We need your support to keep TheyWorkForYou running and make sure people across the UK can continue to hold their elected representatives to account.

Donate to our crowdfunder

New Clause 15 - Repeal of Tax Credits Regulations 2015

Part of Welfare Reform and Work Bill – in a Public Bill Committee at 10:00 am on 20th October 2015.

Alert me about debates like this

Photo of Priti Patel Priti Patel Minister of State (Department for Work and Pensions) 10:00 am, 20th October 2015

It is typical of the Labour party to scaremonger and distort some of the facts that we have heard, as well.

The national living wage will be worth more than £9 an hour by 2020. The increase in the personal allowance is part of a single thought-out and coherent plan to ensure that people keep more of their money, rather than having more of their income taxed. The new national living wage means that someone working full time on the current national minimum wage will have a pay rise of nearly £1,000 gross next year, and about £5,000 by 2020. Of course, the personal allowance will go up from £11,000 to £12,500, which means a typical taxpayer will pay more than £1,000 less income tax by 2020.

The Opposition have given illustrations of their view, and I want to give illustrative examples of how families will benefit over the course of the Parliament when the welfare and tax changes announced in the Budget are taken fully into consideration. The income of a couple with two children where only one parent is in work on the current national minimum wage will increase by £2,480. The income of a lone parent with one child working 35 hours at the current national minimum  wage will rise by £1,500. A family with two children where the parents are working 35 hours a week on the national minimum wage will see their income increase by £5,500. And a single person with no children working 35 hours on the current national minimum wage will see their income rise by more than £2,000.

There will also be a wider ripple effect in the economy, which is growing, through the national living wage pushing up wages above the current national minimum wage. As we have discussed, not just in this clause but in previous ones, we are committed to doubling free childcare for three to four-year-olds and providing £5,000 of support in childcare for working parents.

No analysis has taken into account those factors from 2016, with the wider ripple effects, which are set to benefit more than 3 million working people. On top of the uplift in the free childcare, there is the £2,000 per child that working families and parents will be entitled to through tax-free childcare.