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£23.72 Weekly Tax Credit Cut For 2.62m Families

Tuesday, July 14, 2015

80% Of In Work Families In Receipt Of Tax Credits In UK Face Minimum Cut Of £23.72 To The Current £123.90 Average Weekly Tax Credits

 2.62 million families face a minimum loss of £23.72 per week and over time the average loss will be about £34 per week for 3.3 million working families says GMB.

The Tory Government in the July budget announced a minimum cut of £23.72 per week for four out of five in-work families in receipt of tax credits, as part of the £12 billion welfare cuts. This means the loss of income to households and loss of spending power in local economies  across the UK will be a minimum of £3,233 million per year.

The latest figures show that in April 2015 there were 3,277,300 families in the UK getting these in work benefits. Latest figures show that they got an average of £123.90 per week or £6,443 per annum.

Child and working tax credits are now subject to four cuts as follows: First the income threshold for the taper to kick in on tax credits has been cuts from £6,420 to £3,850 per year (£123.46 to £74.04 per week). Second the government will increase the taper rate from 41% to 48%. Third support for children through tax credits is to be limited to two children, affecting children born after April 2017. Fourth tax credits will be frozen for four years.

The first two cuts will lead to a minimum cut of £23.72 per week for 80% of those who get it (2.62 million in the UK) and less for the rest.

Official estimates from the Office for Budget Responsibility (OBR) state that the package to reform tax credits and universal credit will save £4.6bn in 2016-17 rising to £5.8bn in 2020-21. See notes to editor for a breakdown of each change. See notes to editors for sources and definitions.

GMB has been able to analyse from official data the minimum impact of the first two cuts above - these account for 70% of the total cuts in tax credits in 2016/17 – to assess the minimum impact on spending power for each region in the UK.

This minimum cut of £23.72 per week in child tax credits (CTC) and working tax credits (WTC) will lead to a minimum loss of income for 80% of 417,800 families in North West and a loss of spending in the local economy of £412 million per year. This will be the biggest loss of spending power out of the 12 regions in the UK.

Next biggest minimum loss in spending power will be London where 80% of 408,700 families will face a minimum loss in spending power of £403 million followed by South East where 80% of 348,600 families will face a minimum loss in spending power of £343m, followed by West Midland where 80% of 319,000 families will face a minimum loss in spending power of £344m.

In Scotland the minimum loss in spending power for 80% of 250,300 families will be £247 million. In Wales 80% of 167,400 families will face a minimum loss in spending power of £165m.

The table below shows the numbers in receipt of tax credits in each of the 12 regions in the United Kingdom, with average weekly amounts paid and amount that will lost per year to the economy in the region due to a minimum cut of £23.72 per week for 80% of families who get tax credits.  Set out at the foot of this press release on the GMB website at www.gmb.org.uk are press releases for each of the 12 regions of the UK  plus the raw data with figures for each of the 226 areas in the UK. Tax Credits April 2015 v6.xlsx  north west final.doc 

FIGURES FOR UK REGIONS - RANKED BY LOSS OF SPENDING POWER DUE TO TAX CREDITS CUT BY A MINIMUM OF £23.72  PER WEEK FOR 80% OF RECIPIENTS

 

 

Total families - in work families

Average weekly value:

All in-work families

Estimated minimum

size of cut in spending

power  in 2016/17

 

 

 

 

 

 

United Kingdom

3,277,300

£123.90

£3,233,882,330

 

England

2,732,600

£125.25

£2,696,398,515

 

 

 

 

 

 

North West

417,800

£125.02

£412,264,986

 

London

408,700

£141.25

£403,285,542

 

South East

348,600

£122.90

£343,981,747

 

West Midlands

319,000

£127.62

£314,773,888

 

Yorkshire and The Humber

311,000

£124.10

£306,879,872

 

East of England

267,100

£121.58

£263,561,459

 

South West

259,900

£116.94

£256,456,845

 

East Midlands

252,200

£119.73

£248,858,854

 

Scotland

250,300

£113.46

£246,984,026

 

Wales

167,400

£118.54

£165,182,285

 

North East

148,300

£117.60

£146,335,322

 

Northern Ireland

112,500

£124.63

£111,009,600

Paul Kenny GMB General Secretary said “Last weeks budget was a beautifully crafted con trick by Osborne.

