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MSE News: Families with kids '£500 a year worse off' from Friday
Former_MSE_Helen
Former MSE 2.4K Posts
This is the discussion thread for the following MSE News Story:
"Anti-poverty campaigners dubbed the start of the financial year Bad Friday, warning of cuts totalling more than £2bn"
"Anti-poverty campaigners dubbed the start of the financial year Bad Friday, warning of cuts totalling more than £2bn"
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Quotes from Ed Balls? Is this supposed to inform or enlighten?
Rather than re-post a PA story, it would be nice to explain to people how they might be better or worse off.
"That is why families with children will be an average of £511 a year worse from tomorrow," he says – contrasting that with the decision to cut the top rate of income tax from 50p to 45p.
Exactly how is this relevant for people wondering if they are actually worse off???
"Instead of cutting the top rate of tax for the richest and giving the highest earners a £1.6 billion tax cut on their pensions, the Government could stop these unfair and perverse changes."
Even if they could, and even if this is true, it doesn't inform or enlighten the reader about HOW they are going to be £511 a year worse off (a headline which I take it is totally false - nobody is going to £511 a year worse off, this is it appears an average)
Another 212,000 couples on less than £17,000 a year would lose working tax credit unless they were able to increase their hours of employment, the opposition says.
More hours? What does that mean?
Ah, the Daily Mail tells us better:
http://www.thisismoney.co.uk/money/bills/article-2125431/Budget-changes-leave-households-511-year-worse-tax-credit-cuts-undermine-Government-claim.html?ito=feeds-newsxml
A couple will now also have to work at least 24 hours a week, up from 16 hours for a single person, to qualify for a working tax credit.
Labour also says a minimum wage-earning couple with two children would end up better off quitting work altogether unless they could do at least 19 hours per week between them.
What does this mean?
Again, the Daily Mail tells us better:
It means up to 212,000 working couples earning less than around £17,000 a year will lose close to £4,000 – all their Working Tax Credit – if they cannot increase their hours at work. A couple with two children on the minimum wage could be better off quitting their jobs and going on benefits if they cannot work at least 19 hours per week.
Note the COULD, not WILL as the article here says.
"It is astonishing that the people making the smallest contribution to deficit reduction are in the richest half of the population.
"Ordinary families and children are now carrying the greatest burden of deficit reduction."
No idea if this is true or not, but again it's irrelevant.
How about telling people what's changed, how they might lose out, and what to do about it? This article is an absolute disgrace.
There are two changes, and they are not that complicated to explain. At present a couple with children is eligible for Working Tax Credit if one partner works 16 hours or more week. In the future (with some exceptions), the couple must work a total of 24 or more hours per week together, with at least one of them working more than 16 hours per week.
This is the 'poorest working families' stuff. Basically these 'poorest working families' will have to work more hours - 24 per week instead of 16.
Secondly, when Tax Credits was introduced by Labour, in their zeal to expand the size of the welfare state, they introduced a rather bizarre system whereby the poor could receive thousands or tens of thousands of pounds in tax credits, but this would be very quickly withdrawn, however, the last ~£500, the so-called 'family element', was protected and would be paid to earners up to around the higher rate allowance.
This is ~£500, actually £545, is no longer protected, and is now lumped in with the rest of tax credits, so will be withdrawn along with all the other tax credits middle earners cannot get. So if you received the ring-fenced £545 'Child Tax Credit Family element', and no more in tax credits than that, you probably won't in future.
I don't know where the figure of £511 in the article has come from, but basically a lot of families earning £25k-£42k will lose £545. Which is obviously a blow to their finances, but nothing you can do about that. It doesn't however, seem unreasonable, as the money is still there, it's just properly means-tested as with the rest of the tax credits.
Those on much lower incomes could lose up to £1950 in Working Tax Credit, and any child care help, IF they are currently working 16+ hours a week and are a couple, and don't up their hours to 24.
Where are the jobs, the decent pay, the cheap and readily available childcare, the cheap and readily available public transport, the affordable housing and so on?
Remember that originally, 9 out of 10 households with children qualified for tax credits, this in itself is completely bizarre - why do 90% of families need state assistance to meet their basic living costs?!
They didn't, it was just taking with one hand and giving back with the other.
OK. I'll give it a go. The £511 is the average loss for households with children for all measures coming into effect in 2012-13. This is against a counterfactual of the 2011-12 tax and benefit system being indexed in line with the default indexation policy. For those interest the average loss for households without children is £156 and pensioner households are better off on average by £119. The figures are produced by the respected Institute for Fiscal Studies.
http://www.ifs.org.uk/budgets/budget2012/budget2012robjoyce.pdf
The figures are based on the following changes coming into effect:
Increase personal allowance and cut basic rate limit
Freeze higher rate threshold
CPI index some direct tax thresholds
Reduce contracted-out NI rebates
Remove plateau on family element of tax credits
Reduce income disregard in tax credits to £2,500
Reduce backdating of tax credits
Abolish 50+ element of tax credits
Withdraw Child Benefit from high-earning families
Freeze basic and 30 hr elements of Working Tax Credit
Increase working requirement for couples in Working tax Credit
Freeze couple and lone parent elements of working tax credits
Freeze Child Benefit
Index Housing Benefit deductions for non-dependents with prices
Time Limit contributory ESA
CPI indexation of most benefits and tax credits
Increase Basic state pension
Freeze Council Tax in England
Tobacco Duty increases
Alcohol Duty increases
Freeze Fuel Duties until August then Increase
Increase Pension Credit
Freeze maximum Savings Credit award
Lose: no longer possess, not to retain, unable to find
Loose: not firmly or tightly fixed in place
Non working families get tax credits and those who pay miniscule amounts of tax, for example, those on the NMW, can get much more in benefits than they've ever 'paid in' (not that benefits work that way anyway).
So 'tax credits' was always a wrong term for what is essentially an in work and out of work cost of living 'benefit', albeit administered by the same organisation that collects taxes.
It's a fairly standard piece of contemporary social Marxism.
Call something 'tax credit' when it's actually a welfare payment, and pay it, though in much smaller amounts, to nearly everybody, in order to drag as many people into the scope of the welfare state as possible, and to obfuscate any future attempts to reverse that dragnet by portraying changes as an attack on everyone.
With regards to my comment, in a sense it was giving with one hand and taking away with the other, because for those entitled to ONLY the £545 (and £1090 with a baby before that), they did indeed pay (a lot) more tax than that £545, and it was paid out as a discount off their tax bill (through PAYE).
They could have just stuck the £545 onto Child Benefit in the first place, but they wanted to expand the size and scope of the welfare state so they did it like this.
No complaints that it's gone...
It would be up to £3870 (basic element + couple). Childcare help wouldn't come into it, no-one will lose that due to the 24 hr rule change. If they are getting help with childcare costs they must be either working 16 hrs each (i.e. 32) therefore not affected by the change or one of the exceptions to childcare applies to them which means they will also be excepted from the 24 hr rule.
IQ
once again the rich tories attack with a vengence the working class
blah blah blah