Tax Credits in 2017: What does the coming year look like for struggling families?

As the year races to a close, here at Hylton-Potts, we’ve been reflecting on everything that has happened this year, and what it’s meant for families up and down the UK. While we have helped thousands of households who have had their benefits cut or suspended, and finding themselves struggling to survive, we’re aware that there are still many out there still fighting to make ends meet.

In today’s post, we’re going to take a brief look back over the last 12 months, and consider what we can expect from 2017.

The challenges from 2016

Over the course of this year, we’ve seen a huge problem emerge amongst the households of ‘just managing’ families. Their wages aren’t stretching as far as they used to, and other factors such as the Universal Credit roll-out which has significantly decreased most benefits, has left them barely able to keep their heads above water.

In fact, according to the latest Resolution Foundation report, families have experienced a variety of harmful circumstances which have left them struggling. The report considers six million of these families across the UK, who are all working-age households on low to middle incomes. They also place a particular concentration on diverse areas such as Pendle in Lancashire, Sandwell in the Midlands and North Devon.

They identify “an unprecedented pay squeeze, rising housing costs and the added financial pressure of having children” as challenges for the typical incomes of ‘just managing’ families.

The battle with Concentrix

For many, these issues have been made far more serious and painful due to the questionable tactics of American tax investigation company, Concentrix, which has not had its contract renewed by the British Government after thousands of complaints. Although we cannot be sure of how many families were affected by the company, it’s a fact that far more lives have been made harder during an already difficult time, than was necessary.

Shockingly, the worst facts have only just come to light in recent weeks. The BBC reported that almost 90% of appeals against the company, originally hired by Revenue & Customs (HMRC) to cut tax-credit payments, have been upheld. Government figures state that between 14th September and 15th November 2016, 24,219 claimants (89.7% of total claims) have had their tax credits reinstated.

Despite not renewing their contract, the fact that the company was hired to cut tax fraud in the first place is still sending shockwaves throughout Parliament. In an article by the Daily Express, it was highlighted how the HMRC is continuing to be slated by MPs.

The Commons Work and Pensions Committee described the performance of Concentrix as a “scandal”, stating that the HMRC had been “complicit” in the firm’s “gross failings” which left thousands of vulnerable UK citizens struggling to feed their children or pay bills.

It also focused attention on how many low income families had been forced to take out expensive loans, or fall into arrears with their rent. The Committee added: “The human consequences of the Concentrix scandal are all too real. Vulnerable people have been put through traumatic experiences as a consequence of avoidable failures. It is imperative that it is not allowed to happen again.”

An article by the Daily Mail reported some extent of the damage done to families; while innocent workers were hounded by a ‘guilty until proven innocent’ approach, Concentrix used supposedly underhand tactics to wrongly strip around 45,000 of their tax credits.

Those most in need left worse off

This year things certainly haven’t been easy for parents of disabled children in particular thank to the Universal Credits roll out, and they’re set to lose out even more, according to the Guardian. Thousands of families with disabled children have supposedly lost out on up to £4,400 a year in tax credits, after an administrative blunder by the authorities. An error in processing claims meant an estimated 28,000 families who qualify for a disability living allowance (DLA) during 2011-14, missed out on an additional tax credit premium of between £60 and £84 a week.

The government revealed in their autumn statement that it had set aside £360million over six years to ensure these families receive child disability tax credits in future. However, the payments will only be backdated to April, so individual families may have lost out on entitlements totalling up to £20,000 over the past five years.

The charity Contact a Family called for a compensation fund, stating that it was not the fault of the families in question that they had lost out on what collectively amounts to tens of millions of pounds in entitlements.

Una Summerson, the charity’s Head of Policy and Public Affairs, commented: “One thing is certain: this isn’t the fault of families. When you tick a box on a government form indicating you are in receipt of tax credits you reasonably expect it’s there for a reason – and there’s a process in place that allows government departments to share this information.”

What does 2017 look like?

As we look back on 2016, it’s clearly been a difficult time for many different types of households, and so far in this article, it seems like an even gloomier end to the year for most. However, there is reason to be cheerful about 2017, as the Theresa May leadership is attempting to improve matters. As ITV highlights, “the reduction in the Universal Credit taper rate […] gives back to claimants something George Osborne took away. It is clearly meant to signal that this Government is not as “nasty” as the last Tory administration.”

Plus, elsewhere it is reported that the millions of people affected by the planned cuts to Universal Credits are expected to be compensated in some form. The Prime Minister and Philip Hammond have been heavily lobbied by Conservative backbenchers, including the former work and pensions secretary Iain Duncan Smith, to row back on £3billion’s worth of cuts to in-work benefits.

However, when it comes to your benefits claims, it’s true that you could still be facing issues in the new year. For one thing, the sanctions regime is still regarded by many as too severe and unfair on the most vulnerable amongst society, and secondly, the sick and disabled on Employment Support Allowance are about to lose up to £30 a week on reforms introduced by George Osborne.

Remember, no matter what time of year it is, the legal experts at Hylton-Potts are always here to help you. If you’ve discovered that your benefits have been suspended or cut without warning, or if you’ve received a letter that you’re being investigated for benefit fraud, the best thing to do is to get in touch with us as soon as you can.

We can ensure that you never attend an interview under caution, and we’ll be able to explain things in a jargon-free way, so that you full understand your position. Call us on 020 7381 8111, or email us at [email protected].

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