Families with children to lose £511 per year from tomorrow, new IFS figures show - Ed Balls5 April 2012
Families with children to lose £511 per year from tomorrow, new IFS figures show
Up to 1 million families set to lose all tax credits
Families with children will lose an average of £511 a year from changes to tax, benefits and tax credits being introduced from tomorrow, according to new figures from the Institute for Fiscal Studies being highlighted by Labour today.
The analysis follows last month's Budget and is on top of tax rises already introduced, like last year's VAT rise which is costing a family with children an average of £450 per year.
New Government figures obtained by Labour also show that up to 1 million families are set to lose all of their Child Tax Credit or Working Tax Credit from tomorrow:
- Over 850,000 families on modest and middle incomes will lose all of their Child Tax Credit – worth around £545 per year.
- And up to 212,000 working couples earning less than around £17,000 per year will lose all of their Working Tax Credit – worth up to £3,870 per year – if they cannot increase their working hours.
Figures also uncovered by Labour reveal that, following tomorrow's changes to working tax credit, a couple with two children on the minimum wage will be better off quitting their jobs if they cannot work at least 19 hours per week.
The IFS figures also show that Government policies mean pensioners will be an average of £315 a year worse off from April 2014 once cuts to their allowances announced in last month’s Budget – what has been dubbed the 'granny tax' – have kicked in.
Ed Balls MP, Labour's Shadow Chancellor, will today visit a children’s centre in Leeds to meet parents and child-minders set to be affected by the changes to tax credits.
Speaking ahead of the visit Ed Balls said:
“Families on middle and low incomes are this weekend facing a tax credits bombshell from David Cameron and George Osborne.
“For all the Government’s talk about increasing the personal allowance, these independent figures show that while they may be giving one with one hand they are taking much more away with the other hand. That is why families with children will be an average of £511 a year worse from tomorrow.
“There do need to be tough decisions on tax, spending and pay. But why are people earning over £150,000 soon to get a £3 billion tax cut from this out of touch Government while parents on middle and modest incomes are being clobbered?
“It cannot be the right priority to make millions of families and pensioners pay more so millionaires can pay less – over £40,000 less in the case of the 14,000 richest people in the country.
“It is no wonder that the Chancellor cannot bring himself to say the words 'we're all in this together' again. His empty slogan has been expo sed by the reality of his policies which are hitting women harder than men and hitting families with children hardest of all.
“And these cuts to tax credits for parents on middle and low incomes are breaking yet another promise David Cameron made during the general election campaign.”
Ed Balls added:
“This Government’s policies aren’t just unfair, they’re also not working on jobs, growth or the deficit. With the economy flatlining, unemployment soaring and £150 billion of extra borrowing to pay for this economy failure, raising taxes and cutting spending too far and too fast has backfired.
“And despite promises to make work pay, thousands of working parents will now find themselves better off if they quit their jobs.
“Instead of cutting the top rate of tax for the richest and giving the highest earners a £1.6 billion tax cut on their pensions, the Government could stop these unfair and perverse changes.
“We need a plan for job and growth, like Labour’s five point plan, to get our stalled economy moving again, get Britain back to work and get our deficit down.”