Tax credits no more

UPDATE:  A number of folk have been looking for the original paper – here is the link

And belated thanks and dues to Hannah Jordan at SCVO for originally circulating it to folks she thought might be interested.

Also, it seems the number might be even higher – according to HMRC last December, it estimated the number of families in Scotland losing out to be 84,900.  It’s worse than we thought!

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I’ve been sitting on this information for more than a week now, in the hope that someone, somewhere would also come across it.   It is taken from a paper that was lodged in the House of Commons publications store (I’m sure it has a suitably fancy name.. answers on a postcard please).

Because it is dynamite.  And I really cannot believe that no-one else has seen it (they have) and thought it was newsworthy.  Or at least blogworthy.

In the last few weeks, thousands of families all acros Scotland have been receiving missives from HMRC, regretting to inform them (not really, not at all in fact) that their tax credits are no more.  For every family it will have come as a shock.  But taken together, the scale of the impact of this cash grab from hardworking families (TM Labour/Conservatives/Lib Dems/take your pick) all across Scotland is quite shocking.  The table below sets out how many families in each local authority area in Scotland will no longer be in receipt of child tax credits come the start of April.

Aberdeen City 2200 Edinburgh 4500 Orkney Islands 300
Aberdeenshire 3400 Eilean Siar 200 Perth & Kinross 2000
Angus 1800 Falkirk 2900 Renfrewshire 2600
Argyll & Bute 1200 Fife 5600 Scottish Borders 1800
Clackmannanshire 900 Glasgow 5000 Shetland Islands 400
Dumfries & Galloway 2500 Highland 3600 South Ayrshire 1400
Dundee 1800 Inverclyde 1200 South Lanarkshire 5200
East Ayrshire 1900 Midlothian 1400 Stirling 1100
East Dunbartonshire 1600 Moray 1700 West Dunbartonshire 1400
East Lothian 1500 North Ayrshire 2000 West Lothian 3000
East Renfrewshire 1200 North Lanarkshire 6000

I should point out that several times while compiling this table I went back to check that the figures really are “thousands”, for 200 families in the Western Isles and 400 on Shetland just seems a huge amount, relatively.  But in terms of actual numbers, the worst hit local authority areas are North Lanarkshire with 6000 families losing their child tax credits, Fife with 5600, South Lanarkshire with 5200, Glasgow with 5000 and Edinburgh with 4500.

Also of interest is the impact on many rural areas in Scotland.  Dumfries and Galloway and East Ayrshire are largely comparable in population terms; usually, in league tables like these the picture will be worse in East Ayrshire because of higher deprivation levels.  But Dumfries and Galloway will be hit harder in terms of the income loss to families, partly because it has marginally lower unemployment and therefore more parents in work, but also because areas like these are low wage economies.  Lots of people earn just enough to get by – tax credits have helped make incomes stretch further.  No more.  And what will happen is that young families will leave these areas or not move there in the first place.  The same applies to all the peripheral regions of Scotland.

The change applies to any lone parent family earning over £26,000 per year and any two parent family earning over £32,000.  Previously, the cut off point was £42,000.  At the same time,  the amount that can be received for childcare costs is being cut from 80% to 70%, meaning that families have to meet nearly one third of such costs themselves.

Now, people on these kind of sums are not living in poverty but for two parent families in particular, £16,500 each is well below the national average.  The ones who will feel it most are still on fairly low incomes.  And it’s the impact.  Going without several hundred pounds a month – as will be the case for some – just like that, will be tough.  Especially in an era of largely frozen pay and rising household costs.  This is the Institute of Fiscal Studies’ predictions of middle-range income families being hit the hardest by the Coalition government’s austerity measures.

This is indeed the squeezed middle so one wonders where are all the strident political voices protesting on their behalf?  Where is the media?  Or do we only care about those lambs about to lose their child benefit on much higher incomes?

The fact is that such decisions have a knock-on effect.  For some, it will be to choose not to work – or rather to be forced into deciding that work does not pay.  This will be particularly true in many two parent families, and often, it will be the woman who stays at home, creating greater economic dependency and disparity between men and women’s earnings, yet again.

Tax credits have always been somewhat controversial.  Hugely bureaucratic, costing significant amounts to administer, some even argue they have contributed to in work poverty, keeping people on low incomes and allowing unscrupulous employers to avoid their responsibilites to ensure that people are paid a decent wage.  But they have served an essential purpose for many families, who would be on low incomes anyway.  They have brought more money into families for the benefit of children, centred around the fact that there are children who have the right not to grow up in poverty or indeed, in workless households.  This will all now change.

