New one per cent caps on tax credits and child benefit, announced by the Chancellor in his autumn statement, will contribute to some working families being £3,000 worse off a year by 2015, warns the Trades Union Congress (TUC).
The TUC has calculated that the combination of real terms cuts to child benefit, announced today and in previous budgets, will leave a household with two children £315 a year worse off by 2015/16.
Over the course of this Parliament, a family with two children will lose over £1,000 in child benefit. Parents earning £50,000 or more will lose even more as their child benefit is further reduced, depending on how much they earn.
But fresh real terms cuts to tax credits are even greater, says the TUC. A family with two working parents, a combined income of £40,000, two children and childcare costs of £300 a week will lose around £2,800 a year by 2015/16. Real terms cuts to child benefit and tax credits will leave this family over £3,000 a year worse off by 2015/16.
The Chancellor has already announced a three-year freeze in child benefit up to 2013/14 and frozen various tax credits over the same period. In addition, he has switched the inflation measure used to uprate these benefits from RPI to CPI.
In yesterday's autumn statement the Chancellor announced that from April 2014, when freezes in tax credits and child benefit were due to end, any further rises would be capped at one per cent for a further two years.
TUC General Secretary Brendan Barber commented: "This Chancellor has presided over one of the biggest ever squeezes on the budgets of working families. Small gains are dwarfed by the swingeing cuts to child benefit and tax credits that many millions of families rely on to get by."
"For all the Westminster talk of fiscal rules and structural deficits, it is money at home that matters to families, and that's where they've been hit harder than anyone else.
"Pay is now set to keep falling in real terms until 2014. But the Chancellor is also planning to take thousands more pounds away from working families. This will squeeze household finances further still, making it harder for them to pay the bills and stop them spending on the high in the high street to help our economy grow.
'This Chancellor's stealth cuts have made the biggest squeeze in living standards since the 1920s even longer and deeper, especially for those with children," concluded Mr Barber