Francis Elliott, Deputy Political Editor
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to The Sunday Times
More than 1.8 million low-paid workers face losing 60p more for every extra £1 they earn as a result of tax changes that come into effect next month.
Gordon Brown and Alistair Darling were accused of deepening the poverty trap by scrapping the 10p starting rate of income tax and clawing back tax credits from those earning more than £6,420.
The measures would affect dinner ladies and hospital cleaners, while millionaires were taxed at 40 per cent, said Stephen Byers, the former Transport Secretary. Figures included in this week’s Budget showed that the numbers now subject to tax rates equivalent to 60 per cent or more will exceed 1.8 million in the coming year, compared with 760,000 a decade ago.
“Poorly paid people are facing a reduction in their income of over 60 per cent — higher than millionaires who are paying 40 per cent income tax. For a progressive Government this is not an acceptable situation,” Mr Byers told MPs yesterday.
The close ally of Tony Blair and a long-time critic of Mr Brown’s tax credit system called for large increases in the national minimum wage to help to release more people from the poverty trap.
Ministers said that they were right to concentrate on meeting the Government’s target to halve the number of children in poverty. Poorer parents are to be offered £200 to take up free nursery places and could receive further cash payments to meet targets set for their child, it emerged yesterday.
From next year they will be offered cash to attend a “taster” session with their young child during a trial of child development grants in ten council areas. The Department for Children, Schools and Families said that it hoped to replicate a scheme set up last year by Michael Bloomberg, the Mayor of New York. The project, Opportunity NYC, rewards families for meeting education and health targets with cash payments.
Ministers said that they intended to help teenage mothers by introducing “new approaches to improving supported accommodation for teenage parents”. Based on existing schemes that intend to keep young people off the streets, mothers would be allowed to live independently in return for training or working.
David Cameron joined the battle on family policy last night by proposing that fathers and mothers could be paid to stay at home at the same time to look after their newborn children.
The Conservative leader said that couples should be allowed to decide how to allocate 38 weeks of state-paid parental leave after an initial 14 weeks during which the £112-a-week benefit was payable to the mother. The Tory proposal goes beyond government plans in allowing parents to take their leave simultaneously and reducing from 26 weeks to 14 weeks the period that the benefit must be claimed by mothers.
Mr Cameron said that families would be helped by increased flexibility. “The world is changing, men want to be more involved in bringing up their children,” he said.
John Hutton, the Business Secretary, said that few couples could live on state benefits. “Even if you doubled statutory maternity pay and paid it for a shorter period of six months, families in which both parents gave up work would be faced with a cut of nearly £400 per week on average — on top of the income they already forgo from the mother taking time off. It shows the Tories are not living in the real world that families live in,” he said.
The Tory leader announced the first in a series of policy announcements on the family before the Conservatives’ spring conference in Newcastle upon Tyne, which starts today.
Mr Cameron allowed ITN cameras to film him at home with his family in preparation for today’s announcement. He was pictured at breakfast time with his wife, Samantha, and three children, Ivan, Nancy and Elwen.
He was shown playing with his children and asking them which cereals they wanted. His wife, who is interviewed rarely, spoke of how regimented the family needed to be to get out of the house on time.
Mr Cameron’s decision to give access to his family is in contrast to the practice that has been followed by Gordon Brown, although Tony Blair was pictured regularly with his wife Cherie and their four children.
Asked whether he thought that it would be controversial, Mr Cameron said that “people want to know what you are like and what makes you tick — that is modern politics. People want to know a bit about your life. That is natural.”
He added it was important that voters did not think that politicians were a breed apart.
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This appears to be the real Alastair Darling/Gordon Brown policy to persuade people in poverty to look for jobs. In practice it is clearly even worse than the theoretical figures Stephen Byers quotes. These poor people are being hit by the Government's attempt to claw back at least a billion pounds from tax credits over-paid in the past. Hundreds of thousands of them (chosen at random as far as they can see) can expect to be hit by under-payments of tax credits due to them this year. Over and above all that, I have just been reading an Income Tax coding notice sent to a pensioner who has just had incapacity benefit withdrawn as comes to receive his pension. The Coding Notice proposed to cut his tax personal allowance by over four thousand pounds - on account of his receipts from incapacity benefit! I suspect thatthere will be over a hundred thousand of such errors hitting the poorest taxpayers.
Diversity, Madrid, Spain
The relativity of child poverty. If you are on average income with an average mortgage trying to pay your way you are possibly on the same breadline as non working parents who have their housing and council tax paid for them. Most low paid folk on on the minimum wage do not have enough to raise themselves out of the Poverty trap. This is now worse with the abolition of the 10 per cent tax rate. In fact no one should pay tax until their earnings reach around 13.000 a year. Rent ot Mortgage of £600 to £700 a week ( in the south east at least) equals £7200 a year . council tax of around an average £1350 a year gas and electricity of around £1200 a year and food minimum of £50 a week this is around £7 a day. or £2600 a year .I haven t even included any transport costs but if the bus fair in my area is anything to go by it is £4 return to go around five miles. In fact my sums add up to ove£14000
Most low to average paid work does not give you this after tax
I rest my case here .
