Tax Credits: Impact of Cuts

Baroness Kramer Excerpts

Monday 14th September 2015 Lords Chamber

[Lord Ashton of Hyde]

My Lords, this is a strategic change in how we deal with welfare in this country. It is worth bearing in mind the problem: we produce 4% of the world’s GDP and 7% of the welfare payments, and nine out of 10 families were on tax credits. I completely agree with my noble friend that we want to increase people’s pay and lower the amount of tax they pay so that all families benefit in this country.

[Baroness Kramer (LD)]

My Lords, despite the Minister’s disdain for statistics, he will be aware of the Institute for Fiscal Studies report last week that demonstrated that, among the 8.4 million working-age households currently eligible for benefits and tax credits but containing someone in work, the average loss from the cuts to benefits and tax credits is £750 per year. Among this same group, the average gain from the new minimum wage is estimated at only £200 per year. Does he accept that statistic?

[Lord Ashton of Hyde]

My Lords, I assure the House that I do not have any disdain for statistics. In fact, I have an enormous pack full of statistics that I have tried to learn. The problem with the IFS study is that the £12.5 billion of net cuts to benefits and tax credits and the estimated £4 billion increase in wages do not compare like with like for working families, because the reduction in benefits includes cuts to those families out of work.