Charity links recession with £3 billion tax credit cuts

Published by Max Salsbury for 24dash.com in Housing and also in Central Government, Communities, Finance

Child Poverty Action Group believes that today's news of a deepening of the recession is linked to the £3 billion cut in tax credits.

The Office for National Statistics has announced that the economy shrank by 0.7% in the second quarter.

The charity thinks that the £3.14 billion cuts to social protection and support in April have contributed to the contraction.

The cuts represent 0.2% of annual GDP.

Imran Hussain, Head of Policy at Child Poverty Action Group, said: “For many families with children the recovery never got underway. They have endured a miserable few years coping with rising living costs, job losses, wage freezes and cuts in social protection.

"Ministers have to do more to create jobs, help parents move into work by providing better childcare and reinstate the tax credits taken away this April from many low-paid couples.

“An international study looking at which countries recovered fastest from recession in 2009 found it was those giving the biggest stimulus to the incomes of the poorest households. This is because low income families spend their money straight away in their local shops and services, helping struggling businesses to survive.

“The size of the contraction is perhaps less surprising when you take account of the £3 billion of cuts to tax credits that hit the poorest working families this April.

"Ministers must urgently reconsider welfare cuts, not just because of the social damage we know they are causing, but because they may be deepening the current recession and impeding economic recovery.”