Families with children 'worse off'

Ed Balls with a child in a nurseryFamilies with children stand to lose £511 a year on average under tax and benefit changes coming into force from Friday, an analysis by a respected think-tank showed.

Anti-poverty campaigners dubbed the start of the financial year Bad Friday, warning cuts totalling more than £2 billion were taking effect over the Easter weekend.
Shadow chancellor Ed Balls said the impact calculated by the Institute for Fiscal Studies was proof of a "tax credits bombshell" with up to a million households losing eligibility entirely.

As political sniping continued over the effects of last month's Budget, the Treasury retorted by claiming the average household would be £5.50 a week better off. More than 15 times as many would see an improvement to their finances than would be worse-off thanks to an increase in income tax allowances, Economic Secretary Chloe Smith said.

Labour pointed to Government figures suggesting more than 850,000 families stood to lose their child tax credit - worth around £545 per year - from the start of the financial year. Another 212,000 couples on less than £17,000 a year would lose working tax credit unless they were able to increase their hours of employment, the opposition said.

Treasury Chief Secretary Danny Alexander said the Government had taken some "very difficult decisions" on tax and benefits but insisted they had been "fair".

He told BBC Radio 4's Today programme the Government was still spending £31.6 billion on tax credits, a £3.2 billion cut in real terms: "That is part of the package of measures that we have to take to deal with the catastrophic mess that Labour and Ed Balls left our economy in."

"I think it is right to say, in a situation where you ask a single parent, for example, to work 16 hours a week before they can receive working tax credits, that you ask more of two people. If you are going to ask a single parent to work two days a week before they can receive working tax credit, I think asking a couple to work three days a week between them is a reasonable position."

Mr Balls said he did not accept the Government's claim that 15 times as many people would see their finances improve as a result of the package thanks to the increased tax allowance.

He told Today: "I don't think the Government is taking into account the other changes coming in today, the freeze in child benefit, the cuts to tax credits which mean that a family with children is worse off, according to the IFS, by £511 from tomorrow and a million families lose all of their tax credits entirely."

© 2012 Press Association
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