- Posted by: Valerie Vaz MP
- Category: News
I voted on Tuesday 20 October 2015 for a motion tabled by Her Majesty’s Opposition Labour Party calling on the Government to reverse its decision to cut Tax Credits from April 2016. Unfortunately the motion was voted down by 317 noes to 295 ayes.
Cuts to Tax Credits amount to a ‘work penalty’ on families on middle and lower incomes. The two key changes are the increase in the taper rate from 41 per cent to 48 per cent and the reductions in the income thresholds in Tax Credits. This means that the amount people receive in Tax Credits will reduce more quickly as their earning rise and fewer people will be eligible to receive Tax Credits. Currently Tax Credits begin to be tapered away once someone is earning more than £6,420. From next year that will fall to £3,850.
The changes will hit almost all in-work families in receipt of Tax Credits. There are currently just over 3 million in-work families receiving Tax Credits, of whom 2.7 million have children. These families will be, on average, around £1,300 worse off next year as a result of these changes. Some families on middle-incomes will lose entitlement to Tax Credits altogether. A family with one earner on average earnings and two children will lose over £2,000 in Tax Credits next year from the changes.
The full text of the motion:
That this House calls on the Government to reverse its decision to cut tax credits, which is due to come into effect in April 2016.
Today’s debate is incredibly important, but it is a shame that we have to hold it at all. It is deeply disappointing for the 3 million families across the UK who are set to lose an average of £1,300 from April that the Government have not taken the opportunity to step back, do the right thing and rethink these unfair proposals. The Conservatives omitted to mention these unfair proposals in their manifesto. Indeed, given another chance today to stop the changes—in the Welfare Reform and Work Public Bill Committee—they chose to vote against doing so.
Last night, we heard the latest arguments in favour of the cuts, which are already backfiring. The Government are seeking to make this a binary choice between cutting the incomes of the working poor and funding nurses, when in fact many of those in receipt of tax credits are our nurses, teaching assistants, care workers, civil servants and so many others who work day and night to keep our public services and our economy moving.