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  1. ITV Report

Osborne urged to delay tax credit cuts

Sir John Major and Gordon Brown have attacked poverty levels in Britain. Credit: PA

A cross-party committee of MPs has said George Osborne should postpone his plans for the reforms by a year, and arguing they had gone "too far and too fast" and would need to be changed altogether.

The intervention from the cross-party Commons Work and Pensions Committee appeared to undermine the Chancellor's promise to mitigate the impact of the cuts, saying there was no "magic bullet" to help affected families.

Chris Ship, deputy political editor for ITV News, has been looking at the pressure mounting on the Chancellor.

It came as Prime Ministers Gordon Brown and Sir John Major each launched scathing attacks on poverty in modern Britain, and warned ministers not to worsen the situation for poorer families.

Explained: What are tax credits and how are they set to change? Mr Brown - who introduced tax credits during his time as Labour Chancellor - wrote in the Mirror that the proposed reforms would undermine "everything Britain stands for" and "plunge almost another million families into poverty".

He accused the Conservatives of causing "government-induced poverty" through measures such as successive freezes in child benefit since 2010.

Tax credits were introduced during Gordon Brown's spell as Chancellor. Credit: John Stillwell / PA Wire/Press Association Images

"Quite simply child benefit cannot contribute enough to the costs of a child and is probably now worth only half of what was originally intended," he wrote.

"And on top of this the Osborne tax credit cuts hurt low income families with children."

£1,100
estimated average impact of tax credit cuts on families

In a lecture to the National Council for Voluntary Organisations, Sir John - Conservative PM from 1990 to 1997 - hit out at "shocking" levels of poverty in the country, adding that too many poor people "not only live meaner lives but shorter lives".

He made no reference to tax credits specifically, but said ministers "must understand how hard it is to escape from such circumstances" and have an "equal concentration on those who are failed by the system" as those who cheat it.

Sir John Major led the Conservative party from 1990 to 1997. Credit: Joe Giddens/PA Archive/PA Images

I have no doubt that much of this disparity [in life expectation] is caused by poor lifestyle, poor choices, poor diet - but poor environment, poor housing and poor education must surely be contributory factors

Whatever the reasons, this is a shocking situation in 2015.

As a country, we are one of the richest in the world and yet some of our communities are among the poorest in all Northern Europe.

– Sir John Major

The proposals for tax credit reforms were blocked by the House of Lords last month.

Following the humbling defeat, the Chancellor said he was "determined to deliver" plans to cut £12 billion from the welfare bill, but would take steps to mitigate the impact of tax credit reforms.

However, after assessing the various options available to him, the Commons Work and Pensions Committee concluded there was no "magic bullet" to protect low-paid workers from the planned £4.4 billion in tax credit cuts.

George Osborne has said he is 'determined' to see through economic reforms. Credit: Anthony Devlin/PA Archive/PA Images

It added there was general agreement that Mr Osborne should rethink the cuts, which went "too far and too fast", costing the average family £1,100 - "a reduction in income that many cannot afford".

It added that measures the government had claimed would make up for the cuts - such as the new higher income tax personal allowance and national living wage - "should not be confused with compensation for tax credits cuts".

It said the measures would not help many of those affected by tax credit changes, saying the benefits to those who were helped were "generally dwarfed by the cuts".

£4.4bn
planned savings from the tax credit reforms

A Treasury spokesman said: "The Chancellor has already made clear that the Government will listen about how we make a transition to the higher wage, lower tax and lower welfare economy he wants to see, and will announce proposals on how we do that at the Autumn Statement.

"So this report is out of date. Like other analyses, the examples cited here don't consider other measures the Government has introduced or is introducing to support working families, such as the free childcare that will be worth £5,000 a year per child, freezes in council tax and fuel duty throughout the last Parliament, higher public spending on the NHS and schools, or the upward pressure on wages up the income scale that we are already starting to see thanks to the new National Living Wage.

"The Government's end goal is clear: this country cannot have an unlimited welfare budget that squeezes out other areas of public expenditure."