Tax credit cuts are an ‘attack’ on the low-paid

Chancellor George Osborne has spent this week trying to convince people that his latest benefits blitz has been toned down following a Lords’ revolt.

Don’t be fooled. The core move – cuts to tax credits for low-­paid families – will hurt the poorest and will see 3.3 million families lose an average of £1,300 next year. And all to finance tax breaks for the wealthy.

The aim is to save a further £4.4bn on top of the £12bn announced in the summer. Measures announced since June 2010 are forecast to save around £35bn by 2020, with the bulk, almost 20 per cent, ­falling on social security.

So what happened to Tory election promises to “make work pay”? The whole point of tax credits is to top up low-­paid workers so that they are better off being employed than on benefits.

Let’s take an example. You earn £15,000 so you will be £11,150 above the income threshold. Under the new rate, the Government will deduct £5,352 from your tax credits. For every £1 you earn above the £3,850 threshold, you will lose 48p instead of 41p as before. In other words, the more you earn, the more you lose. That threatens to push another generation into the poverty trap.

In the north east, where average income is £7,500 lower than London, working tax credit households will be £1,410 worse off.

Ministers should be tackling low pay, but instead they are attacking the low­-paid.