Families tax credit to be split into two

the government was accused of creating confusion for millions of low-income families yesterday when it admitted that its flagship anti-poverty policy would be broken up and renamed after the general election.

the government was accused of creating confusion for millions of low-income families yesterday when it admitted that its flagship anti-poverty policy would be broken up and renamed after the general election.

Opposition parties claimed a policy U-turn as the Treasury confirmed that the working families tax credit (WFTC) would be split into two new credits and paid differently after 2003.

Treasury officials stressed that WFTC, which tops up the wages of low-paid parents and has been hailed by Gordon Brown as his key welfare reform, would be "extended" rather than abolished. But the department admitted that the payment would lose its name and be split into two new credits, the integrated children's credit and an employment tax credit, in three years' time. The WFTC was launched with a £12m advertisement campaign and ministers are proud that it has boosted the pay of more than one million families by an extra £20 a week.

WFTC was intended to make work more attractive than benefits while simultaneously offering large increases in cash support for children in poor families.

But critics claim that the Treasury's own reforms mean that the Chancellor's favourite policy will no longer exist in its current form after 2003.