UK Budget ‘encourages inequality’
Cuts to tax credits could cost to up 250,000 households in Scotland £1,000 a year.
Up to 250,000 households in Scotland will be affected when the reduction to income thresholds in tax credits and work allowances in Universal Credit is introduced in April 2016, according to a Scottish Government paper published yesterday (Sunday).
The UK Government’s tax credit proposals announced in this week’s Budget will cost working families an average of £1,000 per year according to the Institute for Fiscal Studies, which the Scottish Government analysis confirms.
The planned increase to the minimum wage is not enough to compensate for the impact of the Budget on lower income households, who will have their net income cut as a result. While Scotland’s lowest earners are seeing further cuts, the announced increase in the higher rate threshold for income tax will only benefit individuals earning over £42,385 which is equivalent to only around 15% of Scottish income taxpayers.
First Minister Nicola Sturgeon said:
“These figures prove that the Chancellor is cutting disproportionately from the poorest and most vulnerable sections of society, short-changing those on low incomes and removing work incentives, whilst giving tax breaks to the better-off. The changes in the minimum wage, whilst welcome, are nowhere near enough to offset these changes. The UK Government’s budget simply encourages inequality.
“Tax credits form an important part of the tax and welfare system, particularly to support working families on low incomes, and the stark and tragic reality is that almost 250,000 families in Scotland will be on average £1,000 a year worse off because of these tax credit changes.
“More than half a million children in Scotland currently benefit from tax credits, while many more families will be affected by the freeze on other benefits, including 577,000 who currently receive child benefit.
“We want to support people get into work - and stay in work - and the tax credit system provides important practical help to families on low pay. These are people who are in jobs, often working very hard for relatively little pay, and it is unfair that their children are on the receiving end of the UK Government’s austerity agenda.
“Today’s Scottish Government analysis comes on top of estimates from the Institute of Fiscal Studies this week which makes clear that it will be impossible for less well-off families to be better off as a result of the new minimum wage – wrongly branded a living wage by the UK Government – such is the extent to which poorer households will have their income slashed by the loss of tax credits.
“The UK Government’s Budget continues the misguided austerity programme, which is not just unfair but damaging to the economy – undermining attempts to stimulate sustained and widely shared growth.
“Austerity hasn’t worked and it is astonishing that the UK Government continues to attack low paid workers, ignoring the fact that their polices do little more than hit the most vulnerable the hardest.”
Notes To Editors
To access the new paper visit: http://www.gov.scot/Topics/Economy/Publications/BudgetReforms
The latest available HMRC statistics are for 2013-14 (Published June 2015). They show:
- Over half a million children in Scotland (60% of the total) benefit from the tax credit system
- Tax credits were worth £2 billion to Scottish households in 2013-14, with two thirds of this expenditure going to low income working families with children
The announced increase in the higher rate threshold for income tax only benefits individuals earning over £42,385 which is equivalent to only around 15% of Scottish income tax payers.
Latest News from
First Minister message for Eid13/05/2021 13:05:00
Muslim communities urged to celebrate end of Ramadan safely.
Scottish Child Payment helps nearly 79,000 young people13/05/2021 10:25:00
New benefit to tackle child poverty pays out £3.6 million since February.
Next steps out of lockdown12/05/2021 11:15:00
Significant easing of restrictions across most of Scotland.
Children (Scotland) Act 2020 - alternatives to court and funding of alternative dispute resolution pilots: report11/05/2021 10:05:00
Report on the Scottish Ministers progress between 1 October 2020 and 1 April 2021 on establishing a pilot of the meetings on alternatives to court and on funding of alternative dispute resolution as per the duties under section 23 (funding for alternative dispute resolution) and section 24 (pilot scheme for mandatory alternative dispute resolution meetings) of the Children (Scotland) Act 2020.
HM Fire Service Inspectorate in Scotland: Chief Inspectors plan - 2021 to 202407/05/2021 12:05:00
The Chief Inspector's three year plan outlines how HM Fire Service Inspectorate in Scotland (HMFSI) will meet its statutory purpose to inquire into the efficiency and effectiveness of the Scottish Fire and Rescue Service (SFRS) to assist in its continuous improvement.
STEM strategy for education and training: third annual report07/05/2021 10:05:00
Third annual report on progress of the Science, Technology, Engineering and Mathematic (STEM) education and training strategy setting out a range of actions that have been taken, despite the restrictions due to COVID-19, in support of STEM education and training provision.
GDP Quarterly National Accounts for 2020 Quarter 406/05/2021 10:05:00
A National Statistics Publication for Scotland.
Supplementary Prison Population Statistics 2019-2028/04/2021 13:05:00
Supplementary experimental prison population statistics covering the period 2009-10 to 2019-20 have been published by Scotland’s Chief Statistician.