By Joe Mellor, Deputy Editor
Conservative MPs voted to slash nearly £1billion from tax credits, even though the Chancellor swore he wouldn’t cut the benefit; that helps millions of hardworking families across the UK.
A little-known catch will hit hundreds of thousands of people and was approved in a very brief vote and with no debate.
It was a massive U-turn over his attempts to slash tax credits for over 3 million families by £1,300 in a year, however he didn’t cancel changes to the ‘income rise disregard.’ This indicates how much a claimant’s pay can rise in a year before the tax credits are recalculated.
Now families will be chased for back payments if their salary rises by more than £2,500, cutting the current rate of £5k in half.
The vote was passed with a majority of 44 after 272 MPs voted in favour and 228 voted against. Tory MPs where whipped to ensure they followed the party line.
This decision was not debated because it was put before MPs in the form of a small-scale Statutory Instrument, not as part of an Act of Parliament.
Figures show the change will bring in an additional £935million for the Treasury by 2020. 800,000 people a year will now be hit by the income rise disregard.
Shadow Chancellor John McDonnell said: “It’s completely shameful when you consider that 800,000 working people, almost the equivalent of a city the size of Leeds, face losing £300 a week when the Tories are cutting taxes for a wealthy few.
“This is something George Osborne needs to urgently reverse in full in the budget next month, and it’s something he could easily do if he wants to.
“There will be many Tory MPs who told their constituents that their Chancellor was not cutting their tax credits who’ll now be left looking silly.”
A Treasury spokesman said: “It is a simple matter of fairness and common sense that tax credit awards are reviewed as people’s incomes change.
“It isn’t right that someone earning significantly more should do just as well in terms of tax credits than someone earning less.
“Lowering the maximum annual pay rise that is disregarded to £2,500 will simply return the system to the same level as when tax credits were first introduced.