Monday 31st December 2012
Embargoed until 00.01hrs, Tuesday 1 January 2013
In 2013 the true scale of the unfairness of David Cameron and George Osborne’s decisions will be exposed
Rachel Reeves MP, Labour’s shadow chief secretary to the Treasury, commenting on tax and benefit changes due to take effect in 2013, said:
“We ended 2012 with the failure of the Tory-led Government’s economic plan on both growth and the deficit and the news that working families are being forced to pay the price. And in 2013 the true scale of the unfairness of David Cameron and George Osborne’s decisions will be exposed for all to see.
“While millionaires will get a huge tax cut this year, striving working families on modest incomes will see their tax credits cut, middle income families will lose child benefit and pensioners will be hit by the granny tax.
“In a year when our economy needs to be kick-started and millions of striving families will continue to see their incomes squeezed the Tory-led government is sticking with the same failing policies and standing up for the wrong people.
“Millions of working families will be worse off overall under this government, even with the changes to the personal allowance, as cuts to tax credits and child benefit bite on top of the cost of higher VAT. Yet 8,000 millionaires will get an average tax cut of over £107,000 in April.
“There is nothing fair about making striving working families pay the price for this government’s economic failure, while George Osborne gives a £3 billion tax cut to the richest earners in the country.
“The Tories can no longer claim we are all in this together and throughout 2013 Labour will highlight the major economic and political mistake they have made.”
1. Details of all the tax and benefit changes for 2013 can be found below:
• 7 January 2013: Child benefit changes for parents earning over £50,000 come into effect. The changes will mean that a one earner family on £50,000 will see their child benefit cut, while some two earner families on as much as £100,000 could keep all their child benefit.
• 1 April 2013: Council Tax Benefit replaced by localised support for Council Tax and budget reduced by 10 per cent.
• 1 April 2013: Changes to housing benefit will mean that people living in under-occupied housed will have to move to somewhere smaller or make up the difference in rent. Housing benefit will be cut by 14 per cent if one bedroom is under-occupied and by 25 per cent if two or more bedrooms are under-occupied.
• 1 April 2013: Local Housing Allowance will be uprated by CPI.
• 6 April 2013: 50p additional rate of income tax cut to 45p on incomes over £150,000 – meaning that 8,000 people earning £1 million or more will receive an average tax cut of £107,500.
• 6 April 2013: Working age benefits and tax credits increased by 1 per cent – in other words cut in real terms. According to the Resolution Foundation, more than 6 in 10 households affected by the 1 per cent uprating decision are in work. (Resolution Foundation, Analysis of the 2012 Autumn Statement, December 2012,http://www.resolutionfoundation.org/media/media/downloads/Resolution_Foundation_AS_Reaction.pdf)
• 6 April 2013: Cap on income tax reliefs claimed by individuals will come into effect.
• 6 April 2013: Personal Allowance for those aged under 65 will be set at £9,440.
• 6 April 2013: The higher rate threshold will fall to £41,450
• 6 April 2013: The ‘Granny Tax’ takes effect.
• 6 April 2013: Child benefit frozen for third year.
• 8 April 2013: Personal Independence Payment will replace DLA for new claims in Merseyside, North West England, Cumbria, Cheshire and North East England. During this period new claimants in all other parts of the country will continue to claim Disability Living Allowance as now.
• 15 April 2013: Household benefit cap begins to come into effect, starting in Bromley, Croydon, Enfield and Haringey.
• April 2013: Pathfinder projects for Universal Credit will begin in some local authorities.
• June 2013: New claims for Personal Independence Payment will be taken from all parts of the country.