Gingerbread urges MPs to consider the disproportionate impact of tax credit cuts

Posted 29 October 2015

Gingerbread releases new research ahead of backbench debate on tax credit cuts.

Ahead of today’s backbench debate Gingerbread has urged MPs to consider the disproportionate impact proposed cuts to tax credits will have on single parents.

The charity has published research showing working single parent families will be the group hardest hit by the Summer Budget reforms, including plans to cut tax credits.

1.3 million of the UK’s two million single parents are set to lose out according to research carried out by the Institute for Public Policy Research, on behalf of Gingerbread.

On average, single parent households will by 2020/21 lose £1,300 (7.6 per cent) of their income each year as a result of the combined tax, pay and welfare reforms unveiled in July.

Working single parents in the poorest fifth of households are hardest hit in cash terms, and can expect to lose an average £1,610 (13.4 per cent) of their income by 2020/21.

Considering just those tax credit changes which were set to take affect from April 2016, one in four single parents faced an overnight drop in income, around half of single parents on in-work tax credits were expected to lose money.

Chief executive Fiona Weir said:

“We welcome today’s debate on tax credits, and are urging MPs to consider the hugely skewed effect cuts will have on the UK’s two million single parents.

“Our research shows that a staggering 1.3 million single parents will be worse off as a result of the budget. Single parents are hit harder than other families with low paid single parents hit worst of all.

“While two in three single parents are working, our findings show those who most need support to ‘make work pay’ will be worst affected by the cuts to tax credits and the work allowance under universal credit in particular.

“The budget proposals risk turning back the clock on efforts to support single parents into work, destroying any incentive to work extra hours.

“We are pleased that the House of Lords voted to delay plans that would have hit single parents hard, and we are now calling on the Chancellor to look at options to alleviate the impact, particularly on low-paid working single parents.

“The government now has an opportunity to pause and properly consider the impact of the cuts – in particular what they mean for many working families relying on tax credits to make ends meet.

“Plans as they stand risk making some of the poorest in our society worse off, while also undermining the government’s goal of making work pay.”

ENDS

Notes to editors

Gingerbread’s impact analysis of the Summer Budget can be found here: www.gingerbread.org.uk/payingtheprice.

Working single parent households are set to gain on average just £100 from the higher minimum wage, and a negligible amount in the higher personal tax allowance and higher income tax threshold.

Taking into account the gains in pay and reduced tax, 1.4 million single parent households are estimated to see their income fall by 2020/21 compared with just 100,000 whose income will rise [13 times more losers than winners].

It is among working households where the difference in losses between single parents and other household types is most stark – working single parent households lose around seven times the share of income lost by working couple households.

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