On the one hand he offers a vision of a living wage which is welcome. He confirms what GMB has being saying for some time – the vast majority of employers can afford pay rises and no amount of howling from CBI will alter that fact. 

On the other hand he is taking away money from working families without any guarantee that they will be better off.

GMB assess that for 2.62 million the minimum loss will £23.72 per week and that over time that the average loss will be about £34 per week for 3.3 million working families.

For the huge numbers of working families that will be hit by cuts in tax credits the answer is simple – they should join a union to fight for better pay from employers who can well afford it as Osborne confirms.

George Osborne is big in attacking working families and young workers but he has yet to take action on the billions of public money flowing out of the country into tax havens because of the abuse of housing benefits income by private landlords."

End

Contact: Kamaljeet Jandu 07956 237178 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 020 7391 6755/56.

Notes to Editors

In the Summer Budget 2015, George Osborne reduced the income threshold for tax credits from £6,420 to £3,850 per year (£123 to £74 per week).

The government will also increase the rate at which a person’s or household’s tax credit award is reduced as they progress in work, by increasing the taper rate in tax credits from 41% to 48%.

The taper is used to calculate the reduction due to income by multiplying the excess income figure by the taper percentage, which has been increased from 41% to 48%. Before the Summer budget a worker would only start to lose 41 pence in the £ for income over £6,420, after the budget the same worker would lose 48 pence in the £ for income over £3,850. So a single worker earning £20,000 per year will be £2,184 per year worse off (£42 per week) because of the lowering of the threshold and the increase in the taper.

The OBR state that due to the change in threshold and the increase in taper, awards will be withdrawn earlier and at a faster rate with many families losing their entitlement altogether.

The Budget will also limit support provided to families through tax credits to 2 children, so that any subsequent children born after April 2017 will not be eligible for further support. Working age benefits are also going to be frozen for 4 years.

Exchequer Impact of changes to Tax Credits

 

Exchequer Impact

 (£ million)

 

2016-17  

2017-18  

2020-21  

Welfare

 

 

 

Uprating: freeze working-age benefits, tax credits and

Local Housing Allowances for 4 years from 2016-17

90

940

4,010

 

 

 

 

Tax Credits and Universal Credit

 

 

 

Limit child element to 2 children for new births in

tax credits and new claims in UC

0

315

1,365

Remove family element in tax credits and UC, and the family

premium in Housing Benefit, for new claims

55

220

675

Increase tax credits taper rate to 48%

1,475

1,035

245

Reduce income thresholds in tax credits and work

allowances in UC

2,880

3,060

3,440

Reduce income rise disregard in tax credits

170

225

110

 

Sources: Child and Working Tax Credits Statistics - Recipient in-work families receiving Child or Working Tax Credit - April 2015

Average annualised entitlements for in-work families - 2013-2014

Source: HM Revenue & Customs Child and Working Tax Credits Statistics

 

 

 

 

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Additional Resources

Full Table of Figures

download xlsx52Kb (xlsx) - 14 July 2015

Child and Working Tax Credits Statistics - Recipient in-work families receiving Child or Working Tax Credit - April 2015

80% Of In Work Families In Receipt Of Tax Credits In North West Face Minimum Cut Of £23.72 To £125.02 Average Weekly Tax Credits

download pdf217Kb (pdf) - 14 July 2015

Across the UK 2.62 million families face a minimum loss of £23.72 per week and over time the average loss will be about £34 per week for 3.3 million working families says GMB

