Tax credit change could cost families £4k a year - Labour


Rachel Reeves: 'This is the wrong policy at the wrong time for thousands of families'

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Low income families with parents in part-time work could lose nearly £4,000 per year because of a change in tax credits, the Labour Party says.

Families can currently qualify for Working Tax Credit if one parent works at least 16 hours a week.

About 212,000 families could be hit from April when the threshold is raised to 24 hours per week, the official data highlighted by Labour shows.

The Treasury said new measures to help working families were being introduced.

Couples can apply for the credit as long as they make a joint claim. However the money will be paid to the person who works part-time.

There is a basic amount available for each application, and then additional elements depending on whether you have applied as a couple or as a lone parent.

Treasury Minister Chloe Smith said the policy was part of "what we have to do as a country to get out of the enormous deficit mess left by Labour".

She told BBC News the policy was not unfair because it "levels two parent households with what lone parents have to do", adding that Labour would have to decide whether or not they agree with that.

Figures obtained by Labour's Treasury spokeswoman Cathy Jamieson show 212,000 households - with a total of 470,000 children between them - could lose the £3,870-a-year credit because of the change.

The region with the most households likely to be affected is said to be London (46,205), followed by the North West (26,845), West Midlands (22,675) and Yorkshire and the Humber (20,225).

BBC political correspondent Naomi Grimley reports that shadow ministers are suggesting it might be difficult for parents to increase the amount of time they work as many companies were cutting employees' hours because of the tough economic climate.

'Nothing fair'

Shadow chief secretary to the Treasury Rachel Reeves told the BBC it had taken Labour some time to go through the figures and talk to people who would be affected by the changes.

She said: "So many families have no idea this is coming.

"It's something now that's gaining traction as people realise what impact these government policies will have on them.

Start Quote

This is the wrong policy at the wrong time for thousands of families”

End Quote Rachel Reeves Shadow chief secretary to the Treasury

"In normal circumstances you might think these people will be able to take extra hours on but we know, at the moment, businesses and the public sector aren't taking on workers or giving extra hours' work either."

But a Treasury spokesperson said Labour's figures ignored the other measures it had taken.

These include increasing working age benefits by 5.2% in April and the child element of Child Tax Credit by inflation.

The spokesperson added that fuel duty had been cut and council tax was frozen.

"When it is introduced, the Universal Credit will give nearly three million households a higher level of entitlement and enable more parents to get into work by helping 80,000 families with childcare support."

The spokesperson added: "Ultimately there is nothing fair about running huge budget deficits and burdening future generations with debts we cannot afford to pay."

Ms Reeves denied Labour was being disingenuous saying: "The government's own figures show that they expect 82,000 families will lose the full amount of their tax credit."

Start Quote

We need to leave more money in the pockets of people who earn the money in the first place”

End Quote John O'Connell Taxpayers' Alliance

She said the coalition was choosing to "hit women and families particularly hard with the cuts they are introducing".

She added: "In an environment where we know that there are many people working part time because there aren't the full time jobs available, this is the wrong policy at the wrong time for thousands of families."

Imran Hussain, from Child Poverty Action Group charity, told the BBC that many families were going to struggle, especially in the current economic climate.

He added: "The bizarre thing about this is the government's fundamental policies around welfare reform are about abolishing this kind of qualifying period of hours."

John O'Connell from the pressure group Taxpayers' Alliance called the tax system "complicated and too burdensome".

He said it encouraged a culture of dependency for both those out of work and working families penalised by having too much taxed in the first place.

"We need to leave more money in the pockets of people who earn the money in the first place," he said.


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  • rate this

    Comment number 319.

    Andy B 306 You said "Why can't the 'jobless' do these jobs? Because they'd lose their massive benefits and be worse off" Or maybe it's because Employers prefer young, able bodied Immigrants to older British Citizens who have Health and Disability issues. No-one "gets" a Job, and Employer has to offer one, and they offer according to their prejudices, which are often unsound in my opinion.

  • rate this

    Comment number 318.

    The CEOs of Housing Associations are paid large salaries from taxpayers (in excess of the PM's salary) and have recently escalated the rent they charge, even to poorer tenants, whilst conveniently giving money to local councils. I suspect this is yet another scam. I suspect that local governments are even more corrupt than central government. This country is well and truly wrecked.

  • rate this

    Comment number 317.

    Reading thro' the comments I've got faith in the values of ordinary UK people again; I think we're an intrinsically decent lot.
    Sure there's a few on here who, like the government & manipulated by them, want to lay the boot into the vulnerable when they're down.
    However most of us understand it could be any one of us dealt a bad set of circumstances - & with no millionaires cushion to back us up.

  • rate this

    Comment number 316.

