The Tories' plan to cut tax credits is not what people voted for, and will hit women the hardest

The Government says that its welfare reforms will reward work and tackle poverty, when they will actually achieve the opposite

Click to follow

The shape of George Osborne’s budget is emerging. Cut tax credits for working families on £15,000 a year. And cut taxes for working people on £150,000 a year by cutting the 45p top rate. So much for one nation.

But the Tories plans aren’t just unfair, they are bad for Britain’s future, and fail sensible principles of welfare reform. When half a million more children are now in absolute poverty, the Government is pretending that cutting tax credits is part of a long standing plan to reward work and tackle poverty. Yet it will do the opposite.

Labour must not let them get away with it. We need to challenge them both on injustice and on the failed principles behind their plans.

Let’s take each of the Tory arguments in turn. First their plan for tax credits is not what people voted for, and it is an outrageous betrayal of David Cameron’s promise in April that they “would not fall”. Now the Government is briefing it will cut £5 billion from tax credits. This will hit 2.7 million families, and push many two children households to lose £1,700 a year.

Secondly, the idea that removing tax credits will better reward work is baloney. Seventy per cent of those who get tax credits are in jobs. But as the low paid, low productivity economy has grown, more families find they can’t cover childcare, or transport on their wages, and fear they would be better off on benefits. Sensible welfare reform supports work incentives and makes sure work pays – that's what tax credits help achieve. It is completely illogical for the Tories to argue that they increase work incentives by making the highest paid better off but the lowest paid worse off.

Nor do tax credits increase dependency. As one mum at the school gate told me, her tax credits pay for childcare so she can work – they give her independence.

David Cameron has also argued that tax credits are “a merry-go-round” – and that it's better to increase tax allowances so people pay less tax. But that’s not an alternative. More than half of those on tax credits are on less than £10,000 a year and don't pay tax in the first place, so won't benefit.

And here's something David Cameron never thinks about. Women will be worst affected – about 90 per cent of child tax credits are paid to mothers, but they benefit less from increased tax allowances because on average they are paid less.

Finally, the Government is trying to steal Labour arguments about poverty and the living wage to pretend that cutting tax credits can be justified. It doesn’t.

The minimum wage should go up. More employers should pay a living wage. So far the Government has resisted all our policies on this, even though they save money by lifting people up. But they aren’t an excuse for making bigger cuts to push people back down. A low-paid mum working full time to support her two children would need a minimum wage not even of the £8 an hour we called for, but over £13 an hour to be better off if tax credits were taken away.

Labour has to have the confidence to challenge the Tories on their betrayal of working families and renew our determination to end child poverty. Their policies won’t deliver genuine welfare reform. They will only weaken work incentives, hold more children held back and raise costs of failure down the line.

Instead we need to work harder to get people into employment. Parents need more childcare. We need to build more homes so we can tackle housing costs, and support work incentives such as tax credits or Universal Credit. And we should build a stronger economy with higher productivity, higher paid jobs and higher growth too. That's what George Osborne's budget should be focusing on.