Monday, 12 March 2012

Working Tax Credit and for Hyndburn

In Hyndburn, 515 couples with children work who both work between 16 and 24 hours a week and are currently entitled to Working Tax Credit.

These couples have 1,235 children, so a total of 2,265 people are affected.

If they cannot find more hours of work by 5 April to take them over 24 hours a week, they will lose all their Working Tax Credit of £3,870.

Most of these families are earning on or near the minimum wage - a current total household income of £17,000 to £18,000 for a family with 2 children.

For a family of 4, this will reduce their total income by 21.5%, from around £18,000 - where they can only just get by - to around £14,000 a year, meaning many will struggle to afford even the basics, and face debt and possibly homelessness.

Extra hours and alternative jobs are very hard to come by in the current economic climate. 78% of Usdaw's members affected by the changes say they cannot find the extra hours of work they need to continue to qualify.

These families gain very little from any other measures - they earn less than the threshold for income tax, so will not gain from the increase in the personal tax allowances. Whilst Child Tax Credit was increased by £128 above indexation last year, this does not compensate for the freeze in Child Benefit and Working Tax Credit both last year and this year.

If 78% of the families affected in your constituency cannot find the extra work required, an additional 963 children will fall well below the poverty threshold, and £1,554,600 will be taken out of the local economy, neither of which will help the economic recovery.

We very much hope that MPs such as yourself will help to make the case for the working families in your constituency and ask for this change to be postponed for at least one year until a time when parents are able to find the extra hours that they want to work, and Universal Credit is introduced in 2013 which will abolish the rule for minimum hours of work.

I attach a briefing from Citizens Advice Bureau who spoke at Wednesday's meeting, who have set out examples from their case work showing the disincentive to work, financial difficulties and the 'couple penalty' that these changes will cause.

If you would like any further information about these changes and the effects on working families on low incomes, please let me know.