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David Cameron announces deep cuts to tax credits

Published 22/06/2015

Deputy First Minister Martin McGuinness speaks at the End Austerity Now rally in Parliament Square, London. Photo: John Stillwell/PA Wire
Deputy First Minister Martin McGuinness speaks at the End Austerity Now rally in Parliament Square, London. Photo: John Stillwell/PA Wire
An effigy of Prime Minister David Cameron among protesters at the End Austerity Now rally down Queen Victoria Street, London
Protesters at the End Austerity Now rally down Queen Victoria Street, London

Prime Minister David Cameron has signalled that the Government is preparing deep cuts to tax credits as he defended the his plans to slash £12 billion from the welfare bill.

The Prime Minister said that Britain needed to become a "a higher wage, lower tax, lower welfare society" rather than simply dealing with "symptoms" of low pay by topping up people's pay packets.

In a keynote speech in Runcorn in Cheshire, he vowed to end the "merry-go-round" where people on low pay paid tax to the Government only for the Government to hand back the money in welfare payments.

His comments come after Chancellor George Osborne and Work and Pensions Secretary Iain Duncan Smith confirmed plans to strip another £12 billion off the benefits bill.

The announcement dashed speculation that the reduction could be scaled back or delayed when Mr Osborne sets out further details in his first all-Conservative Budget next month.

With pensioners, the disabled and child benefit all protected, the brunt of cuts is expected to fall on tax credits and housing benefit.

Mr Cameron said: "There is what I would call a merry-go-round. People working on the minimum wage having that money taxed by the Government and then the Government giving them that money back - and more - in welfare," he said.

"Again, it's dealing with the symptoms of the problem - topping up low pay rather than extending the drivers of opportunity - helping to create well paid jobs in the first place.

"We need to move from a low wage, high tax, high welfare society to a higher wage, lower tax, lower welfare society."

Labour leadership frontrunner Andy Burnham said it was "disgraceful" that ministers had yet to spell out where the cuts would fall and questioned whether they had a mandate from the electorate.

