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“Tax credits bombshell” as 2640 couples in Tees Valley could lose £4,000 a year

More than 2500 families with more than 5,000 children in the Tees Valley will lose up to £4,000 a year in tax credits from April when the Government introduces new rules for them to qualify, whilst across the North East it is 9,000 families with almost 20,000 children affected.

Stockton North MP Alex Cunningham is urging the Tory-led government to reconsider a little-noticed change to tax credit rules which means thousands of families will lose all of their working tax credits unless they can significantly increase their working hours.

The change means that couples with children earning less than around £17,700 will need to increase the number of hours they work from a minimum of 16 to 24 hours per week or they will lose all their working tax credit of £3,870 per year.

Government figures recently revealed showed that 2,640 households in the Tees Valley and 212,000 households across the country households could lose out.

A recent survey by the Chartered Institute for Personnel and Development found that one in five organizations have cut back on the number of hours that people work as a result of the economic downturn, with just 6 per cent increasing them so the opportunities for people to increase their hours are very restricted.

Alex said:

“This is a deeply unfair change for families in Stockton and across the Region from a government that is increasingly out of touch with parents feeling the squeeze and struggling to juggle work and family life.

“Raising taxes and cutting spending too far and too fast has seen unemployment rise and the economy go into reverse, and many employers are cutting people’s hours. In this climate, very few people in part-time work in Stockton will be able to increase their hours by up to 50 per cent at the moment. And for a couple with children losing around £4,000 a year, or £75 a week, from this change could mean going out to work makes no sense.

“This tax credits bombshell is now just a few weeks away. For many families here on Teesside it means going out to work won’t pay. That makes no economic sense at all. The government urgently needs to think again and next month’s budget provides them with an opportunity to do so.”