THE BLOG
14/09/2015 13:37 BST | Updated 14/09/2016 06:12 BST

The Government's Changes to Tax Credits Will Have a Serious Impact on the Lives of Millions

On Tuesday the House of Commons will vote on the rather boringly named 'Tax Credits (Income Thresholds and Determination of Rates) (Amendment) Regulations 2015'.

This won't be a debate you'll see being carried live on TV, it may even pass by without mention, but for millions of people it will have a serious impact on their income and quality of life. That's because these regulations make major changes to the tax credit system on which many families rely in order to make ends meet.

The Tax Credit system is hugely complicated, made up of various different 'payment thresholds' and so-called 'disregards'. But ultimately the key aspect of the system is the 'taper rate' - that means how much is taken away in Tax Credits for every additional pound you earn.

This taper rate is important, because when someone is making the decision about whether to take on more hours, particularly if they have children, then money matters. If it turns out you're only going to keep a few pence in the pound by taking on the extra work it may not be worthwhile, particularly if you need to pay for expensive additional childcare in order to cover the increased time spent away from home.

When the Liberal Democrats were in Government we recognised this problem and, alongside Iain Duncan Smith, fought for a new system, which would guarantee you kept more of the money you earn and that it would always be beneficial to take up extra work. Iain Duncan Smith rightly gets a lot of criticism for some of the benefit reforms he has introduced, but his support for the 'make work pay' agenda was greatly to his credit.

It is therefore all the more galling that tomorrow, just months after the Liberal Democrat brake on the Tories was released, the Government will seek to push through a series of changes set to undermine the make work pay agenda. The changes to the tax credit system will essentially mean that people on low incomes start paying back their tax credits earlier, and that they pay back more for every pound they earn.

The impact will be hugely damaging. According to the Institute of Fiscal Studies 8.4 million household will lose on average £750 as a result of these changes- serious money if you are on a low income.

Further analysis by the Social Market Foundation, suggests a couple living in social housing with two children, where one person is in work will lose up to £1,736 as a result of the changes. Even worse, when combined with the various other complexities of the benefit system they could lose up to 93p in benefits for every pound they earn. How are we going to persuade people that there is real value in going out and finding those additional hours if they are effectively doing them for free?

The Conservatives have argued that they can make these tax credit changes because they are increasing the minimum wage. While this increase in the minimum wage is welcome, the average social housing tenant earns £8.08 an hour - already above this new minimum wage. This means they will not see any benefit from the increase, but will see a huge loss in their tax credits. Even worse, the newly increased minimum wage does not, disgracefully, apply to those under 25, meaning that young couples will be hit even harder. According to the IFS the new minimum wage will only make up 26% of the losses that households losing out on tax credits see.

If all this sounds complicated it's because it is. But for millions of people the decision of the new Tory Government to abandon the 'make work pay' agenda we agreed in Coalition will cause real damage.

Of course, one of the reasons the Conservatives can get away with these changes is because people assume that 'cuts to benefits' means cuts to support to people who are refusing to work. In reality the changes made as part of the Tory budget will hit the very people we want to encourage - those who are going out and finding work to support their families, but need a bit of additional help due to low wages. The Conservative Party once promised not to balance the books on the back of the poor but sadly that is exactly what they appear to be doing now.

As Liberal Democrats we will stand up to this injustice.

Baroness Zahida Manzoor is a Lib Dem peer, and is the party's Work and Pensions Spokesperson