Oct 05 2015

Conservative Conference: PM David Cameron confirms cuts to in-work tax credits

Prime Minister David Cameron has said that in-work tax credit cuts will not be reviewed in the Autumn budget statement and will be pressed ahead. Despite calls from within the PM's Conservative party to reconsider the the policy, Cameron said that the government will impose the credit cuts, arguing that it is a good system and that the rise of the minimum wage to a living wage will make up for the cuts.

"We have had the vote in Parliament on tax credits and I think people respect this argument that the National Living Wage… is a very significant change that really helps to make work pay, rather than a tax credit system that recycles money back to people," Cameron told Andrew Marr on his BBC Sunday show. "Obviously I accept we are making changes to tax credits."

He said his party is protecting the lowest-paid people with child tax credits but added that he wants to move to an economy and a country where people will get paid more and pay less in tax. "That is a better system," he said.
However, critics from within the Tory government as well as other parties and economists have said that the new living wage cannot make up what families will lose because of the Conservative's living wage, which is effectively a higher minimum wage.
Paul Johnson, the director of the Institute for Fiscal Studies said in his response to the government's summer budget statement in July: "The key fact is that the increase in the minimum wage simply cannot provide full compensation for the majority of losses that will be experienced by tax credit recipients. That is just arithmetically impossible."
Cameron's comment come as the Conservative party is holding its annual conference in Manchester. The conference has been stormed by thousands of protesters, who call for a relief on the strict government cuts.
The Tories introduced cuts in UK public services, claiming that austerity is the only way to relieve taxes and to narrow the staggering deficit.

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