Friday, 25 April 2008

Two thirds of 10p losers in South East still worse off

The u-turn by the Prime Minister earlier this week over the 1op tax band was not only humiliating but has added real uncertainty about the future amongst rank and file Labour politicians. But beyond the "Westminster Village" there remains total confusion about how these so called concessions will work and do they really compensate those who lose out from the change.

So far the Chancellor has only said that the winter fuel payment will be backdated to April - all other tax credits are unlikely to be backdated meaning that people will still lose out on hundreds of pounds. Using figures supplied by the Institute for Fiscal Studies it appears that even after the concessions 3 million families will still lose out nationally.

Locally it was estimated that before any concessions, approximately 708,144 families in the South East would lose out, even after tax credit changes. After concessions, only a limited amount can be compensated using the measures Alistair Darling has indicated. The maximum reduction in the number of losers is 40,084 from any changes to the Winter Fuel Allowance for women aged 60 – 64; the maximum reduction in the number of losers is 22,981 from an increase in the minimum wage; the maximum reduction in the number of losers is 160,334 from changes to the eligibility requirements for the Working Tax Credit; and the maximum reduction in the number of losers is 40,084 from an increase in the Working Tax Credit.

Therefore, this means that based on what the Government have said so far about their strategy for compensating the losers, a best estimate of the maximum total reduction in the number of losers as a result of the package is 263,483 out of 708,144.

These concessions help a third of those who lose out from the 10p tax band change. What about the rest? The change should never have been made, and voted for by Labour MPs, in the first place.

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