GMB Experts in the World of Work
Join GMB today
 Follow @GMB_union

3.3 Million Families Face Axe

Monday, June 22, 2015

3.3 Million In Work Families Face Cuts To £123.90 Average Weekly Tax Credits As Cameron And Osborne Brief In Advance Of July 8th Budget 

Government must raise tax thresholds and insist that employers pay a living wage to compensate for the losses for these lower paid workers says GMB.

GMB is calling on Government to raise tax thresholds and insist that employers pay a living wage to compensate 3.3 million in work families in the UK who face cuts to the average of £123.90 weekly tax credits they now receive.

Over the weekend Prime Minister David Cameron and Chancellor George Osborne stepped up press briefings on in advance of in the post-election budget on July 8th. See notes to editors for article in FT dated 22nd June and Sunday Times dated 21st June.

The latest figures show that in April 2015 there were 3,277,300 families in the UK in receipt of these in work benefits. Latest figures show that they got an average of £123.90 per week or £6,443 per annum. The total amount added these families spending power is £21.15 billion for the UK as a whole.

In London an average of £141.25 per week is paid in child tax credits (CTC) and working tax credits (WTC) to 408,700 families. This is a total of over £3 billion per year. This is the biggest amount paid in any of the 12 regions in the UK.

Next biggest is North West where 418,800 families get an average of £125.02 per week or £2.7 billion per year, followed by South East where 348,600 families get an average £122.90 per week or £2.2 billion per year, followed by West Midlands where 319,000 families get an average of £127.62 or £2.1 billion per year. See Notes to Editors 1 for sources. See the table below for the numbers in receipt of tax credits in each of the 12 regions, with average weekly amounts paid and total amount paid per year in the region. 

In Birmingham the average paid in CTC and WTC is £148.54 per week to 77,100 families or £595.5 million per year. This is the biggest amount paid in any area out of all 232 areas in the UK. Set out in notes to editors 2 are the top 30 areas in UK for amount paid per year. See also GMB website www.gmb.org.uk for 12 regional releases plus the excel sheets with the raw data for all 232 areas. These are set out as pdfs at the foot of this national press release.

NUMBERS OF IN WORK FAMILIES IN UK REGIONS IN RECEIPT OF TAX CREDITS

 

Total families:

in work families

Average weekly value:

All in-work families

Annual amount being put into the 

economy of the area  by in-work tax credits

 

United Kingdom

3,277,300

£123.90

£21,115,643,900

 

 

 

 

London

408,700

£141.25

£3,001,901,500

North West

417,800

£125.02

£2,716,117,800

South East

348,600

£122.90

£2,227,902,600

West Midlands

319,000

£127.62

£2,116,884,000

Yorkshire and The Humber

311,000

£124.10

£2,006,883,000

East of England

267,100

£121.58

£1,688,606,200

South West

259,900

£116.94

£1,580,451,900

East Midlands

252,200

£119.73

£1,570,197,200

Scotland

250,300

£113.46

£1,476,770,000

Wales

167,400

£118.54

£1,031,853,600

North East

148,300

£117.60

£906,854,500

Northern Ireland

112,500

£124.63

£729,112,500

Paul Kenny, GMB General Secretary, said “The elephant in the Downing Street Cabinet Room is still cuts to in work tax credits. 

Such cuts may be the cost of a large brandy for Cameron but are bread and butter for many working families.

Government must raise tax thresholds and insist that employers pay a living wage to compensate for the losses for these lower paid workers.”

End

Contact: Kamaljeet Jandu 07956 237178 or Cath Speight 07506 711925 or Lisa Johnson 07900392 228 or Martin Smith 07974 251722 or Mick Rix 07971268 343 or GMB Press Office 07921 289880 or 07974 251823 or 07918 768773.

Notes to Editors

1 Sources: HM Revenue & Customs, Child and Working Tax Credits Statistics:

Geographical analysis April 2015; Table 3, Recipient families receiving Child or Working Tax Credit in each local authority, April 2015.

https://www.gov.uk/government/uploads/system/uploads/attachment_

data/file/423613/ChildandWorkingTaxCreditsStatistics_geographicalanalyses-April_2015.pdf

Finalised annual awards 2013-14 Geographical Analysis; Table 2 Average number of benefiting families and average annual entitlements in each local authority, 2013-14. https://www.gov.uk/government/uploads/system/uploads/attachment_

data/file/430557/cwtc_Finalised_annual_awards_2013-14_GeographicalAnalysis.pdf

2 Top 30 areas in UK for amount paid per year into local economy

 

Total families:

in work families

Average weekly value:

All in-work families

Annual amount being put into the

local economy by in-work tax credits

 

 

 

