Sources very close to the Chancellor of the Exchequer last night leaked details of a "Budget for women and children" which was said to have "cracked" the problems of working-families tax-credit system that would help to break the poverty trap.
It was stated authoritatively that tax changes would take effect next year which would overcome the three key difficulties of tax credits - switching cash from mothers to men; posing a threat to independent taxation of women; and putting an administrative burden on business.
A senior aide to the Chancellor said: "We have cracked all the problems of working-families tax credit. There is no question of imposing purse- to-wallet transfers, independent taxation is not being jeopardised, and it will be simple and coherent to administer."
The tax credit would include a special payment for childcare. "Women and children are going to be the biggest beneficiaries of the Budget," said sources close to the Chancellor.
The leak of the Budget's main framework was clearly designed to promote the fortunes of Mr Brown, who received a very poor reception from party members at a welfare roadshow in London last week.
It was also said that the Budget would reform national insurance and introduce the long-awaited 10p tax rate. The 10p rate, however, will be worth more to the high paid than to the working poor, because many of the less well-off could see, in some cases, more than 90 per cent of every extra pound that they received being snatched away by the benefits system. One of the changes to be proposed in the Budget will help the low paid by increasing the low level threshold at which national insurance contributions start to be paid, currently pounds 60 a week.
The Budget overall is said to be "neutral" in its impact on the exchequer, but the changes to help the poor will be paid for by higher taxes on drivers and smokers and by extra taxes on the perks and allowances exploited by better-off employees.Reuse content