The announcement by George Osborne that he is scrapping plans for cuts to tax credits is a massive victory for Labour. It will come as a relief to the thousands of working people in Somerset who have been under stress in recent months as they faced the threat of losing vital income.
A campaign that went from the grass roots to the House of Lords has forced the government into a U-turn. In the words of UNISON South West Regional Secretary Joanne Kaye: “The real credit for today’s decision goes to the many brave parents who talked publicly about their already stretched finances, and the distress and hardship the cuts would cause. Their stories convinced the government this unfair tax credits grab was wrong.”
But we must not relax our scrutiny. In a throwaway comment of just twelve words, Osborne revealed how the money could be clawed back. He said: “Tax credits are being phased out anyway as we introduce universal credit.”
And there’s the clue about the Tories’ next plan to hit people with low incomes. Universal credit is the brainchild of the work and pensions secretary, Iain Duncan-Smith. It is replacing six different benefits, including job seekers allowance, housing benefit …. and, crucially, tax credits.
Universal Credit fiasco
Universal credit has been a fiasco. The computer systems bought at vast cost to run it haven’t worked properly. A system that should have been up and running by now just isn’t there. A few people are now getting universal credit in a limited number of pilot areas, including Bridgwater. But the launch has been a disaster and almost nobody understands what is going on.
But in the end, universal credit will come in for all claimants across the country. And that’s our problem. When cuts are made to people’s incomes in the universal credit system – and they will be – it will be much harder to unravel what is going on. We must scrutinise universal credit very carefully – because this is where the next Tory welfare cut will fall.
Joanne Kay said: “If the Government truly wants a high wage and low welfare economy it must now do more to encourage employers to pay staff more. When tax credits stop, and the families receiving are switched on to universal credit, the chancellor must not use this change as a way to revive his original plans and leave working families worse off in 2020 than today.”