Sharon Hodgson MP responds to constituents' concerns over the Government's planned cuts to tax credits.
During the General Election the Prime Minister told the country the Conservatives would not cut tax credits, yet in July the Chancellor announced the changes which will come into effect next April.
I am extremely concerned about these deeply regressive cuts and the disastrous effects they will have on hard working families across Britain.
Whilst it is important to make sensible savings in social security spending, and we all want to see a higher wage economy where people are less reliant on tax credits to get by, doing this on the backs of hardworking families and pushing children into poverty is definitely not the answer.
Around 3 million families receive tax credits and almost all in-work families in receipt of tax credits will be affected by the Government's changes, losing an average of £1,300 from April. A family with one earner on average earnings and two children will lose over £2,000 in tax credits next year from the changes, and some families on middle incomes may lose entitlement to tax credits altogether.
The Government’s answer to repeated questions about tax credit cuts continues to be an insistence on their planned increases in the minimum wage. However, as the independent Institute of Fiscal Studies has stated, the claims that those increases will close the gap is ‘arithmetically impossible’. For example, a couple on the minimum wage who work full time and have two children will gain £1,500 from the change to the minimum wage but lose over £2,200 next year from the changes to tax credits.
It is also concerning that this ‘work penalty’ will increase work disincentives and that as a result of the higher tax credit taper rate, some people will only take home 7p for every additional pound they earn.
I know from the many letters and e-mails I have received that many constituents are worried about the Government’s changes. I wholeheartedly voted against the Government’s Budget in July, and against these cuts to tax credits in the House of Commons on 15th September, and I also supported the Opposition's motion on 20th October calling for the Government to drop their plans.
On Monday 26 October, Members of the House of Lords voted by a majority of 17 to halt the cuts until the Government produces a scheme to compensate low-paid workers for three years. The House of Lords also voted for a delay in the cuts until an assessment of their financial impact is carried out.
As a result of the concerted opposition from both inside and outside Parliament I hope the Government will now think again. The Government should listen to the voices of the millions of families across the country and reverse in full the cuts to tax credits in the upcoming Autumn Statement in November.
I can assure you that I will continue to press the Government on this extremely important matter and highlight the impact these cruel changes could have on low and middle income households in our constituency and across the country.