Date: 20 March 2012
New figures released today by the shopworkers’ Union Usdaw and the Child Poverty Action Group reveal that two thirds of the families about to lose all of their Working Tax Credit because they cannot find enough hours of work are already living in poverty.
From 6 April, around
200,000 couples with children face losing £3,870 if they cannot
increase the total number of hours they work from 16 to 24 hours.
An analysis by Howard Reed of Landman Economics shows that around
140,000 of these families are already living below the poverty
line. A further 35,000 families with around 80,000 children will
fall below the poverty line if they are unable to find extra hours
Usdaw and the Child
Poverty Action Group (CPAG) are making another urgent call on the
Chancellor George Osborne to use his Budget tomorrow to postpone
have welcomed the news announced today that the Government has
decided to exempt full-time carers and their partners from the
requirement to work extra hours, but stressed that this new
exemption would only affect a small minority of
Garnham, Chief Executive of CPAG, called on the Government
not to exacerbate the suffering of families already on the
"This is a
precision-guided attack on the poorest working households. Two
thirds of the households being hit by the cut are working families
already below the poverty line. Slashing their household income by
a further £3,870 will be devastating and will leave children in
severe deprivation. With 470,000 children living in the families
that will lose their tax credits if they cannot find extra hours of
work, we should expect to see a surge in the extent and severity of
UK child poverty. This is a terrible penalty to inflict on families
who are working as many hours as they can find and trying to do
their best for their children."
Hannett, General Secretary of Usdaw, said that it was
wrong to impose such a heavy financial cost on families unable to
find more work due to the current high level of unemployment and
squeeze on employers' wage budgets.
"Thousands of Usdaw's
members are affected by the changes to tax credits. 78% have said
it is impossible for them to find the additional hours of work they
need. When this policy was proposed, back in 2010, the Government
thought that unemployment would be falling in April 2012. Instead,
unemployment is at its highest level for 17 years and a record 1.4
million people in part-time work are seeking more
"This change to tax
credits means that 200,000 couples are seeking an average of around
6 hours a week of extra work, equivalent to over 50,000 jobs of 24
hours a week, to be delivered by next month, mainly in the retail
and service sectors. With spending still low and those sectors
still struggling, the extra work is just not available so George
Osborne needs to delay this cut or thousands of families with
children will suffer through no fault of their own."
"In October 2013, the
rule for minimum hours of work will be abolished when Universal
Credit is introduced. This policy simply needs to be delayed for 18
months until Universal Credit comes in, and there is more work
Case Studies -
Couples Due to Lose Working Tax Credit on 6
Jim live in Guisborough in Cleveland. They have three
children aged 10, 9 and 2. Jim works for 16 hours a week. Donna was
made redundant before Christmas and can now only find work for 6
hours a week. In April they will lose £70 a week - 20% of their
income. Donna says:
"We cannot cut back
any more than we are doing and we face the uncertainty of whether
or not we will be able to feed our children. We are a normal hard
working family, we have three lovely kids who understand and
appreciate all they are given but it is becoming increasingly hard
to manage and if they reduce our money even further I am afraid for
the future. My husband and I should not have to choose between us
which one eats tonight."
from Abertillery works 23 hours a week but her employer says they
cannot even give her 1 extra hour a week so she can keep her tax
credits and her husband cannot find a job as unemployment is so
high. Emma says:
"I'm totally with the
incentive of rewarding the working and not just giving out money to
anyone but why because of 1 hour a week employment should I lose
all tax credits? It's a really worry to me how I'm going to keep a
roof over our heads."
Heather from Gosport says: "We struggle to
keep things going on an even level week to week as it is now. With
the changes to tax credits I'm very worried! I've spoken to my boss
regarding increasing my hours from 17 to 24 a week as I'm going to
lose my working tax credit and I've been told that we are already
overspent on our wages budget so it's not likely I'll be able to
get more hours. My partner is looking for work but is struggling to
find anything. Like many others, this is a worrying time for us and
I'm very concerned with what's going to happen."
- Howard Reed is an economist with over a decade of
research experience. Before leaving to found Landman Economics in
2008, Howard's most recent job was Chief Economist at the ippr.
Landman undertakes high-quality economic consultancy, research and
analysis for a range of clients including NGOs, trade unions, think
tanks, government organisations and the private sector.
- The definition of child poverty used here is the HBAI
definition: below 60% of median BHC household income.
- Changes to the rules for Working Tax Credit that require
couples with children to increase their hours of work from a
minimum of 16 hours a week to at least 24 hours, were announced in
the 2010 Spending Review, to take effect in April 2012.
- Government responses to written questions show that
212,000 couples with 470,000 children will be affected by the
changes. (Treasury response to Cathy Jamieson MP, Written Answers
88172 and 88178, December 2011). Exemptions have been introduced
today for couples who are full-time carers, but this will only
include a very small minority of families affected.
- A DWP response to a written question from Ann Coffey MP
shows that a family on 16 hours a week on the minimum wage,
currently on total household income of £330 a week, will lose £74 a
week if they cannot increase their hours of work. From April, the
same family would be £14 a week better off on benefits than
working. Yet in 18 months time, when Universal Credit is
introduced, they would be £95 a week better off working than on
- An Open Letter to David Cameron on 5 March from Usdaw,
CPAG, Barnados, Citizens Advice, Carers UK, Working Families,
Contact a Family, Church Action on Poverty, Family Action and the
National Children's Bureau called on the Prime Minister to delay
the cuts to tax credits to prevent 18 months of severe hardship to
working families and their children. No substantive response has
been received to date.
- CPAG is the leading charity campaigning for the abolition
of child poverty in the UK and for a better deal for low-income
families and children. CPAG is the host organisation for the
Campaign to End Child Poverty, which has over 150 member
organisations and is campaigning for public and political
commitment to ensure the goal of ending child poverty by 2020 is
- 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.