Rising unemployment shows why it's the wrong time to make changes to Working Tax Credits

Date: 14 March 2012 The shopworkers' Union Usdaw says today's rise in unemployment shows why this is the wrong time for the Government to make changes to Working Tax Credits.

Up to 212,000 couples with children are set to lose £3,870 in tax credits, over £74 a week, from 6 April unless they can find extra hours of work. Couples with children currently receive Working Tax Credit if they work at least 16 hours a week, but from next month this will increase to 24 hours.

78% of Usdaw members affected by these changes say they have tried to find more work, but are unable to get extra hours at a time when unemployment is so high and employers are cutting back on costs and additional hours.

Official figures released today show that unemployment has increased by 28,000 on the previous quarter and now stands at 2.67 million. The unemployment rate of 8.4% is the highest it has been since 1995. The figures also reveal that under-employment has hit a new record high, with 1.38 million people working part-time because they are unable to get full-time jobs.

Despite growing joblessness and under-employment, the Government claimed last week that couples could find the extra hours of work they needed. Chloe Smith MP, Economic Secretary to the Treasury, said in Parliament "increasing the working hour requirements for a couple is entirely fair...hours are available."

John Hannett, Usdaw General Secretary, called on the Government to take note of today's unemployment figures and postpone the change in the tax credit rules until more work is available and the economy has started to recover.

"When this policy was designed, the Government expected the economy to be back into strong growth with much better job prospects, but the sad fact is the economy has worsened rather than improved. With the highest unemployment rate since 1995 and 1.4 million people in part-time work trying to find full-time jobs, this is absolutely the wrong time for the Government to be making these changes."

"If the Government doesn't postpone the changes, it will be punishing thousands of low income families for the failure of its own economic policies. These are families on incomes of only around £18,000 a year. Taking nearly £4,000 from these families will plunge them into absolute poverty and mean that many are better off on benefits than in work."

"We are calling on David Cameron and George Osborne to listen to the thousands of couples affected by these changes who cannot find extra work, and to give them a proper chance of doing so over the next 18 months, when more jobs will hopefully become available."

Notes for Editors:

  1. The quote from Chloe Smith MP is from Monday 5 March 2012, Hansard col 679.
  2. Usdaw is one of a group of national organisations and charities who have called on David Cameron and George Osborne to postpone the changes to Working Tax Credit and to meet with families affected by the changes to hear about their struggle to find extra work and the effects of the poverty they will face in 3 weeks' time when they lose £3,870.
    For further information visit: http://www.usdaw.org.uk/newsevents/news/2012/mar/primeministerandchancellor.aspx and http://www.usdaw.org.uk/newsevents/news/2012/mar/openlettercallsonprime.aspx
  3. Usdaw (the Union of Shop, Distributive and Allied Workers) is the UK's fourth biggest and fastest growing trade union with over 410,000 members. Membership has increased by more than 20% in the last six years and by nearly a third in the last decade. Most Usdaw members work in the retail sector, but the union also has many members in transport, distribution, food manufacturing, chemicals and other trades.

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The official website of the Union of Shop, Distributive and Allied Workers