Tory “lies” on tax credits exposed


Before the general election, the Labour party’s claims about Tory plans to cut child tax credits were dubbed “lies”. Labour was exonerated yesterday as the truth was revealed.

At his party conference speech last year, George Osborne said:

“we can no longer justify paying means tested tax credits to families with incomes over £50,000.”

Since then, the Conservative party has been consistent in claiming that “No families with a combined household income of £40,000 or less will be affected by our [tax credit] policy.”

George Osborne tried the trick again by claiming in his speech, “we will reduce payments to families earning over £40,000 next year and then align the thresholds for the child and family element.” But Table A2 in the Budget could not be clearer. By 2012-13, no family with one child over the age of one and income over £30,000 will get a penny in tax credits.

Earlier this year, a party election broadcast by the Labour party highlighted Conservative plans to “stop Child Tax Credit payments to hundreds of thousands of families on middle and modest incomes”. This followed a Labour briefing on February 3rd which claimed that:

“The independent Institute for Fiscal Studies has said that the Conservatives would need to take tax credits away from households with incomes of £31,000 to raise the money that the Conservatives have promised.”

A week later, then shadow work and pension secretary Theresa May, wrote an article on the Conservative party’s Blue Blog titled “Labour lies on child tax credits“:

Tax credits are designed to help families on low incomes, but we are now paying them to families earning over £50,000. We don’t think that is affordable anymore, so we have said that under a Conservative Government these families would stop receiving tax credits. No families with a combined household income of £40,000 or less will be affected by our policy.”

Who’s lying now, Theresa?

UPDATE 24/6:

It’s just worth being clear that this article – as per the note to the table above – refers only to those ineligible for baby, childcare, or disability tax credits.

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  • James Taylor

    @Jacquie Martin – ‘thin end of the wedge’ arguments (like ‘slippery slope’ arguments) are just lazy and irrelevant to the debate in question. whether this appears to confirm your preconceived prejudices is neither here nor there.

    Also, how can you dismiss Anna’s argument on the grounds that the table is ‘not attempting to show net income’? Surely that’s the whole point at issue – you can’t possibly discuss whether someone is worse off or better off without reference to their net income.

    I’m with David on this – this is just an extension of an existing plan, it’s hardly a policy U-turn. Banging on about ‘Tory lies’ in this instance just seems partisan and puerile – and distracts attention away from some of the more important issues on which we ought to be holding this government to account (in a grown-up way)

  • Natalie

    The tables indicate that we can expect future adjustments but a big change is the increase in the withdrawal rate from 37%to 41% (the rate at which tax credits are withdrawn as income increases). The tables only show scenarios without the childcare element of working tax credit (ie support to help pay for childcare costs). If you apply the new increased withdrawal rate there are dramatic cuts for working families with childcare costs now rather than in a couple of years.

  • http://tangentreal.blogspot.com/ jdennis_99

    @ Jacquie Martin:

    Tax credits are payments from the State to citizens. They are benefits. Don’t kid yourself. And child tax credit in particular is not based on your employment status – it is paid to recipients of Child Benefit, regardless of whether or not they are working.

    The lowest-paid in society are taxed, and then have to apply to have SOME of that tax given back to them in the form of tax credits. It would be far simpler to simply not tax them in the first place.

    As far as deductions being taken into account, it should be noted that people’s basic living costs are roughly the same. Anything beyond your normal utility bills, food, clothing, and compulsory insurance is not a living cost, it is a lifestyle choice. And I personally do not believe that the State should be in the business of subsidising people’s lifestyles. I live reasonably comfortably on a wage of £18,000. I have two children, who I look after 3-4 days a week. The only benefit I receive is working tax credit, which refunds part of my income tax and national insurance. Now if I can cope with no net help from the State, it is perfectly reasonable for people on nearly £10,000 a year more to cope as well.

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