LibLink: Zahida Manzoor: The Government’s changes to tax credits will have a severe impact on the lives of millions

In the Huffington Post this week, Lib Dem Work and Pensions spokesperson Zahida Manzoor wrote of the party’s opposition to the Government’s severe cuts to tax credits for the lowest paid.

The Tax Credit system is hugely complicated, made up of various different ‘payment thresholds’ and so-called ‘disregards’. But ultimately the key aspect of the system is the ‘taper rate’ – that means how much is taken away in Tax Credits for every additional pound you earn.

This taper rate is important, because when someone is making the decision about whether to take on more hours, particularly if they have children, then money matters. If it turns out you’re only going to keep a few pence in the pound by taking on the extra work it may not be worthwhile, particularly if you need to pay for expensive additional childcare in order to cover the increased time spent away from home.

When the Liberal Democrats were in Government we recognised this problem and, alongside Iain Duncan Smith, fought for a new system, which would guarantee you kept more of the money you earn and that it would always be beneficial to take up extra work. Iain Duncan Smith rightly gets a lot of criticism for some of the benefit reforms he has introduced, but his support for the ‘make work pay’ agenda was greatly to his credit.

And she gave some detail on how it would hit people on low wages:

The impact will be hugely damaging. According to the Institute of Fiscal Studies 8.4 million household will lose on average £750 as a result of these changes- serious money if you are on a low income.

Further analysis by the Social Market Foundation, suggests a couple living in social housing with two children, where one person is in work will lose up to £1,736 as a result of the changes. Even worse, when combined with the various other complexities of the benefit system they could lose up to 93p in benefits for every pound they earn. How are we going to persuade people that there is real value in going out and finding those additional hours if they are effectively doing them for free?

The Conservatives have argued that they can make these tax credit changes because they are increasing the minimum wage. While this increase in the minimum wage is welcome, the average social housing tenant earns £8.08 an hour – already above this new minimum wage. This means they will not see any benefit from the increase, but will see a huge loss in their tax credits. Even worse, the newly increased minimum wage does not, disgracefully, apply to those under 25, meaning that young couples will be hit even harder. According to the IFS the new minimum wage will only make up 26% of the losses that households losing out on tax credits see.

You can read the whole article here.

* Newshound: bringing you the best Lib Dem commentary in print, on air or online.

Read more by or more about , or .
This entry was posted in LibLink.
Advert

One Comment

  • What a relief that we have such a committed and well informed spokesperson as Zahida Manzoor in the party. This is the type of detailed research we need to pursue and campaign on in order to rebuild the party’s radical reputation after all that has gone before over the last five years. It should not just be left to Zahida to speak in the Lords about this – we need short punchy factual briefings in order for everyone in the party to start campaigning again.

    Thank you Zahida

Post a Comment

Lib Dem Voice welcomes comments from everyone but we ask you to be polite, to be on topic and to be who you say you are. You can read our comments policy in full here. Please respect it and all readers of the site.

To have your photo next to your comment please signup your email address with Gravatar.

Your email is never published. Required fields are marked *

*
*
Please complete the name of this site, Liberal Democrat ...?

Advert



Recent Comments

  • Mick Taylor
    As a member of a small largely Christian sect, the Quakers, I have never been able to understand the reason for an established church somehow raised above other...
  • Nonconformistradical
    Declaring an interest - writing as an atheist @James Moore "Faith gives us moral guidance and a sense of duty to our fellow human beings." Why do you nee...
  • Michael Berridge
    William Wallace has made "a promise that the Lords would do everything it could to prevent the forthcoming Retained EU Law Bill from diverging too far from comm...
  • Peter Parsons
    Perhaps it might help friendly relations if some folks in the UK parliament were not so persistently antagonistic towards the EU. I still see regular anti-EU rh...
  • Nick Inman
    A very interesting article indeed. I’d like to add a footnote from France (where laïcité has been a perennial topic since the Revolution and a reality since...