Tory tax credit cuts will put 200,000 children into poverty in 2016, study finds

The findings come a day after the PM pledged an 'assault on poverty'

Jon Stone
Thursday 08 October 2015 09:19
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David Cameron delivers his keynote speech at the Conservative Party conference
David Cameron delivers his keynote speech at the Conservative Party conference

Conservative cuts to tax credits and other benefits will push 200,000 children into poverty next year, according to new research.

The study, by the Resolution Foundation think-tank, comes a day after David Cameron promised an “all-out assault on poverty” in a speech widely seen as a grab for the centre ground of politics.

The new report found that those children affected by the cuts would be predominantly in working households and that poverty would dramatically increase despite the introduction of a higher National Living Wage.

The analysis looked at the impact of all benefit, tax and minimum wage changes announced by George Osborne in his most recent budget.

“Taking into account the tax and benefit measures announced at the Summer Budget, as well as the introduction of the national living wage, we estimate that a further 200,000 children – predominantly from working households – will fall into poverty in 2016,” the report’s authors wrote.

“In 2020 we estimate that at least an extra 300,000 children will be in this position, rising to 600,000 once all policy measures have taken. Two-thirds of this increase is among children in working households.”

Mr Cameron completely failed to mention his planned tax credit cuts in the address to conference in Manchester, despite the fact it was focused on the subject to tackling disadvantage.

He told delegates on Wednesday: “If you want a lecture about poverty, ask Labour. If you want something done about it, come to us, the Conservatives. There’s another argument we need to win.”

In an interview broadcast on Monday, the Chancellor George Osborne said that the low-paid would suffer if he did not push ahead with plans to cut their tax credits.

“That tax credit bill would go up and up and up, the country couldn’t afford it, people’s economic security would be undermined, and the people who would suffer would be the very lowest paid in our country – they would be the people who would ultimately lose their work,” he told BBC Radio 4’s Today programme.

Iain Duncan Smith, the work and pensions secretary, said in his own speech on Tuesday that he believed disabled people should have to work their way out of poverty, rather than being pulled up by social security payments.

Labour says the richest should pay to cut the deficit, and has identified cuts to tax avoidance and corporate subsidies it says could replace cuts to the lowest paid.

David Cameron on Sunday also ruled out any changes to the tax credits cuts, telling the BBC that his plans were “right” and would leave people better off.

Mr Cameron effectively ruled out cutting the benefit before the election, telling a voters Question time that he “rejected” proposals to cut tax credits and did not want to do so.

The PM disputed earlier findings by the Institute for Fiscal Studies suggesting that the planned "National Living Wage" would come nowhere near to compensating for the impact of tax credit cuts.

He claimed the study did not take into account increased free childcare and a cut to social rent. The IFS however later replied that these factors would make no difference to the overall outcome if taken into account.

The cuts are part of £12bn cuts to the social security budget that the Government is to make – specifics of which it refused to announce before the election.

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