the European Union States will be tested to its limits. Both sides will need to sacrifice and sacrifice greatly as the cuts in Europe are going to be deep and will affect almost everyone. This in turn will affect businesses in Somaliland as less spending will occur and consumer confidence will be hit hardest and an age of caution which will slow down any potential economical growth is likely to follow. The Somali people back home who are dependent on relatives will have to endure the same austerity measures their sponsors are confronted with here in the UK. As the British Prime Minister, David Cameron, said, we are all in it together and sadly he is right.  In an increasingly globalised world people, regardless of whether they are relatives or not, find that their fates, future and fortunes are interdependent or linked in some way.  Where one is affected they all become affected. The boom years are over and it is now time for everyone to tighten their belts and hope for the best.