Demonstrators including Labour MP Diane Abbott (2L), British singer Charlotte Church (C) and General Secretary of Unite Len McCluskey (2) hold a banner as they march to protest against the British government's spending cuts and austerity measures in London on June 20, 2015. The national demonstration against austerity was organised by People's Assembly against government spending cuts. AFP PHOTO / JUSTIN TALLISJUSTIN TALLIS/AFP/Getty Images
Demonstrators including Labour MP Diane Abbott (2L), British singer Charlotte Church (C) and General Secretary of Unite Len McCluskey (2) hold a banner as they march to protest against the British government's spending cuts and austerity measures in London on June 20, 2015. The national demonstration against austerity was organised by People's Assembly against government spending cuts. AFP PHOTO / JUSTIN TALLISJUSTIN TALLIS/AFP/Getty Images
TOPSHOTS Satirical artist Kaya Mar poses with a work depicting British Chancellor of the Exchequer George Osborne at the start of a protest against the British government's spending cuts and austerity measures in London on June 20, 2015. The national demonstration against austerity was organised by People's Assembly against government spending cuts. AFP PHOTO / JUSTIN TALLISJUSTIN TALLIS/AFP/Getty Images
A demonstrator stands on the statue of former South African prime minister Jan Smuts in Parliament Square holding a smoke flare as thousands of demonstrators gather to listen to speeches during a protest against the British government's spending cuts and austerity measures in London on June 20, 2015. The national demonstration against austerity was organised by People's Assembly against government spending cuts. AFP PHOTO / JUSTIN TALLISJUSTIN TALLIS/AFP/Getty Images
Thousands of demonstrators gather to hear speeches in Parliament Square during a protest against the British government's spending cuts and austerity measures in London on June 20, 2015. The national demonstration against austerity was organised by People's Assembly against government spending cuts. AFP PHOTO / BEN STANSALLBEN STANSALL/AFP/Getty Images
Thousands of demonstrators gather to hear speeches outside the Houses of Parliament during a protest against the British government's spending cuts and austerity measures in London on June 20, 2015. The national demonstration against austerity was organised by People's Assembly against government spending cuts. AFP PHOTO / BEN STANSALLBEN STANSALL/AFP/Getty Images
An anti-government protest placard is seen outside Downing Street during a march to protest against the British government's spending cuts and austerity measures in London on June 20, 2015. The national demonstration against austerity was organised by People's Assembly against government spending cuts. AFP PHOTO / BEN STANSALLBEN STANSALL/AFP/Getty Images
Demonstrators congregate in Parliament square to hear speeches at the end of a protest march against the British government's spending cuts and austerity measures in London on June 20, 2015. The national demonstration against austerity was organised by People's Assembly against government spending cuts. AFP PHOTO / JUSTIN TALLISJUSTIN TALLIS/AFP/Getty Images
Charlotte Church attending the End Austerity Now rally in London
Demonstrators crowd the area around the Bank of England as they gather for the start of a protest against the British government's spending cuts and austerity measures in London on June 20, 2015. The national demonstration against austerity was organised by People's Assembly against government spending cuts. AFP PHOTO / JUSTIN TALLISJUSTIN TALLIS/AFP/Getty Images
Protesters attend the End Austerity Now rally outside the Bank of England, London. PRESS ASSOCIATION Photo. Picture date: Saturday June 20, 2015. See PA story INDUSTRY Protest. Photo credit should read: John Stillwell/PA Wire
A protester wearing a mask at the Scotland United Against Austerity rally held in George Square, Glasgow. PRESS ASSOCIATION Photo. Picture date: Saturday June 20, 2015. See PA story INDUSTRY Protest. Photo credit should read: Danny Lawson/PA Wire
Demonstrators with placards crowd the area around the Bank of England as they gather for the start of a protest against the British government's spending cuts and austerity measures in London on June 20, 2015. AFP/Getty Images
Demonstrators sit outside the Bank of England as they wait for the start of a protest against the British government's spending cuts and austerity measures in London on June 20, 2015. The national demonstration against austerity was organised by People's Assembly against government spending cuts. AFP PHOTO / JUSTIN TALLISJUSTIN TALLIS/AFP/Getty Images
A demonstrator waits for the start of a protest against the British government's spending cuts and austerity measures in London on June 20, 2015. The national demonstration against austerity was organised by People's Assembly against government spending cuts. AFP PHOTO / JUSTIN TALLISJUSTIN TALLIS/AFP/Getty Images
A demonstrator holds a placard as he waits for the start of a protest against the British government's spending cuts and austerity measures in London on June 20, 2015. The national demonstration against austerity was organised by People's Assembly against government spending cuts. AFP/Getty Images
Demonstrators kiss outside the Bank of England as they wait for the start of a protest against the British government's spending cuts and austerity measures in London on June 20, 2015. AFP/Getty Images
Protesters attend the End Austerity Now rally outside the Bank of England, London. PRESS ASSOCIATION Photo. Picture date: Saturday June 20, 2015. See PA story INDUSTRY Protest. Photo credit should read: John Stillwell/PA Wire
Protesters attend the End Austerity Now rally outside the Bank of England, London. PRESS ASSOCIATION Photo. Picture date: Saturday June 20, 2015. See PA story INDUSTRY Protest. Photo credit should read: John Stillwell/PA Wire
Charlotte Church is set to address the crowds

Mr Cameron insisted that the Government was determined to tackle the root causes of inequality and not just the symptoms.

"The right track is to recognise the causes of stalled social mobility and a lack of economic opportunity," he said.

"Family breakdown. Debt. Addiction. Poor schools. Lack of skills. Unemployment. People capable of work, written off to a lifetime on benefits.

"Recognise those causes, and the solutions follow. Strong families that give children the best start in life. A great education system that helps everyone get on. A welfare system that encourages work - well paid work.

"These are the drivers of opportunity - and we need to extend them."

Mr Cameron highlighted three strands of his plan to improve social mobility.

  •  Families will be strengthened with better childcare, flexible working and relationship support, as well as a faster adoption process and an expansion of the Troubled Families programme to help 400,000 families over the next five years.
  •  A focus on "first class" education, with "zero tolerance" of failing schools and a new focus on "coasting schools".
  •  Creating well-paid jobs, increasing the minimum wage to £6.70 in October and the personal tax threshold to £12,500 over the next five years and "going further" as the economy recovers and welfare is reformed.

 

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