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Tax credit cuts to hit North East harder than London

The North East will be hit harder than London and the South by the Chancellor’s tax credit cuts, according to new analysis from the Trade Union Congress (TUC).

Findings show that more than nine in ten (92%) working tax credit households in the region will be worse off as a result of the government’s cuts, and sets out their average loss.

Across the North East, where average income per head is over £7,500 lower than London, the average loss to working tax credit claimants will be £1410.

By contrast, the average loss for a losing household in London will be £1,110. This is despite the fact that London has the highest average income per head in the UK.

Working tax credit households in every UK region and nation will suffer larger average losses than London despite having lower incomes.

In total the TUC estimates that over £220m will be lost from working recipients of tax credits across the region as a result of the cuts.

The TUC says the analysis demonstrates that the tax credit cuts will worsen regional income inequalities. The government should be supporting families on lower incomes rather than making them even worse off, says the TUC.

Although the Chancellor has now indicated that he will modify the plans in the government’s spending review on 25 November, it is currently expected that he will propose transitional arrangements which may delay the full impact, but will not stop them taking place.

TUC Regional Secretary Beth Farhat said: “This research makes clear that as well as making families suffer, the tax credit cuts will make regional inequalities worse. Households in the North East will lose £300 more, on average, than claimants in London.

“Instead of cuts that target the UK’s lowest-paid communities, the government should channel more support towards them.

“The Prime Minister and the Chancellor seem to be the last people in Britain who still think the tax credit cuts are a good idea. They don’t seem to understand that people in work deserve a decent income. These cuts should be ditched altogether.”