Tax credit changes are wrong policy at worst time

The SNP has condemned UK Government tax credit changes, which come into force tomorrow (Friday), warning that the decision will cause severe hardship for working families.

UK Ministers have ignored calls to postpone the change until the introduction of the Universal Credit in 2013. As a result, over 212,000 couples with 470,000 children will be affected. Most families in this situation have a total household income of around £17,000. If they cannot find up to 8 hours extra work a week, they face the loss of £3,870 from their household income – potentially leading to a surge in child poverty.

When UK Ministers announced the policy in November 2010, the OBR were predicting 2.1% growth in 2011 and 2.6% in 2012, with unemployment much reduced. However, as a result of the UK Government’s austerity cuts, extra work is not available, and with higher unemployment levels, as many as 80% of the couples affected say they cannot find the extra work they need.

SNP Work and Pensions spokesperson Dr Eilidh Whiteford MP said:

“These changes will cause severe hardship for working families, and plunge tens of thousands of households into poverty.

“After delivering a Budget tax cut for millionaires, the Tories and, without a word of protest, their Liberal Democrat partners, are now cutting support for vulnerable families.

“With unemployment up as a result of the UK Government’s austerity programme, the families affected simply cannot find the extra work they need to make ends meet. These punitive changes should be postponed until introduction of the universal credit in 2013.

“Scotland needs independence so that we can deliver a fair and effective welfare system - rather than be on the receiving end of unfair Tory policies.”

Jamie Hepburn MSP, Deputy Convener of the Scottish Parliament’s Welfare Reform Committee, said:

“Over 100,000 children in Scotland face being plunged into poverty as a result of these changes, yet Tory Ministers have ignored the warnings of welfare and children’s organisations.

“This is not only the wrong policy, but it comes at worst possible time when couples affected cannot find the extra work that they need to keep their heads above water. This change will leave many families facing the prospect of losing their homes, getting into debt, and actually having to give up their job as they will be better off on benefits.

“After the Budget blow for pensioners last month, the Tories have now hit working families while delivering a tax cut for the wealthiest. The UK Government has its priorities all wrong. We could make better decisions in Scotland and not leave it to Westminster.”

Note:

A document produced by HMRC in December shows that 84,900 households in Scotland will no longer be eligible for Tax Credits when the changes to the threshold kick-in in April.

This would mean that 118,700 children in Scotland will be affected.

These families represent those who are claiming at or below the family element of the CTC which is worth £545 per year per family and as of April they will fall above the new lower income threshold.

The information can be seen in Table 4a in the HMRC document here:

http://www.hmrc.gov.uk/stats/personal-tax-credits/cwtc-geog-dec2011.pdf