 

Birmingham

77,100

£148.54

£595,520,400

Lancashire

69,900

£124.54

£452,672,400

Kent

68,900

£122.79

£439,926,500

Essex

58,100

£121.04

£365,681,400

Bradford

42,100

£146.27

£320,212,600

Hampshire

47,900

£120.31

£299,662,400

Hertfordshire

42,400

£123.94

£273,268,000

Leeds

40,600

£125.56

£265,077,400

Norfolk

43,900

£114.54

£261,468,400

Manchester

35,400

£138.96

£255,800,400

Nottinghamshire

41,000

£115.44

£246,123,000

Staffordshire

40,000

£116.35

£242,000,000

Lincolnshire

40,500

£114.75

£241,663,500

Northamptonshire

38,100

£121.79

£241,287,300

Devon

40,200

£115.19

£240,798,000

Derbyshire

38,500

£113.56

£227,342,500

Glasgow City

35,500

£119.46

£220,526,000

Suffolk

34,500

£116.62

£209,208,000

West Sussex

33,100

£119.92

£206,411,600

Surrey

30,800

£123.33

£197,520,400

Cornwall UA

32,800

£115.58

£197,128,000

Sheffield

29,700

£125.79

£194,267,700

Kirklees

27,700

£133.54

£192,348,800

Leicester UA

27,700

£132.96

£191,517,800

Newham

25,000

£144.44

£187,775,000

Leicestershire

29,700

£116.23

£179,506,800

Liverpool

28,200

£119.17

£174,755,400

County Durham UA

28,600

£114.00

£169,540,800

Somerset

27,700

£115.35

£166,144,600

Enfield

21,100

£149.79

£164,347,900

3 Article in Financial Times dated 22nd June 2015.

Cameron signals assault on tax credits in search for welfare cuts

Elizabeth Rigby, Deputy Political Editor

David Cameron will insist on Monday that Britain must stop the “merry-go-round” of handing out welfare support to those in jobs as he signals an assault on tax credits for the working poor in order to cut £12bn a year from the welfare bill.

The prime minister will say Britain needs to move from a “low-wage, high-tax, high-welfare society to a higher-wage, lower-tax, lower-welfare society” as he hints at a radical overhaul of the tax credit system.

The prime minister will say it is time to deal with the “complacency in how we approach the issue of low pay”.

“This is what I would call a merry-go-round,” he will say. “People working on the minimum wage having that money taxed by the government and then the government giving them the money back — and more — in welfare.

“Again, it’s dealing with the symptoms of the problem — topping up low pay rather than extending the drivers of opportunity.”

Mr Cameron does not outline how he intends to boost wages to ameliorate the effects of slashing in-work benefits, saying only that the government will go “further” on increasing the personal tax threshold and minimum wage as the economy recovers.

The assault on tax credits for low-income working families comes as George Osborne and Iain Duncan Smith on Sunday promised to take a further £12bn out of the welfare bill this year, ignoring the plea from the OECD this month to ease back on the pace of austerity amid concerns the size of the state was being slashed too fast.

It also contravenes the advice offered by the Paris-based international organisation to reduce the effect of cuts on the working poor, amid signs Mr Osborne has been struggling to find £12bn of savings after the prime minister put pensioner benefits and child benefit off limits.

The prime minister will again reiterate his desire to govern as a “One Nation” Conservative prime minister in his second term. But some parts of the Conservative party fear cuts to in-work benefits could blunt the party’s message to blue-collar voters.

With Mr Cameron promising full protection for child and pensioner benefits, the welfare secretary has little option but to cut in-work benefits in order to deliver the promised cuts.

While the entire social security budget runs to £220bn, just three main categories — together work £77.5bn — are now in the line of fire: tax credits, housing benefits and disability benefits, which the prime minister has signalled he is reluctant to touch.

Mr Osborne, the chancellor, and Mr Duncan Smith, welfare secretary, said they would give details of the savings in the Budget next month and the spending review in the autumn. They also warned it would take a decade or more to return the welfare budget to “sanity”.

Writing in the Sunday Times, they said they would reduce the £26,000-a-year benefit cap to £23,000 a year, adding “we believe we need to make significant savings from other working-age benefits”.

The reiteration of the government’s determination to further cut the welfare bill came after tens of thousands of anti-austerity protesters massed outside parliament on Saturday to demonstrate against Conservative plans for further public spending cuts.

Andy Burnham, a frontrunner for the Labour leadership, said he would oppose cuts to tax credits for people on low incomes, and reductions in benefits for the disabled.

He also said the government’s mandate for pushing through £12bn of cuts was questionable given that it did not spell out before the election where the cuts were going to fall.

