Tax credit cut to hit 135,000 families living in Yorkshire

The extent of the cuts – part of Chancellor George Osborne's radical plans to tackle the deficit – is revealed for the first time today, with 135,700 families set to lose hundreds of pounds.

Under Gordon Brown's flagship tax credit scheme households have been pocketing up to 545 a year in tax credits even if they were earning more than 50,000. But the coalition will gradually reduce the threshold because it is no longer deemed affordable as Ministers seek to tackle the budget deficit and get the economy back on track.

Deputy Prime Minister Nick Clegg, MP for Sheffield Hallam, has described the system as "madness" and said it was handing taxpayers' money to people who do not really need it.

Figures released to MPs reveal the extent of the tax credit handout to families in the region, with 14,500 households earning more than 50,000 benefitting.

Another 39,600 families earning between 40,000 and 50,000 are receiving the benefits, as well as 81,600 who earn between 30,000 and 40,000.

Under Mr Osborne's plans the payouts to middle and high earners will be scaled back gradually, with payments stopped next April to those earning over 40,000 next year and the following year to people earning more than 30,000.

Labour has branded the squeeze "deeply unfair", saying households earning 30,000 can find it tough to make ends meet but the Tories were convinced by their Liberal Democrat coalition partners to introduce the tough new rules.

Pudsey MP Stuart Andrew, whose constituency has 1,600 people receiving tax credits despite earning more than 40,000, said: "It was clear in our manifesto that because of the record debt we were left by the last Government we were going to have to make some difficult decisions.

"I'd love to be able to say we could give money but the country simply can't afford it. We all have to tighten our belts. It's not nice, but it's necessary."

Mr Clegg – who will see 1,800 constituents hit by the move – has repeatedly defended the measures, which the Lib Dems have been advocating for some time to help fund their plans to raise the income tax threshold to 10,000.

"Surely, everyone agrees that having tax credits extended – which is basically a means-tested benefit – to nine out of 10 of every family in this country which has got children means you are giving a lot of money – taxpayers' money, other people's money – to people who don't really need it," said Mr Clegg recently.

"We want to taper them away from those families who have much more money than others. I do not think that is an unreasonable way to go."

Labour claims, however, that the moves will "punish" hard-pressed families and said the plan undermined Government claims to be family-friendly.

Shadow Work and Pensions Secretary Yvette Copper said: "It is deeply unfair to cut child tax credit for families who already find themselves overstretched.

"Tax credits are invaluable for working mothers and, in many cases, are what helps them afford to work part-time rather than full-time, or pay for child care costs."

Tax credits were introduced by Gordon Brown when he was Chancellor to tackle child poverty but they have been criticised as overly complicated and costly.

Work and Pensions Secretary Iain Duncan Smith is planning a radical overhaul of the entire benefits system, with one possibility being to scrap all existing benefits and tax credits in favour of a new single payment.

MONEY MATTERS

Families receiving child or working tax credits in the Yorkshire region:

Household income

30,000-39,999 81,600

40,000-49,999 39,600

50,000+ 14,500