Tax Credits: Government Admits One-In-Five Will Be 'Worse Off' As A Result Of Welfare Reform

David Gauke, second from right, pressed on tax credits on the BBC today
David Gauke, second from right, pressed on tax credits on the BBC today

The Government has "blown the lid" off its defence of slashing tax credits after admitting one-in-five workers will be hit by the welfare reform.

David Gauke, the Conservative Financial Secretary to the Treasury, was forced into the admission over an overhaul that some critics fear could be as disastrous for the Tories as the 1980s poll tax on the BBC's Daily Politics today.

It came after Labour leader Jeremy Corbyn made attacking David Cameron over axing the welfare payment to low-paid workers the centrepiece of Prime Minister's Questions.

Labour has urged the Government to "clarify the impact on the income of hard working families" of the cut that will play a huge role in Chancellor George Osborne finding £12 billion of welfare savings.

Ministers have argued cutting the payment will be offset by the introduction of the "Living Wage", a minimum wage for over-25s that will increase to £9 an hour by 2020. But critics argue many working families will lose hundreds of pounds a year in the transition.

On the BBC, presenter Andrew Neil asked Mr Gauke if he would accept one-in-five of the lowest earners will be worse off.

Mr Gauke eventually said "yes" before adding: "There are some people who will be worse off."

In response, Seema Malhotra, Labour’s Shadow Chief Secretary to the Treasury, said: "David Gauke has been forced to admit that families who are working hard and depend on tax credits to make ends meet will be worse off after the Tories tax credit cuts come into effect in April 2016.

"Until now Government Ministers - including the Prime Minister - have tried to pretend that the increase in the national minimum wage will more than compensate for the tax credit cuts.

"David Gauke has blown the lid off that defence. I shall be writing to the Prime Minister demanding that he clarify the impact on the income of hard working families of his tax credits cuts."

Before You Go