Sue C, Worthing,
Scrap these ridiculous tax credits and alleviate poverty by getting people into decently paid jobs with lower tax rates enabling them to keep money the harder they work. The present system penalises hard work and those who are responsible about having children. It's really very simple. Why do Labour have to make everything so complicated?
Paul Owen, Birmingham, UK
New Labour have - Old Labour would have been more in tune with its core vote - NOTE THE DIFFERENCE FOLKS !!!
Ian Payne, WALSALL,
Dear Alix of London,
So what?
eddie, mirthios, crete, greece
I don´t think that Alistair or Gordon realise what they have done to the no-kids, low earners of this country. There are no benefits available to people under retirement age, who are childless and earn less than 15,500 a year. Yet, as a result of this budget, they alone will end up paying more income tax than they did before it. I sincerely hope that history remembers Gordon Brown as the Labour Chancellor who robbed the poor to buy the votes of the rich.
David, Valencia, Spain
...not finished yet!
Cameron's pathetic prostitution of his family life before his children are old enough to make a decision about their public role does not disguise the fact that the Tories have NO alternative policy. George Osbourne was in the Telegraph yesterday admitting that they "cannot promise" a tax cut. Of course they can't! To promise a tax cut to low earners, they'd have to tax their core voters, the rich, more heavily.
The only party currently offering a costed tax cut for low earners is the Lib Dems. Sorry, but true.
It IS possible to offer tax cuts. You just have to be (a) not obsessed with expensive statist control of every aspect of life and (b) not in bed with big business and the super-wealthy.
That's both the Tories and Labour out on both counts.
Alix, London,
I cannot believe that a LABOUR government has got away with this. It makes me furious that no-one called them on it at the time. They have actually got rid of the starting rate band of tax and made the LOWEST earners worse off!
I did work it out when last year's budget came out, and found the dividing line was something like £17k. If you earn less than that, you're worse off come 5 April! You can, of course, pick your way through the tax credits and benefits maze if you've got the stomach for it, and resign yourself to spending more time working out how much benefit you'll lose by doing extra work than you actually spend on getting extra work. Assuming you're eligible for tax credits of course.
Labour have decided to take money away from the poorest people, and give (some of) it back to (some of) them after they've messed it around a bit and siphoned some off for illegal wars.
How is this allowed to happen?
Alix, London,
No MP with salary and expenses approaching £200,000 a year lives in the same world as most famlies. One reason why voters are leaving in droves and taking their earning skills with them.
Marshall, Moraira, Spain
I feel the goverment are driving the country in to resession. There tax's aren't affecting the higher paid they are affecting those of us who are already living on a tight budget. I am a single parent with two children. I work extremely long hours and sometime 7 days a week to make ends met.
Great tax us more!!!
When I then can't afford to get to work as the transport costs have gone up and the cheap cars I can afford (which you would scrap) I can't afford to run or put road tax on you will end up having to house myself and my children at a much higher cost. Even my maths adds that up to a bad idea!
I think it is long passed time for a change and the nation to stand up and say enough!!!
Diane Fairless, Farnborough, Hampshire
I did write this before, about Alistair Darling, I think Alistair is
more Conservative then George Osborn, so how do you think
we the general-community will be rich, the idea of new labour is to make our community in Britain them&us ?
Although, i wouldn't think i am rich, but i am normal thank's
Ken
Cllr Ken Tiwari (Independendent), Oxford, United Kingdom
This is not a Darling budget, it is a Brown budget, and that man was seduced by power long ago as he sat stewing in his malice at number 11. The country feels let down as they both kneel down in front of the uber rich. After this I don't know how they can even look at themselves in the mirror. I will never vote for Labour again.
Darre L , Kings Lynn, Norfolk
How many more poor people have to be taxed to the limit to make all of these millionaires the Chancellor wants?
David Leslie, Perth, Scotland
For the first time in my life I will probably be voting for the Tories - I am very disappointed in New Labour. I am worse off now thanks to Gordon Brown's government.
Pepper, Brighton, UK
All these measures to help teenage mothers etc are really becoming more than a joke. Employers should be paying a salary/wage that covers all the expenses parents face. As it is the taxpayer makes up the shortfall and, because it is a vote winner, the political parties are trying to outdo each other in the amounts they spend on this category of the population. Does anyone check to make sure that it is indeed the children who benefit? A question: do single people exist in the UK - apart from their function as milch cows?
Alice J McCabe, Doncaster, UK
"He added it was important that voters did not think that politicians were a breed apart. "
Ha! ha! ha! ha!
Did he have a straight face when he said this?
R Bingham, Lauzun, France