Tax credits, at almost £30bn the biggest single area of expenditure, have made it feasible for millions to take on low-paid work but critics suggest they amount to a subsidy to business.

There is little hard evidence, however, that the availability and relative generosity of tax credits is acting as a form of corporate welfare, subsidising employers and enabling them to bear down on their own wage bills.

Whitehall officials acknowledge that low pay is likely to become a key issue in the current parliament.

An inquiry into the issue by the Resolution Foundation, a think-tank that focuses on the plight of the “squeezed middle”, found wage growth had been no lower in the part of the earnings distribution where people receive tax credits.

Nor did workers receiving tax credits appear to have seen lower wage rises than those not eligible for the benefit on the same pay.

Dave Prentis, general secretary of Unison, told the Financial Times it would be “absolutely dreadful” to cut tax credits for low-paid workers. “They’re doing exactly what the government wants them to do [by going out to work]?.?.?.?It would make a nonsense of the idea of the Conservatives as a party of working people.”

4 Article in Sunday Times dated 21st June 2015.

Tories: £12bn benefits cuts will go ahead

Osborne and IDS strike deal on reforms

Tim Shipman, Political Editor Published: 21 June 2015

GEORGE OSBORNE and Iain Duncan Smith have agreed a plan to slash spending on benefits by £12bn a year — defying claims that the government’s welfare reforms would be watered down.

In an article for The Sunday Times, the chancellor and the work and pensions secretary today pledge to tackle the “damaging culture of welfare dependency”, warning it will take “a decade” or more to return the welfare budget to “sanity”.

They say they will outline their plans for “significant” cuts to “working-age benefits” in the budget on July 8 and the Whitehall spending review in the autumn. Treasury analysis reveals that spending on working-age benefits has soared from 8% of public spending in 1980 to 13% today.

Details of cuts were thrashed out between Osborne and Duncan Smith in the past few days. They pledge to press ahead with further cuts in the benefits cap, saying it is a “matter of fairness” that the maximum a family can claim per year is reduced to £23,000.

The details of which benefits will be hit are known to only a handful of people but cuts to housing benefit and tax credits are expected to account for the bulk of the savings.

David Cameron has ruled out cutting pensioners’ benefits and any further raid on child benefit. He is also said to be “queasy” about freezing or taxing disability benefits, one proposal that has been considered by the work and pensions department.

In their article, Osborne and Duncan Smith make repeated references to “protecting the vulnerable”.

Targeted savings that have been discussed in Whitehall and are expected to be introduced include banning the under-25s from claiming housing benefit and restricting child tax credits to a couple’s first two children.

The planned cuts emerged as tens of thousands of anti-austerity protesters marched through central London yesterday demanding an end to government controls on spending. Similar demonstrations were held in Glasgow, Liverpool and Bristol.

Protesters lit fires in the streets of London and tossed smoke bombs as the left-wing comedian Russell Brand and the Welsh singer Charlotte Church addressed the crowd. She branded the need for austerity “the big lie”.

The Tory election manifesto pledged to make £12bn of welfare cuts but, in recent weeks, ministers have said privately that they would be delayed or reduced. However, taking the fight to their critics, Osborne and Duncan Smith confirm that the full £12bn will be found this year and say that some welfare spending is little more than “debt-fuelled largesse”.

The two ministers write: “This government was elected with a mandate to implement further savings from the £220bn welfare budget. For a start, we will reduce the benefit cap, and have made clear that we believe we need to make significant savings from other working-age benefits.

“We will set out in detail all the steps we will take to bring about savings totalling £12bn a year in next month’s budget and at the spending review in the autumn.

“It took many years for welfare spending to spiral so far out of control, and it’s a project of a decade or more to return the system to sanity.

“Reforming the damaging culture of welfare dependency and ensuring that work pays has been central to our mission to make Britain fit for the future.”

The article points out that even with the reforms which the Tories have already put in place, which shaved £21bn a year from the welfare bill in the last parliament, the independent Office for Budget Responsibility forecasts that benefits will still account for 12.7% of government spending in 2019-20.

Duncan Smith signed up to the full series of cuts in exchange for an agreement that they would be designed to promote work and change lives, and not just save money.

That means there will be a significant restructuring of some benefits rather than a “salami slicing” of lots of them.

Arguing that the cuts are “the right thing to do”, they write: “All our reforms will have these central aims: to ensure the welfare system promotes work and personal responsibility, while putting expenditure on a sustainable footing.

“Welfare reform is fundamentally about opportunity and changing lives, supporting families to move from dependence to independence — a vital point, because without social mobility there can be no social justice.”

Osborne and Duncan Smith also throw down the gauntlet to the challengers for the Labour leadership, urging them to ditch their party’s opposition to welfare cuts.

