MPs to cut Tax Credits by £4.4 Billion
MPs have voted on George Osborne's plans to cut tax credits, which they say will save the country £4.4 billion from the welfare coffers. There was opposition from the SNP and Labour Party, but these cuts will be going ahead, and will affect a lot of families.
Basically, what is happening is that the Commons just approved plans to lower the earnings level above which tax credits are withdrawn, from £6,420 to £3,850. Tax Credits will also be limited to two children per family, and the new rules will speed up the rate at which the benefit is lost, as pay rises.
These plans, you may recall, were announced in the Queen's Speech in Summer. Tories are saying that this move is to "raise pay and incentivise work", whereas Labour say it is an "ideological attack" on working families.
Some of the Conservative Party weren't keen, with a couple voting against the reforms. Peter Aldous, the Tory MP for Waveney, told MPs: “I do have serious concerns about the impact on working families in the short term over the next two to three years, and I urge the government to address these issues in the coming months before the measures come into effect next April.”
The changes will come into play from April next year, and it is thought that it will see three million families losing an average of £1,000 per year. Damian Hinds, Treasury minister, thinks that 8 out of 10 households are going to be better off by the time 2018-9 rolls around, mainly thanks to the introduction of the national living wage, as well as the extension of childcare subsidies and to increase personal tax allowance to £12,500.