Changes to the Tax Credits system introduced by Chancellor George Osborne are estimated to cost an average of £511 a year to almost 80,000 West Midlands families.
Official figures indicate that these families, who are currently entitled to Child Tax Credits, will now receive nothing as a result of the new reforms.
The figures undermine the Government’s claims that working families will be better off under the new system, as a result of income tax changes. Families with household incomes of over £26,000 a year will lose their entitlement to the benefit if they have only one child.
Families on lower incomes who currently receive Working Tax Credit if they work at least 16 hours a week will lose their entitlement unless they work at least 24 hours a week.
Numbers affected are estimated to include 10,800 families in Birmingham alone, and around 1,400 in Solihull. Labour’s Shadow Chancellor, Ed Balls, said that families on middle and low incomes were facing a bombshell from the leaders of the Coalition Government.
But the Treasury disagrees, saying that the average household will be £5.50 a week better off.
The changes, which were initially announced in 2010, have prompted charities to warn that parents on the lowest incomes who are already badly affected by rising fuel, energy and food bills could face a choice between securing housing or feeding their families.
Sally Copley, of registered charity Save the Children said:
Far too many children are already hungry, cold, or poorly clothed because their parents can’t earn enough, and this will make their situation even worse. The poorest families could lose nearly a quarter of their incomes unless they can find extra work. This is not easy when employers are cutting back and record numbers of people are trying to go full time.