Chancellor closes the door on tax credit cut review

21st October 2015

Chancellor, George Osborne has rejected calls from London mayor, Boris Johnson to ease the effects of tax credit cuts on those working for the lowest wages.

Mr Osborne maintains the UK’s tax credit bill would have soared without the reforms implemented in the recent Summer Budget.

London mayor, Johnson insisted that, “somehow or other we’ve got to reform this system.”

“This is something that is under intensive review and consultation at the moment. I have no doubt that people are working very, very hard right now to try to make sure that as we reform the tax credit system, we do so in such a way as not to bear down too unfairly on hard-working people on low incomes in London and elsewhere.

“I’m sure that, irrespective of the politics of it, nobody wants to do something that is not fair to working people.”

At a recent backbenchers’ meeting, the Chancellor reiterated that the tax credit cuts must go ahead and warned that if he had not made the changes in the last Budget then £15bn worth of spending cuts would have had to be found elsewhere.

New analysis from the Treasury, released at the backbenchers’ meeting, revealed that government spending on tax credits would have peaked at £40bn in 2016-17 – a rise of £10bn from 2010-11 – had the Chancellor’s cuts not been realised.

The data also demonstrated that, had the welfare cuts not been made, the Government would be forced to lay off the equivalent of 200,000 nursing staff and 70,000 doctors; 325,000 teachers or scrap the entire Home Office budget to make equivalent savings.

Mr Osborne said the £15bn savings is comparable to the amount that has been spent since increasing the personal tax allowance to date, or £500 a year extra in income tax for every UK taxpayer.

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