The government has been accused of trying to hide the impact of its welfare reforms after producing an analysis that fails to show how the changes will hit different sections of the population.

A Treasury document issued this week to an obscure Lords select committee is the first attempt by the government to set out the impact of the tax credit cuts announced in the post-election summer budget, but the analysis only shows the impact by income on families already in receipt of tax credits, as opposed to the impact by income on the population as a whole.

The Treasury select committee and the work and pensions select committee have been asking for a full impact assessment since August, but ministers have hidden behind a careful set of wording to avoid showing how George Osborne’s claim that eight out of 10 families will be better off by 2017-18 will be borne out.

Frank Field, the chairman of the work and welfare select committee, accused ministers of trying to bamboozle parliament and the public.

The new figures showing the impact of the budget measures on different income groups already in receipt of tax credits were handed to the Lords secondary legislation scrutiny committee this week.

However, Matt Whitaker, the chief economist at the Resolution Foundation thinktank, pointed out that relevant numbers necessary to make a judgment on the losers and winners across the population had been withheld.

He said: “Government analysis of how the summer budget will affect households was conspicuously absent in July. This may, in part, be due to the eye-watering cash losses that millions of working households will experience due to tax credit cuts – despite the welcome introduction of the ‘national living wage’.

“The government’s latest analysis still fails to show the full distributional impact of its welfare changes. They should focus instead on easing the losses that working families will face in April.”



The Treasury select committee wrote in August to the chancellor asking for a full assessment of the summer budget measures. The so-called distributional impact has been provided following previous budgets.

But the committee met this week to discuss the distributional impact paper they had been finally sent, and agreed it was inadequate.

Andrew Tyrie, the committee chairman has now written back to the chancellor to ask again for a full impact assessment as originally requested. One committee member said the evidence “is an obvious sleight of hand”.

Field, the chairman of the work and pensions select committee, has announced he is to hold an inquiry into the overall impact of the tax credit cuts.

Field said: “George Osborne simply won’t come clean about the impact of these cuts in April on Britain’s lowest-paid workers. He’s trying to bamboozle his way out of a corner by saying ‘eight out of 10 working households’ will be better off overall by 2017-18. But it is doubtful that any of the tax credit claimants affected by these cuts will be among this group. Might he now publish a proper reckoning of the impact of these cuts on the nation’s strivers?”

A Treasury spokesman said: “This week we provided the secondary legislation scrutiny committee with an impact assessment on the government’s reforms to tax credits set out in the summer budget, which they had previously requested.

“The government is under no obligation to provide this analysis, and impact assessments of any kind are not routinely done for reforms made by statutory instrument in this way. Indeed, we have gone out of our way to be transparent in this instance.

“The government’s analysis clearly demonstrates that tax credit claimants on the highest incomes – on average £42,000 a year – will contribute nearly four times as much as the claimants on the lowest incomes to the savings made by the fair and necessary welfare changes we have set out.”

The government has tried to defend its proposals more broadly by referring to a wider range of measures in the summer budget, including increases in the personal tax allowance, help for childcare, and increases in the minimum wage, which are to be introduced over the course of the parliament.

As a result, the Treasury says it is expected that by 2020-21, an illustrative couple with two children currently in receipt of housing benefit and where one partner works 35 hours a week on the national minimum wage will see a cash increase in their annual income of £2,400 compared with today.

But Helen Goodman, a Treasury select committee member, said these numbers do not take into account the fact that the cuts to tax credits will bite next April, but the full increases in personal tax allowance and the minimum wage do not occur until the end of the parliament.

She adds they also fail to take into account that many people on the minimum wage are second earners in relatively well-off households. Owen Smith, the shadow work and pensions secretary, said: “The impact assessment forced out of the government today is an insult to the 3 million working families set to lose £1,350 a year as a result of Tory cuts to tax credits.



“The government says the increase in the minimum wage will offset the losses to working families from tax credit cuts. However, this shoddy, back of the envelope, analysis doesn’t even try to prove that false claim.”

In the new information provided by the Treasury, the distributional analysis shows that 10% of tax credit claimants on the highest incomes are contributing nearly four times as much as the poorest tax credit claimants to welfare savings.

Average household income in the richest 10% of tax credit claimants is £42,000 a year; significantly above the average household income of £25,000. It adds that 60% of the tax credit savings come from the half of tax credit claimants with the highest income.



The savings are to be achieved in 2016-17 by increasing the tax credits taper rate from 41% to 48%, so saving £1.47bn; reducing the tax credits income threshold to £3,850 saving £2.76bn.