embargo: 00.01hrs Wednesday 18 November

New analysis published today (Wednesday) by the TUC reveals that the Chancellor’s tax credit cuts will hit the UK’s poorest regions and nations the hardest.

The TUC analysis shows that more than nine in ten (91%) working tax credit households in the UK will be worse off as a result of the government’s cuts, and sets out the average loss in each part of the UK.

In Northern Ireland, where average income per head is the lowest in the UK, the average loss to working tax credit claimants will be £1,480 – the highest of any UK nation and region.

By contrast, the average loss for a losing household in London will be £1,110. This is despite the fact that London has the highest average income per head in the UK.

Working tax credit households in every UK region and nation will suffer larger average losses than London despite having lower incomes.

In the North East, for example, where average income per head is more than £7,500 lower than London, households will be £1,410 worse off from the Chancellor’s tax credit cuts.

And in Yorkshire and the Humber, where average income per head is more than £7,000 lower than the capital, households will lose £1,440.

In total the TUC estimates that over £4.5bn will be lost from working recipients of tax credits across the UK as a result of the cuts.

The TUC says the analysis demonstrates that the tax credit cuts will worsen regional income inequalities. The government should be supporting families on lower incomes rather than making them even worse off, says the TUC.

Although the Chancellor has now indicated that he will modify the plans in the government’s spending review on 25 November, it is currently expected that he will propose transitional arrangements which may delay the full impact, but will not stop them taking place.

TUC General Secretary Frances O’Grady said: “This research makes clear that as well as making families suffer, the tax credit cuts will make regional inequalities worse. The households who will lose the most are those already in low-income areas.

“Instead of cuts that target the UK’s lowest-paid communities, the government should channel more support towards them.

“The Prime Minister and the Chancellor seem to be the last people in Britain who still think the tax credit cuts are a good idea. They don’t seem to understand that people in work deserve a decent income. These cuts should be ditched altogether.”

NOTES TO EDITORS:

Regional losses in 2016/17 from tax credit cuts announced in July 2015 Budget

Region Average income per head Average loss per working tax credit loser Northern Ireland £14,347 £1,480 Yorkshire & The Humber £15,252 £1,440 North East £14,927 £1,410 Wales £15,413 £1,390 North West £15,412 £1,370 Scotland £17,039 £1,370 West Midlands £15,551 £1,340 East Midlands £15,893 £1,300 South West £17,693 £1,260 South East £19,898 £1,230 East £18,523 £1,220 London £22,516 £1,110

Source: IPPR tax/benefit simulator and TUC analysis using ONS data

Regional losses in 2016/17 from tax credit cuts announced in July 2015 Budget

Region % of working tax credit households facing losses Total loss to working families Northern Ireland 90% £169.0m Yorkshire & The Humber 95% £471.5m North East 92% £221.4m Wales 90% £245.6m North West 93% £537.2m Scotland 93% £399.3m West Midlands 95% £439.5m East Midlands 95% £391.6m South West 86% £364.7m South East 90% £478.8m East 91% £342.3m London 81% £464.2m UK 91% £4.5bn

Source: IPPR tax/benefit simulator and TUC analysis using ONS data

- The "average loss" column is for losing working households. It is calculated from April 2016

on a before housing costs basis.

- The total loss to all households in a region is arrived at by multiplying the average loss per region with by the total number of households.

- The Prime Minister has claimed that the losses from his government’s tax credit and Universal Credit cuts will be compensated for by a higher minimum wage and a more generous income tax personal allowance. However, while the tax credit cuts hit next year, the minimum wage will not reach £9 until 2020; and the tax allowance will not reach £12,500 until 2020 either.

- The government has been heavily criticised over the lack of an adequate impact assessment for the tax credit cuts by the Secondary Legislation Scrutiny Committee. The Committee has a remit to examine the merits of new regulations brought forward by statutory instruments – the form of legislation by which the tax credit cuts will be implemented. As well as the Committee’s most recent report on the tax credit regulations before parliament, correspondence between the Chair of the Committee, Lord Trefgarne, and the Chancellor of the Exchequer, George Osborne, is included in an appendix to the 9th report of the Committee, which was published on 15 October 2015. In a letter to the Chancellor on page 23 of the report, Lord Trefgarne states: “The Committee was concerned that the assessment could have done more to set out the short-term impact on household incomes; and also that the presentation of some of the material, notably on distribution, was difficult to understand, even for those used to economic analyses.” The full report from the Committee can be found here: www.publications.parliament.uk/pa/ld201516/ldselect/ldsecleg/38/38.pdf

- The average loss figures have been calculated using the Institute for Public Policy Research’s tax/benefit model.

- The income figures are for gross disposable household income per capita in 2013, taken from Regional Gross Disposable Household Income (GDHI), Office for National Statistics, 27 May 2015, table 1, http://www.ons.gov.uk/ons/dcp171778_405192.pdf . These figures are used in the House of Commons library to answer enquiries from MPs about regional differences in the income of households.

- All TUC press releases can be found at www.tuc.org.uk

- Follow the TUC on Twitter: @The_TUC and follow the TUC press team @tucnews

Contacts:

Media enquiries:

Alex Rossiter T: 020 7467 1285 M: 07887 572130 E: arossiter@tuc.org.uk

Tim Nichols T: 020 7467 1388 M: 07808 761844 E: tnichols@tuc.org.uk

Michael Pidgeon T: 020 7467 1372 M: 07717 531150 E: mpidgeon@tuc.org.uk

Elly Gibson (Mon to Wed) T: 020 7467 1337 M: 07900 910624 E: egibson@tuc.org.uk