Tax Credits

I am very concerned about the Government’s changes to tax credits that were announced in the July Budget.

These changes will effectively introduce a work penalty into the tax credit system and could see three million low and middle income households lose around £1000 a year and 500,00 families lose their tax credits entirely.

It is of course important to make sensible savings in social security spending and we all want to see a higher wage economy where people are less reliant on tax credits to get by.

However, it is now clear – as the independent IFS have said – that overall the changes in the Budget to the minimum wage and tax credits will leave working people worse off.  For example, a couple on the minimum wage who work full-time and have two children will gain £1,500 from the changes to the minimum wage but lose over £2,200 next year from changes to tax credits.

It is also the case that this ‘work penalty’ will increase work disincentives and that, as a result of the higher tax credit taper rate, some people will only take home 7p for every additional pound they earn.

This is why a wide range of charities and children’s organisations have also emphasised the impact these changes to tax credits could have on many working households and on the number of children growing up in poverty.

For all these reasons, I voted against the tax credit changes on 15th September but unfortunately the Government pushed them through.


Hilary Benn
MP for Leeds Central

Do you like this post?

The Labour Party will place cookies on your computer to help us make this website better.

Please read this to review the updates about which cookies we use and what information we collect on our site.

To find out more about these cookies, see our privacy notice. Use of this site confirms your acceptance of these cookies.