ALMOST 200,000 working families in the North East will see their tax credits cut by as much as £500 as the full impact of benefit changes emerges.
MPs will today vote on the Government’s plan to cap annual benefit payment increases at 1%, well below the rate of inflation, in a move which will hit incomes in some of the region’s poorest working households.
Despite Government claims to be targeting “shirkers”, some 68% of the people affected by the benefits cap are low income working families, Labour has said.
At the other end of the scale, new figures on child benefit changes show more than 18,000 families in the North East have received letters from the taxman telling them their payments will be reduced or scrapped.
At the same time, councils across the region have said they will make the better off pay for cuts to council tax benefits traditionally handed out to those unable to pay their bills.
With the Government cutting the money available for this benefit, councils have had to find millions of pounds to plug the gap, including making the unemployed pay for some of the costs.
But councils such as Newcastle, Northumberland and Durham have said they will bring in extra funds by scrapping or reducing discounts to those with second homes or properties left empty.
Last night Labour’s Stephen Timms said they were opposing a benefits cap in order to help the working poor, playing down Conservative claims that the party wanted to see state handouts rise faster than wages.
The shadow employment minister said: “These changes will have a very detrimental effect on thousands of people in the North East. When you look at the examples of people affected it is predominately those in employment.”
He said that families would by 2015 be losing between £200 and £500 a year, while those losing child benefit will see more than £2,000 taken from them.
The benefits fight is part of what is expected to be a tough week for the Government, coming along growing criticism of David Cameron’s hopes of creating a Big Society of charity groups.
Ed Cox, director of think tank IPPR North, said there simply was not the financing available for those groups wanting to offer help.
He told The Journal: “The chief executives of big charities are right to raise concerns about the Big Society being effectively dead but it is the small charities in deprived neighbourhoods that are bearing the brunt of public sector cuts and missing out on new government programmes.
“Both the Government and big charities must recognise that grant funding remains a critical source of income for small groups and Big Society Capital must be more innovative in providing sources of microfinance for community organisations in deprived neighbourhoods.”
Chancellor George Osborne announced last year that annual rises in most working-age benefits are to be capped at 1%, cutting a further £3.7bn from the welfare bill, but insisted he would protect the vulnerable by continuing to increase carer benefits and disability benefits in line with inflation.
The Prime Minister has defended cuts to child benefit payments, which will see families with one earner on more than £50,000 lose some or all of the payment while households with two parents with salaries just under the trigger keep theirs, insisting the move was “fundamentally fair”.