Iain Duncan Smith’s changes to state benefits mean anyone receiving tax credits whose circumstances change – for example, by having a baby – will be moved onto Universal Credit without transitional protection.
The cash loss to the household will be hugely damaging – just when a family needs more money, it will receive less.
Iain Duncan Smith, David Cameron and the Conservatives have reversed the benefit system completely.
Under Labour, families received extra payments to help with the cost of having children. Family Allowance, Child Benefit, Tax Credits – all were intended to help parents cope.
Not so with the Tories.
Universal Credit is the exact opposite of what its name suggests.
New parents could lose hundreds of pounds a year in tax credits when they have their first child under Iain Duncan Smith’s welfare changes, Labour has warned.
The government has admitted that tax credit claimants may be shifted on to the new universal credit system if they “become responsible for a child for the first time”.
Owen Smith, shadow work and pensions secretary, said this meant that people are set to be penalised for getting pregnant.
The Institute for Fiscal Studies has estimated that in-work benefits under universal credit will be less generous than tax credits by an average of £1,600 a year for about 2.6 million working families, although some will see their entitlements rise depending on their circumstances.
Ministers are pressing ahead with cuts to universal credit from April this year, despite having been forced to cancel cuts to tax credits in November under pressure from MPs and peers.
The latest guidance from the Department for Work and Pensions, published this week, says any change in circumstances “may mean your tax credits stop and you will need to make a universal credit claim instead”.
People are gradually being transferred from tax credits to universal credit – which rolls six benefits into one monthly payment – over the next few years until 2020, and are meant to receive “transitional protection” to stop them seeing any cash losses under the new regime.
But the transitional protection will not apply to tax credit recipients who are required to make new universal credit claims because their family or working circumstances have changed.
*Unfortunately, the good work Mr Smith is doing here may be completely overshadowed by the fact that he has indicated a possible unwillingness to remain in the shadow cabinet if Labour policy changes to one opposing the renewal of Trident. The Tory-loving media would far rather discuss possible splits in Labour than any facts that might harm the credibility of their idols.
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