Tagged: tax credit

Tax credit cuts will hit North East hardest and increase child poverty

More than half of North East families will be affected by planned tax credit cuts, making us one of the hardest hit region’s in the country, it has been claimed.

The Government is set to carry out £12bn worth of benefits cuts which it will detail at its next Budget. Tax credits is predicted to be one of the areas where the axe will fall heaviest.

It is reportedly being considered that they will be cut back to the 2003 level, which the Institute for Fiscal Studies has calculated would reduce entitlements for about 3.7m low-income families with children by an average of £1,400 a year, reducing spending by about £5bn.

Labour says that 148,000 North East families – or 56% of the total – benefit from tax credits.

House of Commons figures also show that 70% per cent of those claiming them in the region are in work.

Ian Lavery, Labour MP for Wansbeck said:

“David Cameron and George Osborne must come clean about their proposals to cut tax credits. Their plans clearly put over half of the families with children in the region in the firing line.

“Many families have suffered greatly under the first five years of the Tories, with their incomes falling and bills rising, making life a real struggle already.

“Time after time, during the election campaign and in the first month of this government, they have ducked and weaved to avoid revealing the true nature of their plans. It’s not fair and it’s causing great distress for many. It’s time for the Prime Minister to spell out just what he has in store for families across the region and let the public decide whether his cuts are fair.”

According to campaign groups and charities, the welfare cuts will see the already high level of child poverty in the North East spread even to some affluent areas.

Full story :  http://northstar.boards.net/thread/127/credit-cuts-north-east-hardest

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The minimum income is 2.5 times what people get on benefits – but still they are labelled scroungers

Vox Political

140630minimumincome The numbers speak for themselves: Under ‘Adequacy of safety-net benefits’, EVERY SINGLE INCOME GROUP has lost out. While others have suffered a great percentage drop, single working-age people remain the least able to make ends meet.

“How much money do you need for an adequate standard of living?”

That is the question posed every year by the Joseph Rowntree Foundation – and every year the organisation calculates how much people have to earn – taking into account their family circumstances, the changing cost of these essentials and changes to the tax and benefit system – to reach this benchmark.

This year’s research finds:

A lone parent with one child now needs to earn more than £27,100 per year – up from £12,000 in 2008. A couple with two children need to earn more than £20,200 each, compared to £13,900 each in 2008. Single working-age people must now earn more…

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Cuts May Undermine Work Incentives In Universal Credit

This article was written by Patrick Wintour, political editor, for The Guardian on Tuesday 17th June 2014

 A cross-party review of universal credit is being launched amid new evidence that funding for the project has been cut so severely that its original aim to provide incentives for people to get into work could be undermined.

Technology flaws, implementation delays and Whitehall infighting has led to deep cynicism about the scheme, which is due to be fully implemented in 2017-18 covering as many as eight million households.

Many critics claim the scheme is dead, but although Labour has been fiercely critical of the way in which universal Credit has been implemented, the shadow work and pensions secretary, Rachel Reeves, has not yet said that she would scrap the reforms.

The expert review, to be chaired by the welfare expert Nicholas Timmins, is being launched by the Resolution Foundation thinktank and will focus on structural redesigns that may be required to restore work incentives.

The scheme is currently being implemented on a limited pilot basis in some jobcentres, and that progress is likely to be re-examined in a second report by the National Audit Office before the election.

In total, eight million households – half of them in work – will be eligible for UC, which has been designed as a single payment to replace six existing types of benefit or tax credit. Half of all families with dependent children will be eligible, so making it vital that UC’s structure works and that recent revisions do not undermine its effectiveness.

Initial work by the Resolution Foundation shows that by 2018 cuts to the basic and work allowances will mean UC is £685 a year less generous for a couple with one child, saving the government £1.8bn a year.

The structure of UC may be badly targeted to protect second earners, according to Resolution Foundation. At present, a second earner under UC can lose as much as 76% of their earnings once they make enough to pay income tax.

The review will also look to see whether the coalition was wise to omit council tax support from UC. There has been widespread concern that a household receiving UC will see its earnings eaten away by the means-testing of council tax support.

The review will look at how those in work may face loss of UC if they cannot show jobcentre staff that they are unable to earn more than £220 a week. If they are earning less than this they may be required to take a different job or work longer hours.

> And of course there are so many other jobs for people to take. Why stop at just two ?

It appears that claimants of UC could face the same sanctions regime as applied to claimants of jobseekers allowance if they cannot show they are seeking longer hours, but there is a much scepticism about how this would apply. Similarly, the self-employed under the UC regime will be subject to interviews to see that they are truly gainfully employed.

Finally, the review will examine the way tax cuts prioritised for after the election could be undermined by the impact on UC. The review team suggests families receiving UC will lose at least £65 out of every £100 tax giveaway, and £72 in every £100 where council tax is already withdrawn.

Gavin Kelly, the Resolution Foundation chief executive, said: “Universal credit is an incredibly ambitious and important reform but the recent focus on the slipping timetable together with the complexity of the underlying policy means that some of the underlying policy changes have not received the scrutiny they deserve.”

He said the beginning of the next parliament was likely to be the last opportunity to make changes to UC.

The review team includes Giles Wilkes, a former economic adviser to the business secretary, Vince Cable, as well as Mike Brewer, a former IFS economist who was one of the first advocates of the reform five years ago.

> All people who have probably never had to claim benefits for basic survival, and probably never will. How far would you trust them ?

Source –  Welfare News Service,  18 June 2014

http://welfarenewsservice.com/cuts-may-undermine-work-incentives-universal-credit/

Tax credit debt collection is a double-edged attack on the poor

Vox Political

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There’s more than a little of the piscine about the fact that our Conservative-led has set debt collection agencies onto poor families who have been overpaid tax credit due to errors made by HM Revenue and Customs.

Firstly, the move undermines the principle behind the tax credit system – that it is there to ensure that poorly-paid families may still enjoy a reasonable living standard. Tax credits are paid on an estimate of a person’s – or family’s – income over a tax year and the last Labour government, knowing that small variances could cause problems for Britain’s poorest, set a wide buffer of £25,000 before households had to pay anything back.

By cutting this buffer back to £5,000, the Conservatives have turned this safety net into a trap. Suddenly the tiniest overpayment can push households into a debt spiral, because their low incomes mean it is impossible to pay…

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Why is the DWP being so coy about the Work Programme?

The most successful thing about the Work Programme for me was the fact that they “lost” me and I didn’t hear anything from them for 10 months – almost half of my sentence. 🙂

Vox Political

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It’s amazing how the Department for Work and Pensions will bend over backwards to make it seem one of its madcap schemes has been successful.

It’s also amazing how little evidence DWP press officers will provide to support the claim.

Today we’re being told that more than a quarter of a million people have escaped unemployment via the Work Programme. The fiddle? This is an aggregate figure, including all placements – not people – since the scheme was launched in June 2011.

To register as someone who has achieved a lasting job through the programme, one must stay in work for six months or more (three months in “hardest to help” cases). A figure covering 33 months could include the same person five times over.

Never mind. How many people – who are currently in work as a result of time on this scheme – have, in fact…

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