Changes to Tax Credits and Council Staff

At the Policy & Resources Committee on Monday 8 November 2010 I made the following speech in support of my motion on Changes to Tax Credits and Council Staff:

"Convener, I have placed this item on the agenda tonight because it is anticipated that a significant proportion of our staff will be effected by changes in Tax Credits introduced by the Chancellor of the Exchequer, George Osborne, in his budget in June 2010 and the subsequent Comprehensive Spending Review last month.

While the post Spending Review public debate has focused predominately on changes to Housing Benefit, especially in high rental areas of the UK, especially London, the effects of changes to Tax Credits has hitherto received less attention. This is surprising because the accumulated cuts in Tax Credits are much larger in cash value than the reductions in Housing Benefit. Perhaps this is because many of the Tax Credit changes are complex measures which the think tank, The Resolution Trust has referred to recently as “stealthy changes”.

Now I think we all know that Tax Credits, introduced in 1999 are a form of means tested cash benefit that is paid through the payroll by employers to their employees in households living on low to modest incomes – defined as between £12,000 and £30,000 per year. The award in calculated by Her Majesty's Revenues and Customs on an annual basis. For single parents and couples with children there are childcare allowances,currently up to 80% of allowable costs.

Changes in Tax Credits include:

• uprating tax credits in line with the consumer price index rather than the retail price index, which has been historically higher;
• reducing the opportunity to backdate claims from three months to one month;
• reducing tax credits faster as incomes rise and
• increasing the minimum working hours for couples with children from 16 to 24 and the minimum number of hours worked by one partner in the couple from 16 to 18.
  

So this group of our staff like other citizens in a similar position face a quadruple whammy:

• living with job insecurity;
• stagnation in the their earnings;
• significant price inflation, especially on food and heating and
• reduction and withdrawal of key benefits such as tax credits introduced over a period of time.
  

Most starkly, some of our part time and job sharing staff may find they no longer work the necessary hours to continue receiving tax credits in their pay packets. As soon as they lose entitlement to tax credits their entitlement to a proportion of their child care costs will also go. It is for this reason that I have brought forward this item to request that the Council explore what we can practically, do as a major employer, for members of our workforce who may be effected by these changes."

The motion (see below) was adopted by the Committee unanimously.

Motion for Policy & Resources Committee Meeting

Changes to Tax Credit and Council Staff

This Committee instructs the chief Executive to undertake a review to ascertain the number of Council employees potentially affected by changes in Tax Credits, as announced by the Chancellor of the Exchequer in his June 2010 Budget and the October 2010 Comprehensive Spending Review. This review should focus particularly, but not exclusively, on the increase in the minimum hours threshold for qualifying for Working Families Tax Credits. Furthermore, the Council, explores ways it might mitigate the negative effect of these changes on its employees to be disqualified from Tax Credits when the qualifying conditions change. Finally, that the Chief Executive reports back to the Policy & Resources Committee.