Ed Miliband has warned that millions of families’ budgets are at risk if Conservatives win the May 7 General Election, as he accused David Cameron of secret plans for a £3.8 billion raid on tax credits.
The Labour leader pledged that he would raise tax credits at least in line with rising prices every year if he wins power.
An initial Conservative response did not address the tax credit claim, but insisted that the “one guaranteed risk to working people’s finances” was a Miliband administration propped up by the Scottish National Party.
Conservatives have said they will cut £12 billion from welfare as part of a £30 billion “consolidation” to eliminate the deficit, but have so far identified only around £2 billion of the savings – to be achieved by reducing the household benefit cap from £26,000 to £23,000 and the extension of a freeze on working-age benefits.
Independent economists at the Institute for Fiscal Studies said on Tuesday that it was “hard to see” how the promised savings could be achieved without “sharp reductions in the generosity of, or eligibility to, one or more or child benefit, disability benefit, housing benefit and tax credits”.
Labour said Mr Miliband will on Wednesday release an analysis suggesting that Tories were planning to slash £3.8 billion from tax credits.
The party said this would mean families with one child losing tax credits when their incomes hit £23,000 a year, leaving them over £1,600 a year worse off. Those with two children could lose credits after earning £29,000, at a cost of £2,000 a year, and families earning £12,000 a year will lose at least £550, said Labour.
At a campaign event in London, Mr Miliband is expected to say: “We’ve heard a lot from David Cameron in the last five weeks. False promises, dangerous unfunded commitments dreamt up overnight with no idea of where the money is coming from and a plan to pay for the NHS with an IOU.
“Today I am here to reveal the truth: if the Tories get back in on May 8, your family budget is at risk. Another five years of Tory government will mean a plan to double the pace of cuts next year, a plan that puts your family budget, your NHS and our country’s future at risk.”
The Labour leader will promise: “No government led by me as prime minister will cut the tax credits that working people rely on, while giving tax breaks to the richest. Instead, a Labour government will raise them at least in line with inflation in every Budget.”
Speaking alongside Mr Miliband, shadow chancellor Ed Balls was due to say: “Before the last election, we warned that the Tories would cut tax credits for families earning £30,000. The Tories said this was a lie, but then did exactly as Labour warned after the election.
“Analysis of Tory spending plans shows that David Cameron and George Osborne are planning another raid on the tax credits of millions of working families. They should come clean and admit it.
“The choice at next week’s election is clear. Labour’s better plan which will put working families first or a Tory hit to family budgets which working people cannot afford.”
A Conservative spokesman said: “There’s one guaranteed risk to working people’s finances – Ed Miliband, propped up by the SNP, crashing the economy and putting up taxes, just like he did last time.
“We will cut 30 million working people’s income tax, take everyone working 30 hours a week on the minimum wage out of income tax altogether and support working parents by offering 30 hours of free childcare for three and four year-olds.
“But if you work hard, Ed Miliband and the SNP will be coming after your money through higher taxes. There’s only one way to stop this happening – voting Conservative on May 7.”
The general secretary of the GMB union, Paul Kenny, said: “The £12 billion Tory cuts will hit in-work benefits for decent hard-working people and their families.
“These families come a poor second for the Tory Party who back the non-doms in not paying their fair share of taxes, while the Sunday Times Rich List shows the wealth of their supporters and donors doubling since they took office in 2010 and cut the top rate of tax for the millionaire elite.”