Budget Will Hit Poor

It's claimed planned cuts to the UK budget will hit Scotland's poorest children most.

Figures due to be published by the Scottish Government tomorrow will show that, if tax credits are reduced to 2003 levels in real terms, the poorest 20% of families with kids will lose nearly 8-percent of their income.

More than 22, 000 working families in Fife receive tax credits currently.

The First Minister has described the research as a 'frightening indication' of the impact of George Osborne's expected cuts and said:

“The UK Government has already warned that tomorrow’s budget will continue their austerity approach, which we are clear is not just unfair but damaging to the economy – undermining attempts to stimulate growth.

“Tax credits form an important part of the tax and welfare system, designed particularly to support working families on low incomes.

“More than 500,000 children in Scotland benefit from tax credits. Two-thirds of the £2 billion expenditure on tax credits in 2013-14 went to low-income working families with children and only 5 per cent to households without children.

“If, as we expect, the UK Government targets tax credits for cuts in tomorrow’s budget, it will hit Scotland’s poorest children and families hard. It is a frightening indication of the potential impact of the expected cuts in tomorrow’s UK budget.”

The First Minister went on to describe the austerity approach as “economically counter-productive”: “We want to support people to get into work and to stay in work and the tax credit system provides important practical help to families on low pay.

“These are people who are in jobs and often working very hard for relatively little pay. It is unfair that their children are the people made to pay for the mistakes of the austerity approach – not to mention economically counter-productive.

“When people are in work, they spend their wages in the local economy, leading to a virtuous circle. Cutting child tax credits back to 2003 levels, as we expect the UK Government to do tomorrow, will risk threatening Scotland’s economic recovery.

“The deficit needs to be reduced but this should be done in a more gradual manner with more resources allocated to a programme of additional investment in our economy, rather than risking a financial body-blow to hard-working parents and their children.”