Poorer working families ‘could miss out on tax breaks’

The Joseph Rowntree Foundation (JRF) has published new analysis of tax cuts proposed by the UK's big three political parties and claimed these measures could fail to be of use to those families that are in greatest need of financial support in the current economic climate.

With the Conservatives, Liberal Democrats and Labour all promising tax cuts ahead of the next general election, the foundation has taken it upon itself to crunch the numbers when it comes to the impact of these potential future policies, and has come up with some surprising results.

The report was written by Loughborough University's Donald Hirsch on behalf of JRF and found that while plans are in place for up to £11 billion in tax cuts during the next parliament, the UK's poorest households may not be reaping the benefit from these changes.

Mr Hirsch commented: "Ensuring a decent living standard for working families requires a range of approaches. In the longer term, better pay is essential but state support for families on modest earnings will also be needed to help make ends meet – particularly with childcare costs.

"Cuts in this support hit working families hard: income tax cuts help to offset this but only weakly, because help is spread so thinly."

As a result, JRF has proposed a number of measures that could help to support some of the most vulnerable households up and down the country, including increasing the amount that families can earn before their entitlement to in-work benefits is withdrawn.

A move to indexing the level of support for childcare through Universal Credit would also provide a considerable boost to many families' finances, while restoring the link between in- and out-of-work benefits and the cost of living is also seen as essential.

Head of poverty research at JRF Chris Goulden concluded that while many of the proposals put forward by the three main political parties to date have some benefit, they fail to adequately target those individuals who are most in need of financial support.

Posted by Amy White