The truth behind the Tax Credit cut U-turn by Chancellor George Osborne is that it will have no effect and will not help families in the long run.
- Because tax credits are being phased out and replaced by Universal Credit which was unaffected by the Autumn Statement.
- Because the Government is still planning deep cuts to working-age benefits that will directly hit low-income working families.
- Because lots of other benefit cuts announced in July are still going ahead with more announced in the Autumn Statement.
Even after the announcements in the Autumn Statment the Government is still planning £12bn of cuts to annual benefit spending by end of the parliament.
With £4bn from a freeze on benefits to 2020, £4 to 5bn in additional cuts to Universal Credit and £1½bn of cuts to housing benefit and other smaller changes.
The changes in Universal Credits (UC) being rolled out will represent an additional cut on top of other changes to the tune of £3.7bn a year.
4.5m working families will be affected by introduction of UC
- 2.6m lose an average of £1,600 a year
- 1.9m gain an average of £1,400 a year
- Total cut of £1.5bn a year
1.8m non-working families will be affected by introduction of UC
- 1.2m lose an average of £2,500 a year
- 0.6m gain an average of £1,000 a year
- Total cut of £2.2bn a year
Those hit hardest by the new universal credit rules will be lone parents, disabled people and couples with children who rent their home rather than have a mortgage.