DUBLIN: More than seven million children will be hit by the proposed cuts to tax credits to be announced in George Osborne’s post-election Budget on Wednesday, the Government’s advisers on child poverty have warned.
A new analysis by the Social Mobility and Child Poverty Commission found that any cut in tax credits would reduce the incomes of 45 per cent of working families. The vast majority – 72 per cent – of the losers earn less than £20,000 a year. Only 7 per cent of them have earnings of more than £30,000 a year.
Two thirds (4.9 million) of the 7.5 million families with childrenaffected have someone in work, while 2.6 million are in workless households relying on state benefits. The figures will fuel criticism that the move will hit the “hard-working families” which the Conservatives champion.
Alan Milburn, the former Labour Cabinet minister who chairs the commission, told The Independent: “The Prime Minister is right to argue that a serious ‘one nation’ agenda requires far more to be done to help the poorest families share in the proceeds of economic growth.
“With two in three poor children now in families where someone is in work, the priority has to be to tackle in-work poverty. That’s why the Government should resist making welfare cuts that fall exclusively on the working poor. The risk otherwise is that its approach of making work a route out of poverty will be fundamentally undermined.”
Mr Milburn joined growing calls on Mr Osborne to cushion the blow of lower tax credits by urging employers to pay the Living Wage which, at £7.85 an hour and £9.15 an hour in London, is higher than the £6.50-an-hour national minimum wage.
He added: “At a minimum, the Chancellor must act to balance any cuts in tax credits for working families with a new Government drive to champion the Living Wage, to increase Universal Credit work allowances and to enhance skills training budgets.”
A think tank has warned Mr Osborne that tax credit cuts could stall the recovery. Gavin Kelly, chief executive of the Resolution Foundation, said: “There has been welcome return to rising living standards in recent years.
