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Working tax credit changes should be postponed, child poverty activists say
Working tax credit changes should be halted before George Osborne's 21 March budget, campaigners say. Photograph: Carl Court/AFP/Getty Images
Working tax credit changes should be halted before George Osborne's 21 March budget, campaigners say. Photograph: Carl Court/AFP/Getty Images

Working tax credit changes should be postponed, child poverty activists say

This article is more than 12 years old
Osborne urged to act after April change will raise threshold for families with children from 16 to 24 hours work a week

Child poverty campaigners will call on the government on Monday to postpone changes to working tax credits following research showing the cuts will leave some people worse off than if they gave up work and only claimed benefits.

The chancellor is being urged to act before the 21 March budget after he raised the tax credits threshold for families with children from 16 hours to 24 hours work a week, a change due to take place in early April. In reply to a question from Labour MP Ann Coffey, the employment minister, Chris Grayling, admitted that couples with children that would no longer qualify for the extra money could see their income drop to £257 a week – £14 a week less than an equivalent family with no adult working.

Campaigners say many of the 212,000 couples claiming the credit but working under 24 hours a week say they cannot find more work, and claim it is unfair to penalise them for working. They are asking Osborne to delay the changes until autumn 2013, when a new universal benefits system will address the gap.

"It would be reckless to carry on regardless with a policy that puts 470,000 children at risk of being plunged into poverty," said Alison Garnham, chief executive of the Child Poverty Action Group, who signed the letter to George Osborne along with senior figures from Barnardo's, Citizens Advice and the union Usdaw.

Ed Balls, Labour's shadow chancellor also highlighted the problem. "Tax credits were introduced to help make work pay," he said. "This unfair and damaging change will mean thousands of families will lose £73 a week and will be better off if they quit work. That cannot be right."

Earlier, Balls suggested that Labour would not make a big issue if Osborne cut the top 50p tax rate, saying no tax was "set in stone". Speaking on Sky News's Murnaghan programme, he added: "If, in the coming years, we can move on that as a country, fine. But do we really think families on £150,000 plus are the first priority?"

Jeremy Browne, the Lib Dem Foreign Office minister, also suggested that his party was giving ground on Tory pressure to cut the top rate 50p tax rate for people earning over £150,000, saying neither party were "intellectually wedded" to the idea of a 50p income tax rate and the chancellor would make the decision on when or if the top rate would go.

He said: "As and when it becomes possible to look at what we do to tax rates, then changes may be made but that's not the priority of the government."

However in a clear signal that Lib Dems were not giving up something for nothing, he said the party's "no 1 tax priority" remained lifting the threshold at which people start paying tax to £10,000, something the Lib Dem leader and deputy prime minister Nick Clegg has taken the unusual position of supporting in public before the budget. The party also wants any abolition of the 50p tax replaced with a 1% annual "mansion tax" on homes worth more than £2m.

Balls also expressed support for proposals under discussion by the coalition, including speeding up efforts to raise the £10,000 personal tax threshold, and the mansion tax. "I think the VAT cut is the best but I think a personal allowance rise, a cut in fuel duty, those things would make sense," he said.

"Osborne and Nick Clegg seem to be saying, they are telling the newspapers, if they can find a way to make the mansion tax work – in the past I've supported that – if George Osborne can make a mansion tax work on multi-million pound properties, fine."

But Boris Johnson, London's mayor, appeared to criticise the mansion tax – a levy which would be heavily concentrated on homes in the capital.

"I would much rather we stop focusing so much on bashing people and start looking at what we can do to help people into work," he told the BBC's Andrew Marr programme.

"I want massive investment in infrastructure, help for young people to get into work and I want a crackdown on tax dodgers and tax avoiders of all kinds."

A scheme of selling properties through offshore companies to avoid stamp duty was a "scandal", said Johnson, who is standing for re-election against Ken Livingstone, the former London mayor. He also said upgrades to the 150-year-old tube network were vital to prevent future problems.

More on this story

More on this story

  • No 10 and Treasury divided over curbs on child benefit

  • Child benefit changes could be watered down, says Nick Clegg

  • Ed Miliband to seize on £580 cost to families of tax and benefit changes

  • Steve Bell on plans to withdraw child benefit from higher rate taxpayers – cartoon

  • Child benefit row presents ministers with unpalatable solution

  • Top Tory: George Osborne's child benefit change never meant to happen

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