    How long before Cameron announces a policy of euthanasia for those who are sick, disabled, unemployed or earn less than 12K a year? - by the way I'm safe

    I can honestly see him licking his chops at the though of brining in this sort of policy

  • rate this

    Comment number 315.

    The sign of a bankrupt argument in recent weeks is "you'll end up like the Soviet Union".

    It's been over two decades since the USSR went, there is no left in this country, if you want a bankrupt argument, just talk about the bogeyman.

    "Surely none of you want Jones back?" Yet no-one could really remember Jones. Oh, the irony.

  • rate this

    Comment number 314.

    There is so much misinformation being written here. I would suggest a visit to the HM Revenue & Customs/Tax credits: effect of Budget changes from 6 April 2012 would be a good idea. Chinese Whispers are getting the better of some people who are spreading alarm and despondency unnecessarily.

  • rate this

    Comment number 313.

    I am a public sector worker and work 18,5 hours a week. Exactly in the time my oldest is in school. my youngest is at nursery and childminder during the day. My boss will not be able to give me any longer hours. We will miss out because I want to be there for my kids when they come out of school. I did not have kids to ship them off to a childminder/nursery all day!!

  • rate this

    Comment number 312.

    Message to the old farts - stop blaming Thatcher! It's boring and pointless - some of us don't remember politics from the 80's and subsequent governments have had a bit of time since to implement policies you know...

  • rate this

    Comment number 311.

    I am truly sick of those moaning who either work part time or not at all. My husband and I work full time, have one child - can't afford any more, have paid for our own childcare. We are just covering the mortgage and bills - no other luxuries whatsoever at the moment!!! I think we are lucky having a home but everything else is a struggle including buying food. The Govt doesn't help anyone!!

  • rate this

    Comment number 310.

    77. Asked, 'Why do we put up with it'. Ive asked myself the same question a thousand times. Our media is so biased towards the rich and powerful that I guess the gullible fall for thier brainwashing propaganda. While the planet cannot support this growing population, this is based upon this current dysfunctional system. We need to rid ourselves of finance capitalism and find a new model.

  • rate this

    Comment number 309.

    290. MikeV7

    You are right. You will get negative votes for your comments.

    Most people realise that you cannot always be in control of your destiny.

    Tax credits were a valiant attempt to break the poverty cycle, along with education education education.

    Global events and a change of government means that the end of that social and economic condition we call poverty has been delayed.

  • rate this

    Comment number 308.

    The gospel according to Labour ! Why should people have to share their hard earned cash with people who work fewer hours, or don't work at all. Get real, Labour destroyed the economy , now they are full of advice and negative comment on how the economy should be run. Their advice is rubbish and they invent a new revelation of Tory excess every week because they have nothing constructive to offer.

  • rate this

    Comment number 307.

    286 Ex Tory Voter

    While I understand your point on the number of vacancies, how many people are on benefits who have never done a days work. 4th and 5th generation claimants are a blight and so is people coming here with no intention of working. We as a nation should get behind our manufactures, suppliers and create the extra jobs needed.

  • rate this

    Comment number 306.

    Oh woe the poor.. not!
    £31,000 'after tax' is like a single person earning over 40k. For doing what?
    Sorry but as a worker I resent paying taxes so these people can whine that it's unfair to get less
    And don't whine about no jobs, we have 100's of 1000s come to this country to work. Why can't the 'jobless' do these jobs? Because they'd lose their massive benefits and be worse off

  • Comment number 305.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • rate this

    Comment number 304.


    What on earth are you going on about? Seriously.

  • rate this

    Comment number 303.

    Many people say that poor people should move to cheaper accommodation. Much affordable accommodation (i.e. within the regional caps on housing benefit that have for a long time been in place) advertises, 'No unemployed people', and many do credit checks and require heavy deposits. Moving is also expensive. People get trapped, having to accumulate debt to pay rent, which damages the economy.

  • rate this

    Comment number 302.

    Well this would appear to be Dave's of the broken society and we are all in it together, attempt to refute the aforementioned and cause further hardship in a contracting economy. Because it is quite possible that the extra required hours may not be forthcoming. And the resultant hardship to lower income groups to reduce the deficit caused by Dave's contempories is immoral and socially divisive.

  • rate this

    Comment number 301.

    Aspiemum @ 231 You are quite wrong in your assertion that in the case of a couple 1 of them needs to work 24 hours. It is calculated on the cumulative hours worked by the couple. HM Revenue - "This will mean: if you both work your joint weekly hours must be at least 24, with one of you working at least 16 hours a week.If only one of you works, that person must be working at least 24 hours a week"

  • rate this

    Comment number 300.

    287 Agree. People forget too that despite the supposed 'benefit culture' every years there are many millions of pounds in unpaid benefits - which people choose not to claim.
    I've never bothered to claim the mobility benefit my doctor tells me I'm entitled to, despite needing the money. People are more proud than the government & Daily Mail would have you believe.


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