Ministers consider tax credits cut
Tax credits could be reduced sharply as part of George Osborne’s promise to cut welfare spending by £12bn and eliminate the deficit. Since the Conservatives’ cuts pledge, made in January last year, David Cameron has promised to protect more spending areas including pensions and child benefit. Tax credits, housing benefit and disability benefits, together worth £77.5bn, have therefore been identified as the three categories most susceptible to cuts. The BBC has suggested credits could be rolled back to levels last seen in 2003. Spending on tax credits has doubled as a proportion of national income since 2002, while family benefits amount to 4% of GDP. The Institute for Fiscal Studies has said that cutting tax credits could “strengthen work incentives”.