Tax credit cuts will go ahead in a disguised form, a Christian charity has warned, months after the Chancellor made an embarrassing climbdown over his plans.
Far from a policy reversal, the same cuts George Osborne announced in the 2015 summer budget will go ahead, but will appear as cuts to Universal Credit, not as cuts to tax credits. By shifting the cuts, Osborne has avoided the controversy raised by the proposed cuts to tax credits but families will be hit just as hard.
This is the warning given by the Christian public policy charity CARE in their annual report on the taxation of families.
CEO Nola Leach told Christian Today: "When the Chancellor did a U-turn on his plans to make sweeping cuts to tax credits, many people understandably celebrated.
"However, our latest tax report highlights the disturbing fact that the Chancellor only postponed the main cuts and when Universal Credit is introduced in April 2017, some families will still see their tax burden increase.
"In other words, the government is still planning on introducing the cuts, which will hurt families, but through Universal Credit rather than the tax credits."
The government's much delayed and over-budget welfare reform, Universal Credit, will see multiple different benefits rolled into one monthly payment. However cuts to the programme's budget will mean the system, originally intended to be more generous, will now hurt families. CARE's report argues such a change would create a "deeply hostile fiscal environment for the family".
Leach continued: "Families will be incredibly exposed because there is no formal fiscal recognition of the family in the tax system and now, the government wants to slash fiscal recognition of families in the benefits system.
"All of this is coming from a Conservative government who said they would champion families."
The charity has called for a marriage incentive through the tax system so there is a financial advantage to being married. The report calls for couples to be able to fully transfer their personal tax allowance to their spouse, giving families a significant tax advantage.
A spokesman for the department for work and pensions said: "Universal Credit is fundamentally different to tax credits, and includes a wide range of additional support that is not offered under existing benefits such as increased childcare and help to progress in work. Everyone entitle to them will also receive transitional protections."
The spokesman added that many would receive the same amount or more when they moved onto Universal Credit. He continued: "This is all part of our plan to deliver a new settlement for the British people, one that will create a higher wage, lower tax and lower welfare economy."
