Tax Credits: Impact of Cuts

Lord Dubs Excerpts

Monday 14th September 2015 Lords Chamber

Asked by

[Lord Dubs]

To ask Her Majesty’s Government what assessment they have made of the impact of cuts in tax credits on middle- and lower-income working people.

[Lord Ashton of Hyde (Con)]

My Lords, the Government are placing more emphasis on support to families on low incomes by increasing the personal allowance and introducing the new national living wage, rather than on topping up low wages through tax credits. Taking the welfare changes in the Budget together, with the record increases in the income tax personal allowance and the introduction of the national living wage, eight out of 10 working households will be better off in 2017-18.

[Lord Dubs (Lab)]

My Lords, will the Minister confirm that 3 million of the poorest families will be £1,000 worse off and that the increase in the minimum wage will simply not offset the cut in tax credits? To put it another way, is it not true that 5 million of Britain’s poorest children will lose an average of £750 each?

[Lord Ashton of Hyde]

My Lords, the trouble with this subject is that we could sit swapping statistics all day long. The evidence for children in poverty is clear that work is the best way for families to stay out of poverty. Children in workless families are nearly three times as likely to be in poverty. So we are increasing pay and raising the personal allowance so that families keep more of what they earn. Work and education are what matters, so we are extending free entitlement to childcare to 30 hours for working parents of three and four year-olds.