They write: “Even after the comprehensive rejection of their position by the British people in last month’s general election, Labour seems determined to go on as before. But even now, we appeal to their leadership candidates to engage constructively with us and to support the further savings we must make to make welfare fairer and more affordable, while protecting pensioners and the vulnerable.”

The two ministers point out that the last Labour government “allowed the cost of our welfare state to spiral by a startling 38%”. By 2010, when the coalition took over, working-age welfare cost taxpayers £94bn.

They write: “It was a system that incentivised people to live a life on benefits — something that was bad for them, bad for their families, and bad for the hardworking taxpayers who were footing the bill.”

 

 

Share this page
+1

Additional Resources

417,800 In Work Families In North West Face Cuts To £125.02 Average Weekly Tax Credits As Cameron And Osborne Brief In Advance Of July 8th Budget

download pdf306Kb (pdf) - 22 June 2015

Government must raise tax thresholds and insist that employers pay a living wage to compensate for the losses for these lower paid workers says GMB

148,300 In Work Families In North East Face Cuts To £117.60 Average Weekly Tax Credits As Cameron And Osborne Brief In Advance Of July 8th Budget

download pdf221Kb (pdf) - 22 June 2015

Government must raise tax thresholds and insist that employers pay a living wage to compensate for the losses for these lower paid workers says GMB

311,000 In Work Families In Yorkshire & The Humber Face Cuts To £124.10 Average Weekly Tax Credits As Cameron And Osborne Brief In Advance Of July 8th Budget

download pdf300Kb (pdf) - 22 June 2015

Government must raise tax thresholds and insist that employers pay a living wage to compensate for the losses for these lower paid workers says GMB

252,200 In Work Families In East Midlands Face Cuts To £119.73 Average Weekly Tax Credits As Cameron And Osborne Brief In Advance Of July 8th Budget

download pdf296Kb (pdf) - 22 June 2015

Government must raise tax thresholds and insist that employers pay a living wage to compensate for the losses for these lower paid workers says GMB

319,000 In Work Families In West Midlands Face Cuts To £127.62 Average Weekly Tax Credits As Cameron And Osborne Brief In Advance Of July 8th Budget

download pdf222Kb (pdf) - 22 June 2015

Government must raise tax thresholds and insist that employers pay a living wage to compensate for the losses for these lower paid workers says GMB

267,100 In Work Families In East Of England Face Cuts To £121.58 Average Weekly Tax Credits As Cameron And Osborne Brief In Advance Of July 8th Budget

download pdf219Kb (pdf) - 22 June 2015

Government must raise tax thresholds and insist that employers pay a living wage to compensate for the losses for these lower paid workers says GMB

348,600 In Work Families In South East Face Cuts To £122.90 Average Weekly Tax Credits As Cameron And Osborne Brief In Advance Of July 8th Budget

download pdf225Kb (pdf) - 22 June 2015

Government must raise tax thresholds and insist that employers pay a living wage to compensate for the losses for these lower paid workers says GMB

259,900 In Work Families In South West Face Cuts To £116.94 Average Weekly Tax Credits As Cameron And Osborne Brief In Advance Of July 8th Budget

download pdf222Kb (pdf) - 22 June 2015

Government must raise tax thresholds and insist that employers pay a living wage to compensate for the losses for these lower paid workers says GMB

408,700 In Work Families In London Face Cuts To £141.25 Average Weekly Tax Credits As Cameron And Osborne Brief In Advance Of July 8th Budget

download pdf234Kb (pdf) - 22 June 2015

Government must raise tax thresholds and insist that employers pay a living wage to compensate for the losses for these lower paid workers says GMB

167,400 In Work Families In Wales Face Cuts To £118.54 Average Weekly Tax Credits As Cameron And Osborne Brief In Advance Of July 8th Budget

download pdf227Kb (pdf) - 22 June 2015

Government must raise tax thresholds and insist that employers pay a living wage to compensate for the losses for these lower paid workers says GMB

250,300 In Work Families In Scotland Face Cuts To £113.46 Average Weekly Tax Credits As Cameron And Osborne Brief In Advance Of July 8th Budget

download pdf232Kb (pdf) - 22 June 2015

Government must raise tax thresholds and insist that employers pay a living wage to compensate for the losses for these lower paid workers says GMB

112,500 In Work Families In Northern Ireland Face Cuts To £124.63 Average Weekly Tax Credits As Cameron And Osborne Brief In Advance Of July 8th Budget

download pdf229Kb (pdf) - 22 June 2015

Government must raise tax thresholds and insist that employers pay a living wage to compensate for the losses for these lower paid workers says GMB