George Osborne is facing mounting pressure to publish an analysis revealing how proposed cuts to tax credits will impact upon low-income working families.
Frank Field, Chair of the Work and Pensions Select Committee, has written to the Chancellor asking that he “publish an analysis of the effect of the proposed April 2016 changes to tax credits”.
In his letter, Mr Field requests a “distributional analysis for each year from 2016-17 to 2020-21, by income decile of the 3.2 million families subject to the cuts”.
This must include details on the possible effects of any mitigating measures, such as the so-called ‘National Living Wage’ (NLW), increase in the personal allowance, expansion of free childcare and any other relevant measures announced by the Chancellor in the Summer Budget.
The call comes after the House of Commons unanimously backed a motion calling on the Government “to reconsider the effect on the lowest paid workers of its proposed changes to tax credits”.
Twenty Tory MPs rebelled against the Government to throw their support behind the motion put forward by Labour MP Frank Field. Among the Tory rebels included Will Quince, Tania Mathias, Heidi Allen, David Davis, Bernard Jenkin and Phillip Hollobone.
Osborne’s tax credit cuts have also faced strong opposition from the House of Lords, where Peers voted to delay the changes and force the Government into revealing how families will be affected.
Mr Field said George Osborne should reveal how changes to tax credits would affect “both average cash changes in family income”, as well as “changes as a proportion of family income”.
“This would be a valuable contribution to better understanding both the effects of the proposed changes and assessing the potential transitionary measures that might he included in the Autumn Statement”, he writes.
Frank Field told the Daily Mirror: “The high level of cross-party concern on this issue has become very clear over the past couple of weeks, yet we still have no clear picture of what the net effect of these combined changes will be on the 3.2 million families, many on low incomes, who will be affected.
“It is impossible for Members to represent the interests of their constituents without this information, and we call on the Government to provide the true picture urgently.”
The highly respected Institute for Fiscal Studies (IFS) rubbished claims made by Government ministers that measures such as the NLW would offset the impact of tax credit cuts.
An IFS investigation published earlier this year found that higher wages would not compensate families affected by the changes.
Meanwhile, Labour warned that millions of working families are set to lose an average £1,300 a year.
William Elming, a research economist at the IFS, said: “The new ‘National Living Wage’ will only offer partial compensation to working age households who will see their incomes fall as a result of tax and benefit changes announced for the current parliament.
“There may be strong arguments for introducing the new NLW, such as increasing earnings and the incentives to work for the low paid. However, the new NLW cannot be considered a direct substitute for benefits and tax credits aimed at lower income households.
“The wage increases are not as large as the benefit cuts. And, it is not targeted at the same group who lose from the cuts.”