Rt. Hon. John F. Spellar MP

“Tax credits bombshell” as 805 couples in Walrey could lose £4,000 a year

805 couples with children in part-time work in Warley could lose around £4,000 a year from this April, following a change to tax credit rules being introduced by the government.

John Spellar, Labour MP for Warley, is urging the Conservative-led government to reconsider a little-noticed change to tax credit rules which means thousands of families will lose all of their working tax credits unless they can significantly increase their working hours.

The change means that couples with children earning less than around £17,700 will need to increase the number of hours they work from a minimum of 16 to 24 hours per week or they will lose all their working tax credit of £3,870 per year.

Government figures revealed in parliamentary answers to Labour’s shadow Treasury minister, Cathy Jamieson MP, show 805 households in Warley and 212,000 households across the country could lose out.

A recent survey by the Chartered Institute for Personnel and Development found that one in five organisations have cut back on the number of hours that people work as a result of the economic downturn, with just 6 per cent increasing them.

Commenting on the issue Warley MP, John Spellar, said:

“This is a deeply unfair change from a government that is increasingly out of touch with parents feeling the squeeze and struggling to juggle work and family life.

“Raising taxes and cutting spending too far and too fast has seen unemployment rise and the economy go into reverse, and many employers are cutting people’s hours. In this climate, very few people in part-time work will be able to increase their hours by up to 50 per cent. for a couple with children losing around £4,000 a year, or £75 a week, from this change could mean going out to work makes no sense. 

“It tells you everything you need to know about David Cameron and George Osborne that while the banks are getting a tax cut this year they are making life harder for parents in the squeezed middle who are working and trying to do the right thing.

“This tax credits bombshell is now just a few weeks away. This Tory-led Government talks about making work pay but for many families here in Warley it means they’ll be better off on benefits than in work. That makes no economic sense at all. The government urgently needs to think again.”