‘Tax credits bombshell’ as 650 couples in Oldham East and Saddleworth could lose £4,000 a year
Up to 650 couples – with 1560 children* – in part-time work in Oldham East and Saddleworth could lose around £4,000 a year from this April, following a change to tax credit rules being introduced by the government.
Debbie Abrahams, Labour MP for Oldham East and Saddleworth, is urging the Conservative-led government to reconsider a little-noticed change to tax credit rules which means thousands of families will lose all of their working tax credits unless they can significantly increase their working hours. The change means that couples with children earning less than around £17,700 will need to increase the number of hours they work from a minimum of 16 to 24 hours per week or they will lose all their working tax credit of £3,870 per year.
Government figures revealed in parliamentary answers to Labour’s shadow Treasury minister, Cathy Jamieson MP, show 212,000 households across the country could lose out. A recent survey by the Chartered Institute for Personnel and Development found that one in five organisations have cut back on the number of hours that people work as a result of the economic downturn, with just 6 per cent increasing them.
Debbie says: “This is a deeply unfair change from a government that is increasingly out of touch with parents feeling the squeeze and struggling to juggle work and family life.”
“Raising taxes and cutting spending too far and too fast has seen unemployment rise and the economy go into reverse, and many employers are cutting people’s hours. In this climate, very few people in part-time work in and around Oldham will be able to increase their hours by up to 50 per cent at the moment.”
“And for a couple with children losing around £4,000 a year, or £75 a week, from this change could mean going out to work makes no sense.”
“It tells you everything you need to know about David Cameron and George Osborne that while the banks are getting a tax cut this year they are making life harder for parents in the squeezed middle who are working and trying to do the right thing.”
“This tax credit bombshell is now just a few weeks away. For many families here in Oldham it means going out to work won’t pay and they’ll be better off on benefits. That makes no economic sense at all. The government urgently needs to think again.”
Figures showing the number of couples with children benefiting from Working Tax Credit and working between 16 and 24 hours as of December 2011, and who will be affected by these changes, can be found in this parliamentary answer to Cathy Jamieson MP with a constituency breakdown: http://www.parliament.uk/deposits/depositedpapers/2012/DEP2012-0031.doc#
The Chartered Institute for Personnel and Development’s report’s survey on working hours can be found here (pg.13) http://www.cipd.co.uk/binaries/5756%20Employee%20Outlook%20SR%20(WEB).pdf
HMRC’s website explaining the changes says:
At the moment, if you’re responsible for at least one child and working at least 16 hours a week, you can get Working Tax Credit.
From 6 April 2012, the rules for couples with at least one child are changing. In most cases, to qualify for Working Tax Credit your joint working hours will need to be at least 24 a week.
This will mean:
- if you both work your joint weekly hours must be at least 24, with one of you working at least 16 hours a week
- if only one of you works, that person must be working at least 24 hours a week
- If neither of these apply, your Working Tax Credit will stop from 6 April 2012.
http://www.hmrc.gov.uk/taxcreditsbudget/index.htm#2
John Ramsden
The views and opinions expressed in letters to the editor do not represent the views and opinions of the the editor. Letters may be edited.
