Chancellor George Osborne has made clear that he would be looking to make significant savings in Wednesday’s Budget to the system of tax credits brought in under the previous Labour government to top up the incomes of low paid working families.
Barnardo’s Scotland is calling on the UK Government to keep what it called the “lifeline” benefit after it calculated 49.1 per cent of families in Scotland (301,600) currently use working tax credits.
Head of Policy for Barnardo’s Scotland, Mark Ballard, said: “The UK Government has promised to improve support for working families so that parents do not have to choose between feeding their families and heating their homes.
“Unfortunately, the reality is increasing numbers of working parents are struggling to stay above the breadline, and any proposed cuts to the benefits they rely on will only make things worse. Low paid parents with dependent children rely on tax credits to make up the difference between what they earn and what they need to get by”.
He added: “Families would be better off if the UK Government focused on tackling low wages and high childcare costs, instead of cutting struggling families income.”
Working tax credits are paid to parents on low incomes who are working more than 16 hours per week. Child tax credits are paid to those with a low annual income as help with the costs of bringing up a child.
Welfare Minister Margaret Burgess said: “It is ludicrous for the UK Government to consider cutting this lifeline for thousands of families, who are already in employment, and it will have a devastating impact on children.
“In order to reduce benefit payments and support people into work we need to tackle low pay, create jobs and remove barriers, not take the UK Government approach of removing money which will make it even more difficult for people to feed themselves and their families.”
The comments come after Labour MP Ian Murray also warned more than half a million children in Scotland could be at risk if the Conservatives press ahead with the cuts.
Appearing on BBC1’s The Andrew Marr Show on Sunday, the Chancellor said savings would have to be made to the system of tax credits.
Mr Osborne said: “It has become a very, very expensive system. When it was introduced, we were told by Gordon Brown it was going to cost a couple of billion pounds.
“It now costs £30 billion. That is a huge sum of money. That’s three times the Home Office budget, so we have to make savings.”
Responding to Mr Murray’s comments, a UK Government spokeswoman said: “In Scotland, as across the rest of the UK, the proportion of individuals and children in relative poverty are at their lowest levels since the 1980s.
“We know that work is the best route out of poverty, with children in workless families around three times as likely to be in poverty than those in working families. That’s why, as part of our long-term economic plan, our reforms to the welfare system are focused on making work pay, while our reforms to the tax system are allowing people to keep more of what they earn.
“With substantial tax-raising powers on the way to the Scottish Parliament, there will be scope to make greater decisions on spending in Scotland, whilst continuing to benefit from sharing the risks and resources with the rest of the UK.”