Date: 1 May 2012
Figures released by the Treasury this afternoon reveal that more than 200,000 couples with 449,000 children have lost up to £73 a week in Working Tax Credit because they have been unable to increase the number of hours they work.
Cuts to tax credits made by the Tory-led
Coalition mean that from 6 April, couples with children had to
increase their working hours to at least 24 hours a week or lose
all their Working Tax Credit, worth up to £3,870 a year. Despite
warnings from the shopworkers' Union Usdaw and a number of
charities that most of the 212,000 couples affected would struggle
to do this in the current economic climate, Government Ministers
insisted that extra hours of work and alternative jobs were
available to the families affected.
However, the figures published today show that
on 1 April there were still 203,000 couples with 449,000 children
who were working between 16 and 24 hours a week. These families
will have lost all of their Working Tax Credit from 6 April unless
they fulfilled a small number of exemptions for disability or
caring, likely to affect less than 10,000 couples.
This means that despite Government claims to
the contrary, the net effect is that less than 5% of the 212,000
couples with children faced with losing Working Tax Credit were
able to find additional hours of work or alternative employment
with longer hours.
The majority of families with children
affected by the changes are already living in poverty. Last
month, their typical household income was around £17,000, but the
loss of up to £3,870 in Working Tax Credit has cut their incomes by
more than 20%.
Usdaw has been campaigning against the cuts to
Working Tax Credit, pointing out to the Government the injustice of
making the change at a time when there are 2.6 million unemployed,
workers are facing cuts to hours and overtime and a record 1.4
million people are working part-time because they are unable to
find full-time jobs. 53,000 new jobs were created in the last
quarter, but this figure results from of an increase of 80,000
part-time jobs and a decrease of 27,000 full-time jobs.
John Hannett, Usdaw General
"The Government defended its shameful attack
on working couples trying to do the right thing by insisting they
would be able to get extra hours of work. The Government's own
figures released today blow that claim out of the water."
"If they have an ounce of decency or concern
for real people then Ministers should accept that they have got
this wrong and should immediately suspend the changes until
Universal Credit is introduced in 18 months time."
"Thousands of our members have been affected
by the cuts. The Government's decision to ignore the advice of
Usdaw, businesses and charities that substantial numbers of
families would face severe hardship, debt and even the loss of
their homes, shows how out of touch they are – both with economic
reality and with the appalling hardship their policies are
Rebecca, an Usdaw member who lives in Ipswich
works 18 hours a week in a convenience store. Her husband has been
trying to find another job since he was made unemployed three years
ago, but it is increasingly difficult to find work as there are now
eight JSA claimants for every vacancy in Ipswich.
"I am more than willing to work extra hours
but apparently our store can't give me the six hours that I need.
They have been told to cut their wages budget so even though two
members of staff who worked for 34 hours between them have left,
and another on 16 hours a week is leaving soon, they still can't
even give me another six hours. We have lost all our Working Tax
Credit of £71 a week and I don't know how we will get by unless I
can find some extra work very soon."
Notes for Editors:
1. A breakdown of the numbers of families
affected by Parliamentary constituency can be accessed via:
will lose WTC by constituency 010412.pdf. In
December 2011, the Treasury said 212,000 couples with a total of
470,000 children would be affected by these changes.
2. Details of the number of jobs created in
the last quarter, December 2011 to February 2012, can be found in
Table 3 at: http://www.ons.gov.uk/ons/dcp171778_260957.pdf
3. On 5 March 2012, a group of organisations
including Usdaw, Child Poverty Action Group (CPAG), Citizens
Advice, Carers UK and a number of family and children's charities
wrote to the Prime Minister calling on him to postpone the change
to the hours' threshold for couples claiming working tax credit.
Still no substantive reply has been received to that letter.
4. In correspondence, media interviews and
statements in Parliament, Government Ministers have insisted that
extra hours of work and alternative jobs were available, by
inference saying couples with children would therefore be able to
avoid the loss of over 20% of their income. On 5 March 2012,
Economic Secretary to the Treasury Chloe Smith MP said:
"Increasing the working hour requirements for
a couple is entirely fair. It is right that they should put in more
hours than a lone parent before receiving the working tax credit.
That also creates a clear work incentive signal, which many Members
have sought in this debate, to potential second earners who could
benefit from tax credits if they moved into work or increased their
hours—and hours are available. Let me answer this one. In the
quarter to January, there were 11,000 vacancies across the economy,
meaning that 1 million people moved into work." Hansard 5 March
2012 Col 679 – 680.
In reply to a letter from John Hannett, Usdaw
General Secretary, Chloe Smith said:
"The Government believes it is reasonable to
ask a couple to work 24 hours between them in order to qualify for
Working Tax Credit and believe a large proportion of people will be
able to increase their working hours."
5. Figures released on 20 March by Usdaw and the CPAG revealed
that two thirds of the families set to lose all of their Working
Tax Credit were already living in poverty. See:
6. The strong economic situation needed to
support this change has not been reached. The Government first
announced this change in November 2010 in the Spending Review. At
the time the Office for Budgetary Responsibility (OBR) predicted
that the economy would be back in strong growth with GDP increasing
by 2.1% in 2011 and by 2.6% in 2012. The economy actually grew by
just 0.9% in 2011 and the country is now back in recession with the
economy contracting by 0.5% in the past 6 months. The OBR has also
significantly revised upward the job losses they expect in the
public sector, many of which will be implemented in the form of
reduced hours. The argument by Government that the change would
incentivise increases in working hours no longer makes in sense in
the current economic context.
7. Universal Credit will abolish the criteria
for working hours in 2013. One of the key points about Universal
Credit is that it will reward people for however many hours work
they can do. The criteria for set hours of work will be abolished
and families will receive support that is tapered at a set rate
depending on their earnings rather than their hours of work. The 18
month change in the hours rule to qualify for Working Tax Credit
will therefore create untold misery for hundreds of thousands of
working families and their children for a small and temporary gain
to the Treasury.
8. Usdaw (the Union of Shop, Distributive and Allied Workers) is
the UK's fourth biggest and fastest growing trade union with over
415,000 members. Membership has increased by more than 17% in the
last five 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.