Tax change to cost working families £3,800 a year


Nearly 900,000 of the nation's poorest people face losing thousands of pounds in income from next month because of cuts to tax credits, official figures reveal.

From 6 April, a couple with children must between them work 24 hours a week before qualifying for the annual £3,870 working tax credit, an increase from the current threshold of 16 hours.

New Treasury figures show that 212,000 families across the UK, including 424,000 adults and 470,000 children (a total of 894,000 people) will be affected by the changes, announced by George Osborne in his Autumn Statement last year. Those concerned will either have to find the extra work or forgo the money.

But at a time of rising joblessness, there are doubts over where the extra work could come from. Many of those who work between 16 and 24 hours a week are in the retail sector, which is facing huge pressures. A survey by Usdaw, the union that represents shopworkers, found that 78 per cent of its members affected by the changes could not find the extra hours to tip them over the 24-hour threshold.

Last night Yvette Cooper, the shadow Home Secretary and shadow minister for women, warned the change would force children into poverty. She said: "This is a deeply unfair change that will hit parents who are working hard to support their children. David Cameron promised the most family-friendly government ever, yet he is hitting working families really hard so they will struggle to make ends meet."

Labour is to use an Opposition Day debate in the Commons this week to step up pressure on George Osborne over cuts to benefits. Ed Balls, the Shadow Chancellor, will call for an urgent review of cuts to child benefit for higher earners, which come into effect next January, as well as proposing cancelling the working tax credit changes. Mr Balls will say reversing the working tax credit measure could be paid for by closing a stamp duty tax avoidance loophole on properties over £1m.

Working tax credits are paid to those on the lowest incomes – typically a couple with children earning less than about £17,700 a year. Many parents choose part-time work because of the rising cost of childcare. Labour argued that many families who lose the £3,870 would be better off claiming benefits, the opposite of what the Government was aiming for with its Welfare Reform Bill.

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