Poorest families will miss out on tax cuts promised by all three main parties

 

Deputy Political Editor

The lowest-paid working families will miss out on the tax cuts that will be promised by the main political parties at next year’s general election, a report today warned.

It argued that better-off households would benefit the most from plans being floated by the Conservatives, Liberal Democrats and Labour to reduce income tax bills.

Calls for a rise in the national insurance threshold – an initiative which is being backed by some senior Tories – could prove equally ineffective, according to the Joseph Rowntree Foundation.

It said boosting support through the new Universal Credit scheme, being rolled out by the Government and supported in principle by Labour, could be the most successful way of getting money to the people who need it most.

Both the Tories and the Lib Dems have backed further rises in basic rate tax allowances. But the foundation calculated the tax threshold would have to be increased to £12,500 to bring the lowest-paid families to a level which would guarantee them an “adequate” income.

That would cost the Treasury at least £11.5bn a year, it claimed, and most of the beneficiaries would still be basic rate taxpayers rather than the worst-off.

Meanwhile, Labour has proposed introducing a 10 per cent starting rate of tax. It would need to be fixed at £5,200 to bring families up to an “adequate” income, leaving the Treasury with a bill of about £11bn, the foundation said.

An alternative approach of raising national insurance thresholds for employees would cost the country more than £9bn and not help pensioners.

Chris Goulden, the head of poverty research at the foundation said: “As the living standards election approaches, the main parties have set out their tax pledges.

“While they will have some benefit, they will cost the public purse at least three times as much as more targeted policies and fail to help families in greatest need.”

He added: “Wage levels and tax cuts are part of the mix for improving the living standard of low income working families, but how the state supports low earning families is also pivotal. This underlines the importance of Universal Credit in making work pay, as part of a comprehensive anti-poverty strategy.”

The foundation called for political parties to consider raising the amount families can earn before their Universal Credit entitlements are clawed back, as well as continuing increases in support for childcare costs through Universal Credit.

Start your day with The Independent, sign up for daily news emails
Have you tried new the Independent Digital Edition apps?
ebooks
ebooksA celebration of British elections
  • Get to the point
2015 General Election
May2015

Poll of Polls

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Ashdown Group: Helpdesk Analyst - Devon - £20,000

£18000 - £20000 per annum: Ashdown Group: Helpdesk Analyst - Devon - £20,000 ...

Ashdown Group: Data Scientist - London - £50,000 + bonus

£35000 - £50000 per annum + generous bonus: Ashdown Group: Business Analytics ...

Ashdown Group: IT Project Coordinator (Software Development) - Kingston

£45000 - £50000 per annum: Ashdown Group: IT Project Coordinator (Software Dev...

Ashdown Group: Editor-in-chief - Financial Services - City, London

£60000 - £70000 per annum + benefits : Ashdown Group: A highly successful, glo...

Day In a Page

General Election 2015: Ed Miliband's unlikely journey from hapless geek to heart-throb

Miliband's unlikely journey from hapless geek to heart-throb

He was meant to be Labour's biggest handicap - but has become almost an asset
General Election 2015: A guide to the smaller parties, from the the National Health Action Party to the Church of the Militant Elvis Party

On the margins

From Militant Elvis to Women's Equality: a guide to the underdogs standing in the election
Amr Darrag: Ex-Muslim Brotherhood minister in exile still believes Egypt's military regime can be replaced with 'moderate' Islamic rule

'This is the battle of young Egypt for the future of our country'

Ex-Muslim Brotherhood minister Amr Darrag still believes the opposition can rid Egypt of its military regime and replace it with 'moderate' Islamic rule, he tells Robert Fisk
Why patients must rely less on doctors: Improving our own health is the 'blockbuster drug of the century'

Why patients must rely less on doctors

Improving our own health is the 'blockbuster drug of the century'
Sarah Lucas is the perfect artist to represent Britain at the Venice Biennale

Flesh in Venice

Sarah Lucas has filled the British pavilion at the Venice Biennale with slinky cats and casts of her female friends' private parts. It makes you proud to be a woman, says Karen Wright
11 best anti-ageing day creams

11 best anti-ageing day creams

Slow down the ageing process with one of these high-performance, hardworking anti-agers
Juventus 2 Real Madrid 1: Five things we learnt, including Iker Casillas is past it and Carlos Tevez remains effective

Juventus vs Real Madrid

Five things we learnt from the Italian's Champions League first leg win over the Spanish giants
Ashes 2015: Test series looks a lost cause for England... whoever takes over as ECB director of cricket

Ashes series looks a lost cause for England...

Whoever takes over as ECB director of cricket, says Stephen Brenkley
Fishing for votes with Nigel Farage: The Ukip leader shows how he can work an audience as he casts his line to the disaffected of Grimsby

Fishing is on Nigel Farage's mind

Ukip leader casts a line to the disaffected
Who is bombing whom in the Middle East? It's amazing they don't all hit each other

Who is bombing whom in the Middle East?

Robert Fisk untangles the countries and factions
China's influence on fashion: At the top of the game both creatively and commercially

China's influence on fashion

At the top of the game both creatively and commercially
Lord O’Donnell: Former cabinet secretary on the election and life away from the levers of power

The man known as GOD has a reputation for getting the job done

Lord O'Donnell's three principles of rule
Rainbow shades: It's all bright on the night

Rainbow shades

It's all bright on the night
'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

Bread from heaven

Dutch survivors thank RAF for World War II drop that saved millions
Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

How 'the Axe' helped Labour

UK will be 'run for the wealthy and powerful' if Tories retain power