Tax credits cuts will see Scots ‘£700m worse off’
Tax credit cuts announced in the UK government’s Budget could leave Scottish families £700 million worse off a year, the Scottish Government has claimed.
Social justice secretary Alex Neil has urged the UK government to abandon its “inexcusable” plans to cut tax credits and has reiterated fears from charities that these cuts will push more children into poverty and increase inequalities.
New Scottish Government analysis has found households with the least money will face the biggest losses as a result of the Budget.
Mr Neil’s calls come ahead of a meeting of the Joint Ministerial Working Group on Welfare (JMWGW) today which will also be attended by fair work secretary Roseanna Cunningham.
Mr Neil said: “The shocking reality of the UK government’s budget is that it will widen the poverty gap and push more families into desperate situations.
“To date, the UK government’s austerity agenda has led to unacceptable levels of inequality, including child poverty, with the Institute of Fiscal Studies reporting this week that two thirds of children in poverty live in working households.
“Tax credits can be a lifeline for families on low incomes that rely on them to get through daily life, put food on the table, heat their home and pay their bills.
“By cutting tax credits, households across Scotland will be faced with nearly £700 million cuts and additional worries and stress about caring for their families.”
Martin Crewe, director of Barnardo’s Scotland, said: “We welcome Scottish Government’s call to the UK government to abandon the cut to tax credits which will push more families and children into poverty.
“Our research shows that more than half of children in nine local authorities in Scotland currently live in families in receipt of tax credits, and over half of children in severe poverty live in working households. We now know that growing in-work poverty is having a significant impact on children as their parents make very difficult decisions on how to make a reducing budget stretch to everyday essentials.
“The most recent findings from the Institute for Fiscal Studies shows that 63 per cent of children living in poverty are in working households. This report puts paid to the myth that work alone provides a route off the breadline, discrediting the UK Government’s budget plans to cut families’ lifeline tax credits.
“At Barnardo’s Scotland we work with these families every day and they are very clear that any reduction in their income will have a devastating impact. The UK Government’s plans to cut tax credits to working people will make it an even greater struggle for those who rely on them.”
Peter Kelly, director of the Poverty Alliance, added: “The Chancellor of the Exchequer tried to sell this as a budget for so called hardworking families but it is clear that it has been anything but.
“The UK government may have promised a higher minimum wage for people over 25, but this won’t negate the effects of cuts to tax credits.
“Not only is this new rate not a Living Wage but it is clear that the UK government are giving with one hand and taking with another.
“If this government is serious about helping working families then they need to raise the minimum wage for all employees and ensure that for those on the lowest incomes that tax credits are still there to make work pay.
“It is also important that families who are out of work are given adequate support, and that we as a society recognise that there are other ways for people to contribute beyond paid work.”
Scottish secretary David Mundell challenged the SNP to start working on new devolved welfare policies and stop looking for “contrived complaints”.
Mr Mundell said: “If we are to provide the best possible service for people then Holyrood ministers need to start sharing their plans instead of looking for contrived complaints on the process.
“What new benefits are you planning? Which existing benefits do you want to top up? How are you going to pay for it?”