MORE than 15,000 families in Portsmouth will be hundreds of pounds worse off every year because of changes to the tax credit system, it has been claimed.
Councillor Gerald Vernon-Jackson, leader of the city’s Lib Dem group, said 15,500 families in Portsmouth are facing a loss of money to their family budgets from next April.
The projected loss of tax credits are up to £1,700 per family a year, said Cllr Vernon-Jackson.
His criticism comes as the government is planning a shake-up of the tax credit system to save more than £5bn over the next five years. For the first time tax credits will be limited to the first two children only and the income threshold will go down.
But Chancellor George Osborne has said low-income families will be better off because of the introduction of the ‘national living wage’ from next April of £7.20 an hour for those aged over 25.
Cllr Vernon-Jackson said: ‘This will be a huge cut to many working families on low incomes in Portsmouth. The announcement of a higher minimum wage will still mean many working families on low incomes will still be much worse off from April next year.
‘For the government to offer tax breaks for millionaires so their incomes rise, and at the same time cut tax credits to working families on low incomes is a disgrace.’
He added: ‘For some it will be better for them to give up their jobs and live on benefits, and this is not right for anyone.’
Cllr Donna Jones, leader of Conservative-led city council, said: ‘While we acknowledge there may be some cuts to families with working tax credits or those receiving income support, the prime minister has given a clear pledge that any parent who goes out to work in the UK will be better off than any parent who stays at home. In addition, we need to acknowledge the positive aspects of parents in employment. It’s been proven it helps good mental health in adults.’
She said parents in work raised children’s aspirations and accused Cllr Vernon-Jackson of trying to create a ‘Benefits Street culture’ in Portsmouth, after the controversial television programme.
She said: ‘We are all in this together. The economy is not going to repair itself. We have the fastest-growing economy in the G7 because we have a robust deficit reduction programme.’
The government figures cited by Cllr Vernon-Jackson show that tens of thousands of families across the area could be affected from next April.
The statistics are: Havant (6,500 families); Fareham (4,300) Gosport (6,300); Meon Valley (4,000); East Hampshire (4,100); Chichester (5,000); and Winchester (3,200).