Thousands of Nottinghamshire families will continue to get tax credits after the government dropped plans to scrap the benefit.
Chancellor George Osborne announced the re-think as part of his autumn statement, delivered in the House of Commons today.
However, he added the Government will continue to reduce other benefits in an effort to cut welfare but improve wages across the country.
Instead of phasing out tax credits, the Government will continue with a previous plan to replace them with universal credit.
Mr Osborne’s plan to reduce working tax credits were rejected by the Lords last month, after opponents said millions of families, including thousands across Nottinghamshire, would lose out unfairly.
According to the city council, 19,000 families in Nottingham city alone would have lost money if the cut had gone ahead.
Autumn Statement: Key points affecting Nottinghamshire
- Planned cuts to working tax credits scrapped
- But the benefit is still being phased out over time in favour of new universal credit
- Local councils will be able to charge ‘social care precept’ of up to two per cent on council tax bills for social care
- Budget for Notts Police protected – when many people expected it to be cut
- House building in county likely to increase as 400,000 new homes promised across the country
- State pension up by £3.45
The simplest thing to do is not to phase these changes in, but to avoid them altogether
“I have listened to the concerns,” said Mr Osborne, “I hear and understand them. And because I’ve been able to announce today an improvement in the public finances, the simplest thing to do is not to phase these changes in, but to avoid them altogether.
“Tax credits are being phased out anyway as we introduce universal credit. What that means is that the tax credit taper rate and thresholds remain unchanged.”
Other key points announced so far include a “social care precept” of up to two per cent in local council tax, which must be spent only on social care.
Mr Osborne also underlined the Government’s commitment to electrification of the Midland Mainline, providing faster journeys between Nottingham and London.
Local Labour politicians welcomed the reversal on tax credits but said the Government’s housing strategy needed to be clearer and more effective, while also criticising the ‘social care precept’.
Graham Chapman, deputy leader of Nottingham City Council, said: “The pressure on social care in Nottingham city is £2.5m a year – that’s extra we need annually as people get older.
“The precept idea would bring in £1.5m a year – so we would still be short – although we won’t be making a knee-jerk decision on it.”
He added: “I’m pleased about the u-turn on tax credits – I think he (Mr Osborne) got frightened by the political opposition to it.”
Osborne sits down after an hour of selective announcements but the real picture will emerge over coming hours and days
— Lilian Greenwood (@LilianGreenwood) November 25, 2015
Nottingham South MP Lilian Greenwood said the speech was “selective”
Alan Rhodes, the Labour leader of Nottinghamshire County Council said: “You have to welcome the announcement on tax credits. It would have been very damaging locally for thousands of people.
“We’ll be looking at the implications of the social care precept – we must be mindful of the enormous costs of adult social care.”
