A number of complex Tax Credit changes have been announced in today’s CSR. We will be undertaking more comprehensive analysis of their impacts over the next few hours and days. But for now the key point is that despite new increases in the value of Child Tax Credit (worth £30 a year in 2011/12 and £50 a year in 2012/13 – at total cost to the Treasury of £560 million by 2014/15) there have been cuts worth £1.4 billion in Tax Credit payments for families more widely.
These include a 10% cut in the childcare costs that working families can expect be covered by Tax Credits, a freeze in the annual value of several Tax Credit elements and a requirement that couple households with children are engaged in 24 hours or work (compared to the current 16) before qualifying for Working Tax Credits (and consequently any childcare support at all) at all.
Update: Budget 2006 increased the proportion of childcare costs that Tax Credits could meet from 70% to 80%. Today’s CSR has reversed that move. This means that families with weekly childcare costs of £300 (the maximum payable for a low-income family with 2 children) will lose £30 a week. The CSR’s equalities impact assessment states that “The reduction in support through the childcare element of tax credits…will particularly affect women in lone parent households. “