Tories consider cutting tax credits for working families despite election promise not to

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Andrew Feinberg

White House Correspondent

The Government is looking at making £5bn of its planned £12bn welfare cuts by slashing tax credits for working families, reports suggest.

Around 3.7 million low-income families would lose out on £1,400 a year from the cuts, according to a scenario outlined by the Institute for Fiscal Studies.

BBC Newsnight says allies of the Chancellor George Osborne are examining the plans, which they believe would increase “work incentives”.

If the cuts go ahead they would contradict statements made by David Cameron during the general election campaign.

Asked during a Question Time special whether tax credits and child benefit were at risk, Mr Cameron said he rejected the idea.

"I don't want to do that. This report that was out today is something I rejected at the time as prime minister and I reject again today," he told the audience.

But government sources told the programme that they did not consider the poverty alleviation provided by the tax credit system legitimate and that it “papered over” problems.

Former minister Damian Green said the Government was right to look at the cuts despite Mr Cameron pledging they would not happen.

"The scale of the cuts, it is quite big, they are necessary and we had a government elected about a month ago on the basis of doing this," he told Newsnight.

Labour said the cuts would make families less secure.

Before the election the Liberal Democrats leaked documents which appeared to suggest the Conservatives were considering cuts to tax credits and child benefit before the election.

Downing Street dismissed the documents at the time as “scaremongering”.

George Osborne and Iain Duncan Smith have pledged to make £12bn welfare cuts but would not expand on which cuts they would make before the election.

Officials at the DWP are likely to ministers with a list of “very, highly or extremely controversial” potential cuts to child benefits, according to documents leaked to the Guardian newspaper before the election.