The Conservative Party will “pay a heavy price” over cuts to tax credits in the forthcoming Wales Assembly election, Plaid Cymru has warned.
Speaking ahead of Tuesday’s opposition day debate on tax credit cuts in the House of Commons, Plaid Cymru’s Treasury Spokesperson blasted George Osborne’s “vicious and ill-thought-out cuts”.
Jonathan Edwards pointed out that contrary to Government spin, “a new National Living Wage and the increase in the Personal Allowance will not offset the losses from tax credits”.
Analysis by the Institute for Fiscal Studies (IFS), shows that the so-called National Living Wage would only compensate for 26% of losses due to cuts to tax credits and benefits, leaving an average working family over £1,000 a year worse off.
Mr Edwards said: “If we look at an example of a single-earner couple with two children, neither of whom is in childcare, working 35 hours a week on the National Minimum/Living Wage: Net income of this family, accounting for changes to tax credits, the Minimum Wage, Child Benefit and the Personal Allowance – all announced in the Summer Budget – will fall every year.
“Under the Tory plans, that family will lose an average of £1,789 for each of the next five years. By 2021 the family would see an accumulative loss of £8,945.”
He added: “As Plaid Cymru warned in the aftermath of the emergency budget, cuts to tax credits will leave some of the poorest working households worse off, and will have a direct impact on spending in local economies.
“The Conservative party’s plans will have a disproportionate impact in our communities where wages are generally lower.
“Plaid Cymru is the only political party in Wales to have consistently opposed Tory cuts. In January, Labour MPs supported the Tory Charter for Budget Responsibility which paved the way for £30bn of cuts in this Parliament.
“Plaid Cymru acknowledges the requirement to reduce the tax credit bill. That is why Plaid Cymru’s has promoted a policy of introducing a genuine living wage which would save the Treasury £1.5billion per annum as a result of increased income tax receipts, increased national insurance contributions from both employers and employees, and the subsequent reduction in tax credit payments.
“George Osborne’s cynical rebranding of the living wage will not fill the financial black hole families will face as a result of his ruthless changes to the tax credit thresholds.
“With these changes due to come into effect just weeks before the Assembly election, both the Tories and Labour party who sat on their hands will pay a heavy price at the ballot box.”
Nearly a quarter of a million families in Wales are in receipt of tax credits, says Jonathan Edwards.