Benefits & tax credits: 60 per cent of households hit by real terms cuts are working households - Reeves

5 December 2012

Rachel Reeves

Rachel Reeves MP, Labour’s Shadow Chief Secretary to the Treasury, commenting on independent analysis of the impact of tax and benefit changes announced in the Autumn Statement, said:  

“While millionaires get a tax cut it is millions of struggling families on middle and modest incomes who are paying the price for this government’s economic failure. 

“Independent figures show that around 60 per cent of households hit by the real terms cuts to benefits and tax credits are working households.  

“According to the House of Commons Library these decisions, together with all other changes to tax and benefits taking effect in April, mean a one-earner family on £20,000 with two children will lose £279 a year.  

“This does not even include the VAT rise which has cost families with children around £450 per year. And this will happen on the same day that 8,000 millionaires get an average tax cut of over £107,000. How can this government claim we are all in this together when working families, striving to do their best, are being singled out?” 

Ends  

Editor’s Notes: 

1.   A working family with children on £20,000 will lose £279 a year from next April

As a result of George Osborne’s failure, the Government are borrowing £212 billion more than they planned. The OBR has also forecast that George Osborne will miss his debt target. 

Today George Osborne has made clear that he plans to cut support for working families in order to pay for the cost of his failure.

On page 68 of the green book, the Government set out 1 per cent caps – in other words real terms cuts - for Working Tax Credit and Child Tax Credit.

According to the House of Commons Library, these changes mean that in 2013-14, along with all other changes to taxes and benefits which are set to take effect in April 2013, a one-earner family on £20,000 with two children will lose £279 a year.

This includes the impact of the personal allowance increase. It also includes all the other policy decisions the Government have taken in past Budgets and Autumn Statements. 

It does not include the £450 a year worse a family will be as a result of the VAT increase. 

2.   Analysis from the Resolution Foundation today also suggests that around 60 per cent of the cut associated with the 1 per cent uprating of most working-age benefits and tax credits will actually fall on working households.

http://www.resolutionfoundation.org/media/media/downloads/
AUTUMN_STATEMENT_HITS_STRIVERS_AS_WAGE_SQUEEZE_IS_PROLONGED.pdf