80% Of In Work Families In Receipt Of Tax Credits In Northern Ireland Face Minimum Cut Of £23.72 To £124.63 Average Weekly Tax Credits

download pdf209Kb (pdf) - 14 July 2015

Across the UK 2.62 million families face a minimum loss of £23.72 per week and over time the average loss will be about £34 per week for 3.3 million working families says GMB

80% Of In Work Families In Receipt Of Tax Credits In Scotland Face Minimum Cut Of £23.72 To £113.46 Average Weekly Tax Credits

download pdf287Kb (pdf) - 14 July 2015

Across the UK 2.62 million families face a minimum loss of £23.72 per week and over time the average loss will be about £34 per week for 3.3 million working families says GMB

80% Of In Work Families In Receipt Of Tax Credits In South West Face Minimum Cut Of £23.72 To £116.94 Average Weekly Tax Credits

download pdf203Kb (pdf) - 14 July 2015

Across the UK 2.62 million families face a minimum loss of £23.72 per week and over time the average loss will be about £34 per week for 3.3 million working families says GMB

80% Of In Work Families In Receipt Of Tax Credits In Wales Face Minimum Cut Of £23.72 To £123.90 Average Weekly Tax Credits

download pdf282Kb (pdf) - 14 July 2015

Across the UK 2.62 million families face a minimum loss of £23.72 per week and over time the average loss will be about £34 per week for 3.3 million working families says GMB

80% Of In Work Families In Receipt Of Tax Credits In West Midland Face Minimum Cut Of £23.72 To £127.62 Average Weekly Tax Credits

download pdf211Kb (pdf) - 14 July 2015

Across the UK 2.62 million families face a minimum loss of £23.72 per week and over time the average loss will be about £34 per week for 3.3 million working families says GMB

80% Of In Work Families In Receipt Of Tax Credits In East Midlands Face Minimum Cut Of £23.72 To £119.73 Average Weekly Tax Credits

download pdf197Kb (pdf) - 14 July 2015

Across the UK 2.62 million families face a minimum loss of £23.72 per week and over time the average loss will be about £34 per week for 3.3 million working families says GMB

80% 80% Of In Work Families In Receipt Of Tax Credits In Yorkshire & The Humber Face Minimum Cut Of £23.72 To £124.10 Average Weekly Tax Credits

download pdf203Kb (pdf) - 14 July 2015

Across the UK 2.62 million families face a minimum loss of £23.72 per week and over time the average loss will be about £34 per week for 3.3 million working families says GMB

80% OF IN WORK FAMILIES IN RECEIPT OF TAX CREDITS IN SOUTH EAST FACE MINIMUM CUT OF £23.72 TO £122.90 AVERAGE WEEKLY TAX CREDITS

download pdf205Kb (pdf) - 14 July 2015

Across the UK 2.62 million families face a minimum loss of £23.72 per week and over time the average loss will be about £34 per week for 3.3 million working families says GMB

80% OF IN WORK FAMILIES IN RECEIPT OF TAX CREDITS IN EAST OF ENGLAND FACE MINIMUM CUT OF £23.72 TO £121.58 AVERAGE WEEKLY TAX CREDITS

download pdf198Kb (pdf) - 14 July 2015

Across the UK 2.62 million families face a minimum loss of £23.72 per week and over time the average loss will be about £34 per week for 3.3 million working families says GMB

80% OF IN WORK FAMILIES IN RECEIPT OF TAX CREDITS IN LONDON FACE MINIMUM CUT OF £23.72 TO £141.25 AVERAGE WEEKLY TAX CREDITS

download pdf234Kb (pdf) - 14 July 2015

Across the UK 2.62 million families face a minimum loss of £23.72 per week and over time the average loss will be about £34 per week for 3.3 million working families says GMB

80% Of In Work Families In Receipt Of Tax Credits In The North East Face Minimum Cut Of £23.72 To £117.60 Average Weekly Tax Credits

download pdf199Kb (pdf) - 15 July 2015

Across the UK 2.62 million families face a minimum loss of £23.72 per week and over time the average loss will be about £34 per week for 3.3 million working families says GMB