Wythenshawe MP, Mike Kane says 60 per cent of families in his constituency will be hit by cuts to tax credits announced in the Government’s budget and branded the introduction of a “living wage” a con.
Mr Kane, was reprimanded by deputy speaker, Lindsay Hoyle for being part of a “gang of three” MPs who drowned out Chancellor George Osborne as he attempted to announce benefit cuts in the the House of Commons.
Mr Kane was warned by Mr Hoyle, but the Labour MP said afterwards he was happy to be be part of “a gang of three standing up to a gang of 300 Tory MPs whose cuts will impoverish the people of Wythenshawe.”
Among other measures announced in Mr Osborne’s first Conservative budget were:
- Tax credits and Universal Credit to be restricted to two children, affecting those born after April 2017
- The introduction of a new national living wage will be introduced for all workers aged over 25, starting at £7.20 an hour from April 2016 and set to reach £9 by 2020
- Income threshold for tax credits to be reduced from £6,420 to £3,850
- Working-age benefits to be frozen for four years – including tax credits and local housing allowance, but maternity pay and disability benefits exempted
- The scrapping of student maintenance grants for those on low incomes
- Rents in social housing sector will be reduced by 1% a year for the next four years
- Subsidies for social housing will be phased out with local authority and housing association tenants in England who earn more than £30,000 – or £40,000 in London – having to pay up to the market rent
Mr Osborne told MPs: “This will be a Budget for working people a budget that sets out a plan for Britain for the next 5 years to keep moving us from a low wage, high tax, high welfare economy; to the higher wage, lower tax, lower welfare country we intend to create.”
But Wythenshawe’s Labour MP said: “In this budget the Tories are giving with one hand and taking away with the other. Cuts to tax credits will hit over 3 million people including 60% of families in Wythenshawe & Sale East.
“If Cameron and Osborne were really serious about reducing welfare spending they would be tackling low pay and high housing costs. Instead we get a sham ‘living wage’ promise. The new rate when it’s introduced in 2020 will be lower than the Living Wage this year.
“Young people in Wythenshawe have been dealt a huge blow with the end of maintenance grants from 2016/17, which will be replaced with loans. Yet again Osborne is unfairly targeting the young when looking for budget savings. For many low and middle income youngsters in Wythenshawe & Sale East this could create another barrier to them going to university.”
Labour claim the budget will leave most people in Wythenshawe worse off. They say a lone parent with two children working 16 hours a week at the NMW would gain just over £400 from the move to a ‘living wage’. But she would lose twice that – £860 from the changes to tax credits in 2016/17.
A couple with one person working full time on average earnings would lose over £2,000 in tax credits from the changes announced today and not benefit from the national minimum wage measure.
A couple with two children where both work full time at the national minimum wage will gain £1560 from the change to the ‘living wage’. But they will lose over £2,200 from changes to tax credits and not benefit from the National Minimum Wage measure, say Labour.
And the independent think tank the Institute for Fiscal Studies has analysed the budget measures and has found that extending the freeze in working age benefits, tax credits and local housing allowance out to 2020 will affect 13 million families who will lose an average of £260 a year as a result of this one measure.
The reduction to work allowances in Universal Credit – the amount a claimant can earn before benefit starts to be withdrawn – will cost about three million families an average of £1,000 a year each. The report concludes the change will reduce the incentive for the first earner in a family to enter work and says equivalent changes in the current tax
credit system will have much the same effect.