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East Ham MP Stephen Timms says people are right to worry about Emergency Budget

PUBLISHED: 09:19 08 July 2015 | UPDATED: 09:19 08 July 2015

Archant

Worried residents have been in touch ahead of today’s ‘Emergency Budget’.

They have heard rumours that ministers plan deep cuts to tax credits. In my view, they are right to worry.

Tax credits were introduced by Labour to help ensure it pays to be in work. They have proved very effective. In 1997, the lone parent employment rate was below 45 per cent. Today it is above 60pc. Researchers in the UK and US say most of the improvement is down to tax credits.

400,000 London working families receive tax credits. For families struggling to get by, they provide vital help. They were introduced with other measures to lift families out of poverty: the Minimum Wage; SureStart; the New Deal to support people into jobs.

For the last two years, the Conservatives have promised £12 billion in welfare cuts. They refused to say where the money would come from. It now looks as if much of the cut will be from tax credits. In a speech last week, the prime minister criticised the system in which people receive tax credits on one hand and pay income tax on the other. He called it a “merry go round”.

But most people claiming tax credits don’t pay income tax. For the two thirds of tax credit claimants who work, it might be possible to compensate them for loss of tax credits by increasing their pay. However, ministers have no plans at all to do so.

We can all agree with the prime minister’s call for a “higher-wage, lower tax, lower welfare society”. But in reality what he plans is a large cut in the incomes of working families on low and median incomes.

He should be tackling low pay, not attacking the low paid. It’s wrong, and Labour will fight it. More from Stephen


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