The income disregard has been lowered despite statements suggesting the cuts had been cancelled
MPs have voted to make £1 billion of cuts to tax credits, without holding a parliamentary debate on the subject.
George Osborne said in his autumn statement that he had cancelled cuts to the in-work benefits – but a little-noticed cut to the so-called “income disregard” was quietly left in place.
The change reduces the amount a claimant’s income can increase in a year before their claim is reassessed – from £5,000 to £2,500.
Any low-income worker who earns more than they had expected in a year over the threshold is forced to pay back some or all of their tax credits.
Labour says the £1 billion cuts will make 800,000 more people on low incomes poorer.
MPs voted by 272 to 228 to pass the cuts, with most Labour MPs against and most Conservatives in favour.
The cut was brought through Parliament as a statutory instrument meaning it does not have to go through all the stages of debate – a favourite tactic of the current Government.
The Treasury will gain £935million from the cut by 2020, according to an impact assessment.