CHARLES GRAHAM - Tax credit cuts put economy in debit

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SUCCESSIVE ministers of different political persuasions have pledged to reform the welfare state.

Often perceived as a bloated drain on the public purse and prey to countless lead-swinging fiddlers and malingerers, it is ripe for a shake-up and politicians usually win Brownie points with voters for promises to tackle this thorny issue.

But rarely do these pledges come to any great fruition because implementation invariably proves to be highly complex, opposition flares when folk realise that it’s not just other people that will miss out and when generalised policies to weed out spongers hit deserving claimants too.

“Quiet man” Iain Duncan Smith has become the latest Whitehall chief to have a go, saying that the present system (especially in these straitened times) is unaffordable and that it is ridiculous that folk are disincentivised to work because benefits can sometimes outweigh wages.

Few would disagree with those sentiments, I am sure.

But the latest bid to put this plan into action - by changing working tax credit criteria - seems to be a false economy.

Under new rules, couples earning less than £18,000 a year have had to increase their working hours from a minimum of 16 a week to 24 or lose their working tax credit of up to £3,870 per year or £74.23 per week.

With no fewer than 26,700 working part-time in Wigan borough claiming child tax credits and working tax credit, this is going to affect a heck of a lot of people.

Many face a loss of £45 per week - one quarter of their weekly income - as the changes come into effect.

In fact the GMB figures show that the borough has the fifth highest number of families receiving working tax credits in the North West.

And the union points out that for many of those low paid folk to be hit, it will no longer be worthwhile for them to work. And so they will be forced onto the dole - costing the taxpayer billions of pounds in extra benefits.

Please explain, Mr Duncan Smith, how this will ease pressure on the welfare state?