Ilford North MP estimates tax credit cuts will affect 38,800 Redbridge households and children
PUBLISHED: 09:11 27 October 2015 | UPDATED: 13:54 27 October 2015
Labour MP Wes Streeting has argued that families will lose an average of £1,300 per year due to cuts to working tax credits.
Research from the House of Commons library shows 12,800 working families and 26,000 children, from both Ilford constituencies, will lose out to the government’s proposals.
The Conservatives want to cut the working tax credit threshold from £6,420 to £3,850 a year and child tax credit from £16,105 to £12,125.
They say this will cut £4.5billion from the deficit each year and that losses in benefit will be offset by the introduction of a national living wage.
But the Institute for Fiscal Studies (IFS), an independent think tank, have said recipients will be “unequivocally” worse off.
What are tax credits?
Tax credits are a series of benefits designed to help low-paid families.
There are two kinds of tax credits – working tax credit and child tax credit.
Working tax credit is designed to encourage people to work.
A single person earning £6,420 or under will get their full entitlement of tax credits, above this payments get reduced.
The maximum salary is £13,253 to get any working tax credit, and the person must work at least 16 hours.
To qualify for child tax credit you must have at least one child.
For those also claiming working tax credit the full entitlement threshold is the same.
If you are only claiming child tax credit, you will receive your full entitlement if you earn £16,105 or below.
The maximum salary for people getting child tax credit is £25,000.
The government plan is to cut the full entitlement threshold of Working Tax Credit to £3,850 and Child Tax Credit to £12,125.
Government plans were put in jeopardy last night after the House of Lords voted to delay the cuts. The Prime Minister accused peers of breaking constitutional convention.
Wes Streeting told the Recorder the upper house should slow the bill “because David Cameron promised before the election he would not cut tax credits”.
The Ilford North MP said: “It is now absolutely clear from independent research by the IFS that minimum wage increases and other measures will not kick in fast enough.
“I think as a compromise George Osborne should look at swallowing his pride and withdrawing the bill.
“People who are working very long hours and have low pay are going to have their income cut.”
Mr Streeting said he had spoken to several Conservative MPs who wanted the government to change their policy.
Redbridge Conservatives leader Cllr Paul Canal said last night: “It is simply unsustainable for Britain to spend a massive £30bn on subsidising low wages
“Tax Credits are inefficient, hugely expensive, penalise good employers and are unsustainable in the long run. Reform is essential”
Cllr Canal said he welcomed moves “to support the most vulnerable during the transition stage”, adding: “the key drivers to improving the take home income of all families, including low income families, are the new National Living Wage, higher tax allowances and higher employment.”
Mike Gapes MP for Ilford South said: “It is important to make sensible savings in social security spending and we all want to see a higher wage economy where people are less reliant on tax credits to get by.
“However, it is clear that the overall changes in the Budget to the minimum wage and tax credits will leave working people worse off.”
He added: “The Government is breaking its promise to help hardworking families.
A Conservative spokeswoman said the House of Lords’ intervention “raises constitutional issues”.
She added: “However, it has happened; and what we must address are the consequences of that. We said we would listen, and that’s precisely what we intend to do.”
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