Thousands of families across Nottingham have been given a tax credit reprieve after the Government’s plan to cut the benefit was delayed by the House of Lords.
According to Nottingham City Council, up to 19,000 households in the city alone would have lost hundreds of pounds each a year if the reductions had gone ahead in the proposed format.
But on a dramatic night in Westminster, the House of Lords narrowly voted to back calls for the Government to provide some form of compensation to millions of claimants due to be affected.
Peers also voted to delay the cuts completely until an assessment of their impact is carried out.
Graham Chapman, the Labour deputy leader of Nottingham City Council, said: “I’m delighted – around 19,000 families in Nottingham would have been affected in one way or another according to our numbers.
“What I’d like to see now is reductions decided on an individual basis. What is being proposed is really crude because the introduction of the living wage is not synchronised with the cuts.”
Critics say the move will mean some low-income workers losing more than £1,000 a year.
The system has trapped people in poverty
But the Government says the changes are needed to move the country into an era of higher pay and lower benefits, with the new national living wage reaching £9 by 2020.
Mark Spencer, the Conservative MP for Sherwood, said: “What we have to recognise is that the welfare system has trapped people in poverty.
“In some cases I’m aware of individuals offered work promotions and overtime and they turn it down because it is going to affect their tax credits. That is wrong.”
People are going to struggle to pay the bills
Some people working with low income families in Notts said families already short of money would not have coped with any reduction in the credits.
Michelle Dockerty, a benefits adviser in Brokxtowe, said: “People are going to struggle to pay the bills, which they are already struggling with now. They are going to struggle with food, heating. Children are going to be cold. The foodbank is going to be overwhelmed.”
Taxing issue: What are tax credits and who gets them?
-Benefits introduced by the last Labour government to help families on low pay
-Working Tax Credit (WTC) provides payments for those in work
-Child Tax Credit (CTC) for household with children
-They are not actually connected with paying tax
The move has also caused huge debate about how Parliament is run.
Political convention means the unelected House of Lords amends policy changes, rather than significantly delaying them or rejecting them.
Chancellor George Osborne will now explain how affected families will be compensated in his autumn statement on November 25.
