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120,000 Northern Ireland homes set to lose £900 a year in tax credit cuts

By Noel McAdam

More than 120,000 households in Northern Ireland will be worse off as a result of the Conservative Government's latest planned cuts, new research has revealed.

Around 121,000 homes in receipt of tax credits will get on average £918 less each year - an income cut of £17.60 a week.

That is the warning from the Department of Social Development (DSD) after an investigation into the likely impact of Chancellor George Osborne's summer Budget, which was unveiled after the general election in May.

A booklet produced for DSD officials warns that the Government's plans will mean further substantial cuts to the public purse that go beyond those envisaged by the original NI Welfare Bill in 2012.

Between now and 2020, the total estimated saving of £361m is based on the assumed roll-out of welfare reforms in Northern Ireland, which will see the value of tax credits decrease.

The data from the Northern Ireland Statistics and Research Agency (Nisra) comes as the two main Stormont parties remain deadlocked over implementation of welfare reforms.

Resolution remains central to the Assembly and Executive being able to continue beyond October.

But the latest research, published yesterday, centres mainly on areas outside of the control of the devolved administration, including tax credits.

Working tax credits and child tax credits are among the current payments which are set to be replaced by the Tories' system of universal credit.

The earliest they could be rolled out in Northern Ireland is January 2017.

At present, tax credits payments begin to go down - or are tapered - when income levels reach £6,420. But from April next year, that threshold shrinks to £3,850.

Northern Ireland has 109,000 claimants earning above the £6,420 threshold. Once that is reduced to £3,850, they will have their tax credit award tapered even further.

And there is also an indication that, in some cases, the impact of the changes will contradict the Government's aim of ensuring that it always pays to be in work.

The report, which was signed off by the DUP Social Development Minister Mervyn Storey, said it "could mean that cases with higher incomes are no longer entitled to tax credits".

It continued: "This will reduce the incentive to increase the number of hours worked as there will be less financial return for doing so."

Assuming that welfare reforms will ultimately be brought in here - even if administered from Westminster - the research estimates that Mr Osborne's budget will cut £206m off the welfare bill in 2016/17, rising to £361m in 2019/20.

The analysis by Nisra does not include the national living wage nor the increased personal tax thresholds.

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