Over 2000 local families lose £511 a year from today – Good Friday is Tough Friday

2045 families in Corby and East Northamptonshire families with children lose all tax credits from today – a £511 per year cut

This is the text of a Press Release I issued today to local media:

Families with children will lose an average of £511 a year from changes to tax, benefits and tax credits being introduced from today, according to new figures from the Institute for Fiscal Studies being highlighted by Labour PPC for Corby and East Northamptonshire, Andy Sawford today.

The analysis follows last month’s Budget and is on top of tax rises already introduced, like last year’s VAT rise which is costing a family with children an average of £450 per year.

New government figures obtained by Labour also show that up to 2045 families in Corby and East Northamptonshire are set to lose all of their Child Tax Credit or Working Tax Credit from today:

  • 1800 families on modest and middle incomes will lose all of their Child Tax Credit – worth around £545 per year.
  • And 245 working couples earning less than around £17,000 per year will lose all of their Working Tax Credit – worth up to £3,870 per year – if they cannot increase their working hours.

Figures also uncovered by Labour reveal that, following today’s changes to working tax credit, a couple with two children on the minimum wage will be better off quitting their jobs if they cannot work at least 19 hours per week.

The IFS figures also show that government policies mean pensioners will be an average of £315 a year worse off from April 2014 once cuts to their allowances announced in last month’s Budget – what has been dubbed the ‘granny tax’ – have kicked in.

Labour’s Parliamentary Candidate for Corby, Andy Sawford, said:

“Families on middle and low incomes here in Corby and East Northamptonshire are facing a tax credits bombshell from David Cameron and George Osborne.

“For all the government’s talk about increasing the personal allowance, these independent figures show that while they may be giving one with one hand they are taking much more away with the other hand. That is why families with children will be an average of £511 a year worse from tomorrow.

“I have had many local families getting in touch about this issue to tell me how much they are losing and how unfair they think this is.  One Corby family got in touch with me yesterday to say that they are losing around £300 a month.  They rang HMRC and were told it was because of the government’s changes, including how tax credits work when you have a disabled child.

“It is outrageous that people earning over £150,000 are getting a £3 billion tax cut while parents on middle and modest incomes in Corby are being clobbered?

“It cannot be the right priority to make thousands of families and pensioners pay more so millionaires can pay less – over £40,000 less in the case of the 14,000 richest people in the country. And it cannot be right to leave working parents trying to do the right thing better off if they quit their jobs.

Ed Balls MP, Labour’s shadow chancellor, added:

“Instead of cutting the top rate of tax for the richest and giving the highest earners a £1.6 billion tax cut on their pensions, the government could stop these unfair and perverse changes hitting parents in Corby and East Northamptonshire.

“We need a plan for job and growth, like Labour’s five point plan, to get our stalled economy moving again, get Britain back to work and get our deficit down.”

ENDS

Notes for Editors

1. Figures from the independent Institute for Fiscal Studies can be found at: http://www.ifs.org.uk/budgets/budget2012/budget2012robjoyce.pdf. These tables have just been updated, at Labour’s request, to include for the first time cash figures of the net loss or gain from changes taking effect from April 2012 and April 2014.

2.  The two main changes to tax credits being introduced from tomorrow are a reduction in the income limit for Child Tax Credit from around £40,000 to around £26,000 for a family with one child and an increase in the number of hours couples with children have to work to be eligible for Working Tax Credit from 16 to 24 hours per week. Details of the changes can be found on HMRC’s website here: http://www.hmrc.gov.uk/taxcreditsbudget/index.htm.

3. Government figures, revealed in answers to parliamentary questions from Labour MPs, show 852,900 families will no longer be eligible to any tax credits from next month: http://www.publications.parliament.uk/pa/cm201212/cmhansrd/cm120327/text/120327w0003.htm#1203281002117.

Figures by constituency can be found here:
http://www.parliament.uk/deposits/depositedpapers/2012/DEP2012-0328.pdf

In addition, 212,000 families will lose all their Working Tax Credit if they cannot increase their working hours to the new minimum of 24 hours per week. Figures by constituency can be found here: http://www.parliament.uk/deposits/depositedpapers/2012/DEP2012-0031.doc

HMRC has confirmed to the House of Commons Library that there is “no overlap between losers” in these two groups.

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