THE BLOG
23/09/2015 13:10 BST | Updated 23/09/2016 06:12 BST

Tax Credit Cuts Will Hit Single Parents Hardest

We are very worried the cuts to tax credits put a further barrier in place for these single parents who want to support their families in work. Because if upping your hours, or winning that promotion means you lose more tax credit cuts than you gain in pay, taking that next step might not make financial sense.

Last week's House of Commons vote to cut tax credits dealt a further blow to single parents already struggling to make ends meet. Millions of families will be affected by the proposed cuts, and it is single parents and their children who will be disproportionately hit, as the government slices a further £4.4billion off the welfare budget.

If parliament finally approves the plans, the earnings threshold for working tax credits will be lowered from £6,420 to £3,850.

As it stands, 20% of children with a single parent working full-time, and 32% of those with a parent working part-time, are growing up in poverty. And living standards will now decline further as the cuts to tax credits and changes to Universal Credit come into force.

So what do the cuts to tax credits mean for single parents in cash terms? Analysis by the Institute for Fiscal Studies revealed that a single parent working 20 hours or less, with two children, will lose £1,790 per year. For those on low incomes, that is an enormous drop and will leave many single parent families in a desperate situation.

The Joseph Rowntree Foundation has found that thousands are already falling below the Minimum Income Standard (MIS), the amount defined by the general public as an 'adequate income'. Their research revealed that in 2010 a single parent, with one child, working full-time on the minimum wage, fell just short of the MIS. However, government cuts will lead to a single parent in the same situation falling more than 20% short of the MIS in 2020, the equivalent of a non-working single parent in 2010.

Exchequer Secretary Damian Hinds once again insisted that the cuts were in the interests of reducing the deficit - and pointed to increases in the minimum wage as softening the blow - but try explaining that to the 8.4million families, many of whom are already on the breadline, who will now lose on average a further £550-a-year.

In recent weeks Gingerbread has seen a spike in calls from single parents concerned about how the cuts will affect them. Many of these people are some of the most vulnerable in society, and they are now facing unimaginable hardship.

Another concern for Gingerbread is that the government's new plans sever the link between entitlement and need, which will inevitably leave families unable to make ends meet.

Finally, we are very worried the cuts to tax credits put a further barrier in place for these single parents who want to support their families in work. Because if upping your hours, or winning that promotion means you lose more tax credit cuts than you gain in pay, taking that next step might not make financial sense.

This has to be addressed by the government if it wants to deliver on its promise to encourage more people to work.

And while Gingerbread is encouraged the government has said it will now look at ways of mitigating the impact on the most vulnerable in society, we need to see the detail sooner rather than later.

Gingerbread will shortly be publishing a report looking at the impact of these cuts on single parents, to stay up to date in the meantime sign up to our campaigner list: http://gingerbread.org.uk/content/446/Campaign-with-us