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| Budget 2015: Benefit freeze to hit 13m families, claims IFS | |
| (35 minutes later) | |
| Thirteen million UK families will lose an average of £260 a year due to the freeze in working-age benefits, says the Institute for Fiscal Studies (IFS). | |
| Tax credit changes could hit three million families, which are likely to lose an average of £1,000, it said. | Tax credit changes could hit three million families, which are likely to lose an average of £1,000, it said. |
| Even taking into account higher wages, people receiving tax credits would be "significantly worse off," said Paul Johnson, director of the IFS. | Even taking into account higher wages, people receiving tax credits would be "significantly worse off," said Paul Johnson, director of the IFS. |
| The chancellor said most workers would be better off under Budget changes. | The chancellor said most workers would be better off under Budget changes. |
| The biggest impact on families will come from the freeze in working-age benefits and the changes to tax credits, said Mr Johnson. | The biggest impact on families will come from the freeze in working-age benefits and the changes to tax credits, said Mr Johnson. |
| "It will reduce the incentive for the first earner in a family to enter work," he said. | "It will reduce the incentive for the first earner in a family to enter work," he said. |
| The number of families affected under the IFS analysis includes those who claim Child Benefit - which will be frozen from April 2016. The majority of families claim the benefit. | |
| Benefits Freeze | |
| Most working-age benefits frozen from April 2016. Includes Job Seeker's Allowance, Employment and Support Allowance, Child Benefit and some Housing Benefit. | |
| Replaces 1% annual up-rating since April 2013. | |
| Budget calculator July 2015 | |
| The new Living Wage and you | |
| Benefit changes: Who will be affected? | |
| George Osborne said anyone working full-time on the National Minimum Wage - taking into account taxation changes - would be better off. | George Osborne said anyone working full-time on the National Minimum Wage - taking into account taxation changes - would be better off. |
| Under the new National Living Wage, all workers over the age of 25 will earn a minimum of £9 an hour by 2020. | Under the new National Living Wage, all workers over the age of 25 will earn a minimum of £9 an hour by 2020. |
| Speaking to the BBC, he said the changes amounted to a new contract with the country, which offered fewer benefits, but higher salaries. | Speaking to the BBC, he said the changes amounted to a new contract with the country, which offered fewer benefits, but higher salaries. |
| "This is a fair deal - because you've got to have a welfare system that's fair to the people who pay for it, as well as the people who need it," Mr Osborne told the BBC. | "This is a fair deal - because you've got to have a welfare system that's fair to the people who pay for it, as well as the people who need it," Mr Osborne told the BBC. |
| However the IFS said that higher wages would not compensate for cuts to tax credits. | However the IFS said that higher wages would not compensate for cuts to tax credits. |
| "There is simply not enough money going in to the new minimum wage to anywhere near compensate - in cash terms - people on tax credits," said Mr Johnson. | "There is simply not enough money going in to the new minimum wage to anywhere near compensate - in cash terms - people on tax credits," said Mr Johnson. |
| Tax credit changes | |
| From April 2016, anyone earning more than £3,850 a year will have their Working Tax Credit reduced more steeply. Previously they could earn up to £6,420. | |
| From April 2017, new claimants for Child Tax Credit will not be able to claim for the third, or subsequent children. | |
| '£3,450 worse off' | '£3,450 worse off' |
| Earlier the Resolution Foundation - a think tank that campaigns for low and middle-income families - also warned that the changes to tax credits could "weaken the incentive both to enter work, and earn more." | Earlier the Resolution Foundation - a think tank that campaigns for low and middle-income families - also warned that the changes to tax credits could "weaken the incentive both to enter work, and earn more." |
| Taking into account the new National Living Wage, the Resolution Foundation said many families will still lose out. | Taking into account the new National Living Wage, the Resolution Foundation said many families will still lose out. |
| According to its calculations, by 2020: | According to its calculations, by 2020: |
| However, it said some families moving on to Universal Credit, or applying for tax credits after April 2017 could face much bigger losses. | However, it said some families moving on to Universal Credit, or applying for tax credits after April 2017 could face much bigger losses. |
| For example, a low-earning couple with with three children making a new claim would be £3,450 worse off, following the tax and welfare changes set out in the budget. | For example, a low-earning couple with with three children making a new claim would be £3,450 worse off, following the tax and welfare changes set out in the budget. |
| "We shouldn't think that a higher minimum wage will compensate all low income working families for their losses - many working households will be left significantly worse off," said Gavin Kelly, chief executive of the Resolution Foundation. | "We shouldn't think that a higher minimum wage will compensate all low income working families for their losses - many working households will be left significantly worse off," said Gavin Kelly, chief executive of the Resolution Foundation. |