Working Tax Credit: April is the cruellest month
This year for families on low incomes struggling to make work pay, April will seem very cruel. Back in 2010 the Chancellor announced in the Comprehensive Spending Review a change to Working Tax Credit for couples. From this April couples must increase their hours from 16 to 24 each week (with one parent working at least 16 hours) to remain eligible for Working Tax Credit. The change means 212,000 couples will lose up to £3,870 in a year if they cannot increase their hours.
Working Families is receiving two calls a day to our free legal helpline from parents concerned about how they will cope without tax credits. It isn’t that they want to work only 16 hours between them. Often one parent has been made redundant and the family are limping on with a single part time wage. Working Tax Credit is the lifeline that makes it worth working. At one fell swoop the Chancellor will make these families better off on benefits.
It’s a strange policy indeed, created at a time when the economy was predicted to pick up and when work incentives were on everyone’s lips, but executed in a time of austerity and high unemployment.
Callers to our helpline are bemused. The unemployed partner has been applying for hundreds of jobs to boost family income without success. The part time worker has asked for more hours from their boss, but been refused. They’ve heard the messages that work will always pay and no one will be worse off under Universal Credit. They’ve been relieved to hear that childcare costs will be paid even when they’re only working a few hours a week when Universal Credit is introduced. So why do they have to suffer now?
Parents of disabled children – and carers of older people – are particularly badly affected. We had a caller who told us he’d tried working more than 16 hours but when he did, his wife – a full time carer – couldn’t cope. Their disabled child needed 24 hour care and they also had a lively two year old toddler. But now that family will lose Working Tax Credit because the Government seems to think they’re not working enough.
Employers are none the wiser. We conducted a quick survey and found two thirds of employers were unaware of the changes due next month. We asked them whether they would be able to accommodate a request for eight more hours of work from their employees. Less than a fifth of employers were confident they could offer eight hours. A further third said there may be some hours, but not eight, while 17% said it would be “unlikely” or “impossible” to accommodate a request.
So we asked them what the impact on their business would be if an employee left because they couldn’t get more hours. 56% said it would be a “minor inconvenience” while around a fifth were confident they could easily recruit a replacement. This tells us something about the status of the employees affected: often on low income these employees are already vulnerable to employers cutting or changing their hours. If they leave, there are plenty more jobseekers to replace them.
This change to Working Tax Credit needs rethinking urgently. It simply isn’t fair to make parents look for work that isn’t there and take away their tax credit when they can’t find it. This policy is all stick and no carrot for working parents. Parents trying to do the right thing will suffer a cruel blow come April.