200,000 families hit by tax credit calamity

Friday 4th May 2012

The extent of the changes to working tax credit has been revealed.

Figures today published by HMRC show that more than 200,000 families have lost their entire working tax credit support, worth £3870, from 6 April 2012.

Reacting to the data, Chief Executive of Child Poverty Action Group, Alison Garnham, said: "This is an absolute calamity that plunges nearly half a million children deep below the poverty line.

"Many of these parents will now have less money in work than if they just claimed benefits. It runs directly against the consensus on the importance of making work pay and the Government's duties on child poverty.

"The Chancellor should have announced at the Budget he would keep these working families afloat and in work, but they were cut loose whilst taxes for corporations and the super-rich were cut instead.

"The policy was designed in 2010 when the economy was predicted to be in strong growth by now. But with an economy returning to recession, Ministers should have taken responsible action and put the policy on hold until employers could provide the additional hours of work these families need.

"There will be appalling economic consequences too, with the retail and service sectors taking a big hit from the loss of £500million of spending by the families affected. This could put further jobs and businesses at risk.

"The economy is not where we had hoped it would be and that requires Minsters to make hard decisions on today's realities. Even now, this change could be postponed and David Cameron's government should act swiftly and decisively before the damage is done to families and the economy."

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Mike Jones