65,000 North families to be stripped of tax credits (From The Northern Echo)

65,000 North families to be stripped of tax credits

9:20am Saturday 31st July 2010 in

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ABOUT 65,000 families in the region will see their tax credits disappear under a draconian squeeze starting next year.

The figure is the first analysis of the impact of the coalition Government’s shock decision to withdraw thousands of pounds a year from most families earning above £30,000.

The crackdown – to be introduced gradually, from next April – goes much further than the Conservative manifesto pledge to only target families earning more than £50,000.

According to figures released to MPs, there are about 46,000 families with household incomes above £30,000 currently receiving tax credits in County Durham, the Tees Valley and Tyne and Wear.

The highest number is the 3,500 families in the Stockton South constituency of James Wharton. There are a further 18,500 claimants earning above £30,000 across North Yorkshire Yvette Copper, Labour’s work spokeswoman, attacked the squeeze, saying: “It is deeply unfair to cut child tax credit for families who already find themselves overstretched.

“Tax credits are invaluable for working mothers and, in many cases, are what helps them afford to work part-time rather than full-time, or pay for child care costs.”

But, in his Budget speech, Chancellor George Osborne, described the £30bn tax credits bill as “unsustainable”, adding: “We need to target tax credits on those who need the help most.”

Under the changes, families earning more than £40,000 will have their payments stopped next April. A year later, the threshold will be cut to £30,000 – or possibly close to £25,000.

However, families with more than one child will continue to receive an additional “child element” of the tax credit, which will be worth up to £2,500-a-year from April, on a sliding scale according to income The statistics were released as radical plans were unveiled to dismantle the tax credits system altogether, by combining it with income support and housing benefit.

A second option, put forward by Work and Pensions Secretary Iain Duncan Smith, would see a single “universal credit” replacing about 50 working age benefits.

The idea is to “make work pay”, encouraging millions of long-term jobless to take up a job by allowing them to keep more of their benefits when they do so.

But the plan has a formidable cost – estimated at between £3.5bn and £7bn – at a time when the Treasury is demanding huge cuts at the Department for Work and Pensions.

Mr Duncan Smith insisted his plans would would lead to “dramatic savings” in the long run – partly by cutting out huge errors in the tax credits system, totalling billions every year – adding: “We have done the maths.”

But yesterday’s consultation paper contained few details about the level of any universal benefit and at what point benefit withdrawal would be tapered under a new system.