Tax credit cuts will hit poorest regions hardest, says TUC

By agency reporter
November 19, 2015

New analysis published yesterday (18 November) by the TUC reveals that the Chancellor’s tax credit cuts will hit the UK’s poorest regions and nations the hardest.

The TUC analysis shows that more than nine in ten (91 per cent) working tax credit households in the UK will be worse off as a result of the government’s cuts, and sets out the average loss in each part of the UK.

In Northern Ireland, where average income per head is the lowest in the UK, the average loss to working tax credit claimants will be £1,480 – the highest of any UK nation and region.

By contrast, the average loss for a losing household in London will be £1,110. This is despite the fact that London has the highest average income per head in the UK.

Working tax credit households in every UK region and nation will suffer larger average losses than London despite having lower incomes.

In the North East, for example, where average income per head is more than £7,500 lower than London, households will be £1,410 worse off from the Chancellor’s tax credit cuts.

And in Yorkshire and the Humber, where average income per head is more than £7,000 lower than the capital, households will lose £1,440.

In total the TUC estimates that over £4.5 billion will be lost from working recipients of tax credits across the UK as a result of the cuts.

The TUC says the analysis demonstrates that the tax credit cuts will worsen regional income inequalities. The government should be supporting families on lower incomes rather than making them even worse off, says the TUC.

Although the Chancellor has now indicated that he will modify the plans in the government’s spending review on 25 November, it is currently expected that he will propose transitional arrangements which may delay the full impact, but will not stop them taking place.

The TUC General Secretary, Frances O’Grady, said: “This research makes clear that as well as making families suffer, the tax credit cuts will make regional inequalities worse. The households who will lose the most are those already in low-income areas. Instead of cuts that target the UK’s lowest-paid communities, the government should channel more support towards them.

She concluded: “The Prime Minister and the Chancellor seem to be the last people in Britain who still think the tax credit cuts are a good idea. They don’t seem to understand that people in work deserve a decent income. These cuts should be ditched altogether.”

* The government has been heavily criticised over the lack of an adequate impact assessment for the tax credit cuts by the Secondary Legislation Scrutiny Committee. The full report from the Committee can be found here: www.publications.parliament.uk/pa/ld201516/ldselect/ldsecleg/38/38.pdf

* TUC https://www.tuc.org.uk/

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