Cuts To Tax Credits

Here are six reasons why Labour MPs voted and campaigned against the government’s proposal to cut tax credits…

  1. The cuts to tax credits will hit more than three million families in work
  2. On average, each of these families will lose £1,300 next year
  3. For these families, it’s effectively a penalty for working
  4. The government has claimed that their so-called ‘National Living Wage’ (lower than that calculated by the Living Wage Foundation) will compensate for the cut. The independent Institute for Fiscal Studies has said that this is “arithmetically impossible”
  5. As a result of the cut, child poverty will increase. The Resolution Foundation has found that all the tax and benefit changes in the Government’s Summer Budget will push 200,000 children into poverty next year
  6. David Cameron never mentioned these plans before his election campaign despite having lots of opportunity to do so. In fact, before the election, he promised not to cut child tax credits and made no mention of any other changes, yet these cuts were announced in his first Budget after the election.

FOOTNOTE: In his Spending Review of the 25th November 2015 the Chancellor, George Osborne, has responded to pressure from the Labour Party, the House of Lords, and the public, and announced that he is scrapping his ‘TaxCredit Cuts’ plans. This Tory U-turn is welcomed, but we must read the small print before we can start cheering.

The ‘Institute for Fiscal Studies’ have been examining some of the small print. They demonstrate that in 2017 the Tory Government intend to replace ‘Tax Credits’; with ‘Universal Credit’. This is projected to result in “2.6 million working families being on average £1,600 a year worse off because of the spending review”.



  1. It looks like the ‘Tax Credits’ are being abandoned in 2017 and being replaced by a new ‘Universal Credit’ and this will be set at a level that will mean hardship for millions of working people.

    It seems that we cannot even trust George Osborne when he announces a U-Turn. Sadly, I suspect that once that the small print has been read we will be booing – rather than cheering.


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