Wirral MP claims three million workers will lose £1,350 next year
More than three million working people will lose an average of £1,350 next year because of changes to tax credit thresholds announced in this month’s Budget, according to figures from the House of Commons Library.
Chancellor George Osborne announced plans to cut from £6,420 to £3,850 the earnings level above which tax credits are withdrawn from April 2016, as well as speeding up the rate at which the benefit is lost as pay rises.
Figures obtained by Birkenhead Labour MP Frank Field show the policy will hit families across the UK earning up to £30,000, with the worst-affected losing £2,884 next year.
Workers on £3,850 to £6,420 will lose 48p for every extra pound they earn.
Mr Field said the threshold change – and the increase in the “taper rate” from 41p to 48p in the pound – would hit the “strivers” who the Conservative Party have said they want to support.
“Before, during, and after the general election campaign the Tories rightly gained plaudits for their commitment to protect and advance the interests of Britain’s strivers,” said Mr Field, a former welfare reform minister who chairs the House of Commons Work and Pensions Committee.
“Yet in his first post-election Budget, the Chancellor has decided to knock this group for six. He has torn up the contract they signed when they took it upon themselves to find a job.”
Mr Field was not among the 48 Labour MPs who rebelled on Monday to vote against the Government’s Welfare Reform and Work Bill.
He said the new figures provide the party with an opportunity “to put itself once again on the side of Britain’s army of strivers”.
“First we must fight this double whammy of unfair cuts being forced upon them and, second, we need to push for improvements to the Chancellor’s living wage proposal so that low-paid workers genuinely are better off,” he said.
The new figures suggest that 3.2mworkers will be affected by the changes to thresholds and taper rates, losing an average of £1,350 a year each.
Some 580,100 earning between £3,850 and £6,420 will have benefits withdrawn for the first time, with families at the top end of this band losing £1,200.
On earnings between £10,000 and £20,000, 754,900 families will lose up to £2,184, while losses on earnings between £20,000 and £30,000 will be up to £2,884 for 51,600 families.