The coalition government might argue – and they do – that they don’t like doing this, that this is the necessary consequence of the previous Labour government’s profligacy, that we must all contribute to getting our collective indebtedness down.  But you cannot escape the suspicion that they are hurting where they can get away with it.  Families like these rarely complain, they just get on with it.  And – as we have seen – they are largely ignored.  The ones who cope and can be relied upon to cope.

But with the gap between rich and poor getting wider, with obscene banking bonuses still being paid out, with football clubs and megabucks players enabled to avoid their tax liabilities, with discussions swirling over removing the 50p tax rate for the best off, they will be wondering why they – and their children – are the ones having to carry the biggest load.

How many families in Scotland will be affected?  The UK government’s own figures suggest 73,300.  73,300 about to lose thousands of pounds of income a year.  73,300 for whom the balance will be tipped from coping just to not.  Does nobody care?

12 thoughts on “Tax credits no more

  1. Pingback: Pickiness over Purdah « Better Nation

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  3. To be honest, did you really expect a political firestorm over this? The political narative has been about defecit reduction and ways to reduce the defict – people who are low paid are in the position that they are in due to their own actions. This is how the media has played it and our politicians – even those supposedly of a left of centre nature – have been happy to go along with “conventional wisdom”.

    You are absolutely right with this post. However to be brutaly honest, there isn’t a lot of votes in standing up for low paid workers, which shames us all.

    Funnily enough, there was another “narative busting” piece in the I on Friday by the “Chavs” author Owen Jones which I thought was very good and equally deserving of exposure as your piece.

    http://www.independent.co.uk/opinion/commentators/owen-jones-my-father-and-the-reality-of-losing-your-job-in-middle-age-7546015.html

  4. I’d like to think all the parties in the Scottish Parliament will come together on this, but I sadly do not see that happening. SNP and Greens will probably say something. Lib Dems might say something, Tories obviously won’t and as for Labour… They’ll either condemn it and blame the SNP for it, or they’ll stay silent because agree with the SNP is impossible for them.

    • Err! There is no such animal as Scottish Labour, (even if they lie by calling themselves so), and the Wastemonster Red/Yellow/Blue Tory Rainbow Alliance down there have all signed up to the idea of hitting the poor to bail out the problems the rich caused for the UK. Roll on the Referendum so Scottland can rid itself of these Bullingdon club and Champagne Socialists. I never thought, as a young Trade Unionist, I would see the day in my old age that the proud party of the people would be led by the classmates of Tory Party ex-public schollboys. Vote YES for independence. “It’s comin’ yet fir aa that”

  5. they should make the rich pay more and LAY OFF THE POOR people dont care nowadays the rich would rather stand and watch or they through things out which they could easly offer or give 2 someone else but they dont why theres no excuse for them not 2 that way theyed be helping someone in great need so just think instead of judgeing

  6. Shocking. Only Scotland though?

    • No the paper gives local authority figures for England and Wales, not sure about Northern Ireland. Will put up link later (sorry working!)

  7. The word disgrace does not cover it, The SNP and Labour in Scotland must come together on this. There is a time and place for partisan politics, This is not the time and place. The opposite in fact

    • I’d agree.

    • Absolutely.

      But where are the voices? Both parties knew damn well what was happening here, so why nothing yet?

      Could it be that Labour are waiting to see the SNP response, to decide hwo to play things, which is unforgiveable. And what about the SNP? Surely not scared of saying something as it might upset their benefits policy for independence?

      I don’t care about the Tory or Lib Dem response (and to be honest the Greens as well). I want to see our politicians doing something concrete. They may not be able to change anything, but at least people – those on lower incomes – will feel they have not been forgotten.

    • Labour come together with the SNP? You have to be kidding? Labour in Scotland does exactly what it is told to do by Wastemonster Labour. Are they not tearing themselves apart in Glasgow just now? Wastemonster Labour sent up a man from London who made them deselect several sitting councillors and forced the constituency associations to select Wastmonster chosen candidates. There has been threats, bullying and in-fighting going on, to the extent that Labour are only hanging on by one member, who has already left the party pledging to continue to vote with the Glasgow Labour Council. Another has left and joined the SNP and another group have left and will form another party to stand against Labour in the May elections. How can you expect such a party, who cannot come together within itself, to get together with what it regards as its dire enemy? Sorry to say they are going the same road as the Tory &, LibDem parties before them. Just vote yes for independence and get shot of the lot of them and get real Scottish opposition parties, not in thrall to the Wastemonster. After independence Scotland will need a proper opposition with the chance to one day lead Holyrood’s parliament.

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