Tax credits plan slammed by deputy first minister

John Swinney MSP
John Swinney MSP

Deputy first minister John Swinney has written a letter expressing his concerns over planned UK government cuts to tax credits.

Addressed to Chancellor of the Exchequer George Osborne, it reiterates Scottish Government concerns about “the social and economic impact of further planned cuts to welfare budgets” ahead of tomorrow’s Budget Statement.

The UK government has said it will be making a further £12 billion of cuts to the annual welfare bill in a bid to eliminate the deficit by 2017/18.

The Social Mobility and Child Poverty Commission has said such a cut in tax credits would reduce the incomes of 45 per cent of working families.

Mr Osborne has also pledged to increase the personal tax allowance from £10,600 to £12,500 a year by 2020.

However, Mr Swinney’s letter, which can be downloaded here, says an increase in personal tax allowance would, “in isolation”, be of greatest benefit to “households higher up the income distribution”.

Publishing his letter, Mr Swinney said: “It is vital that we support people in work as well as into work - by tackling low pay, by creating jobs and by removing barriers - rather than cutting tax credits or work allowances.”

He stressed the importance of “measures to boost the recovery, improve productivity and support those in low pay”.

Mr Swinney added: “The UK Government’s approach to austerity has damaged the economy and undermined attempts to improve public finances.

“The deficit needs to be reduced, but this should be done in a more gradual manner in which more focus and resources are allocated to a program of additional investment in our economy.”

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