The Conservatives can no longer claim to be the party of "strivers" as the government plans to slash tax credits, according to a former welfare minister. Frank Field told IBTimes UK that the Tories' proposal to reform the tax credits system "blows that claim apart".
"Over three million strivers are going to be made worse off by more than £1,300 ($2,006) a year, which is a mega sum," the senior Labour MP said. "I think they are [making the cuts] through carelessness and I don't think the government has actually realised what the impact will be on ordinary striving families."
The warning comes ahead a crunch vote in the House of Commons on 15 September over George Osborne's Budget proposal to slash £6bn in tax credits. Field said he did not know what was going to happen in the debate, but the anti-poverty campaigner said some Tory MPs were opposed to the chancellor's plans – an indication that the government could face another early rebellion in the Commons.
Osborne has argued that the changes, part of the chancellor's plans to make £12bn in welfare savings, are "fair" and will help the UK move from a "high welfare, high tax economy, to a lower welfare, lower tax society".
"These changes to tax credits are not easy but they are fair, and they return tax credit spending to the level it was in 2007-08 in real terms," the chancellor said in July.
"When we came to office in 2010 this country had reached the point where a benefit that was intended to support lower income households, was instead available to nine out of 10 families in this country."
The top Tory added: "We are moving Britain from a high welfare, high tax economy, to a lower welfare, lower tax society. The best way to support working people is to let them keep more of the money they earn."
But the independent Institute for Fiscal Studies (IFS) has warned that Osborne's proposal to lift the national minimum wage (NMW) to £9 per hour by the end of the parliament in 2020 would not make up for the cuts to tax credits and other welfare payments.
"The new national living wage will only offer partial compensation to working age households who will see their incomes fall as a result of tax and benefit changes announced for the current parliament," said William Elming, a research economist at the IFS.
"There may be strong arguments for introducing the new NLW, such as increasing earnings and the incentives to work for the low paid.
"However, the new NLW cannot be considered a direct substitute for benefits and tax credits aimed at lower income households. The wage increases are not as large as the benefit cuts. And, it is not targeted at the same group who lose from the cuts."