Tax credits: Winners and losers

Three million people will have particular reason to listen in to the Spending Review and Autumn Statement on Wednesday, as the chancellor announces what is to become of his plans to cut working tax credits.

They are the claimants, who, according to the Institute of Fiscal Studies (IFS), stand to lose an average of £1,000 a year from April 2016.

"After losing a vote in the House of Lords, the chancellor, George Osborne has promised to soften the transition to lower tax credits, but without losing sight of the £4.4bn in eventual savings to the Treasury.

So what are the chancellor's options, and how will those three million people be affected?

What could Osborne do?

  • He could phase in the cuts over two years, rather than one.
  • He could reduce tax credits only for new claimants.
  • He could abandon the cuts altogether.
  • ventually tax credit payments will get smaller anyway, as claimants switch to Universal Credit. But any postponement of the cuts would reduce the £4.4bn in annual savings. So either the chancellor would need to find large cuts elsewhere, or the Treasury would have to live with the deficit beyond 2020. Currently the Office for Budget Responsibility (OBR) is predicting a budget surplus by then.

    • If the cuts are reduced, the chancellor will need to be careful not to break the government's self-imposed welfare cap, which limits the amount of total benefit spending, and which comes into force in April 2016.

    Credit unions in Canada

    Canada has the highest per-capita membership in credit unions in North America. More than a third of the population is a member of at least one credit union.[1] Credit union membership is largest in Quebec, where they are known as caisses populaires (people's banks) and in western Canada.

    Responsibility for the incorporation and regulation of credit unions resides primarily at the provincial and territorial level in Canada. Credit union legislation exists in every province of Canada but does not currently exist in the three northern territories. While legislation was adopted under the federal Bank Act in 2012 to allow for the creation of federal credit unions, no credit union currently operates under this legislation. Credit unions and caisses populaires operate in every province of Canada. In Quebec, caisses populaires are required to be formally federated with the Caisses Populaires Desjardins.

    Provincially regulated credit unions

    Outside Quebec[edit] As of September 30, 2014 there were 352 independently operated credit unions and caisses populaires operating in the nine provinces outside of Quebec. The largest of these include Vancity, Coast Capital Savings, Servus Credit Union, Meridian Credit Union, First West Credit Union, Conexus Credit Union, Steinbach Credit Union, Assiniboine Credit Union, Cambrian Credit Union and Affinity Credit Union. 315 of these credit unions and caisses populaires were affiliated through a provincial or regional credit union central to Credit Union Central of Canada, the national trade association. These credit unions operated 1,746 branches across the country with 5.3 million members and $168.4 billion in assets.[.

    Within Quebec[edit] Within Quebec there are 344 caisses that are formally federated with the Caisses Populaires Desjardins as of September 30, 2014.[5] In 2012, Desjardins served nearly 5.6 million members from 897 locations, with $196.7 billion in assets

    Tax credits debate: Finding your way

    Conservative peer Lord Ashton must have had a crystal ball when fielding questions on tax credits in September. "The trouble with this subject is that we could sit swapping statistics all day long," he told the House of Lords. That is what has actually happened for weeks. Prime Minister David Cameron and Chancellor George Osborne vowed to stick to their guns on tax credit changes, suggesting nine out of 10 people would benefit from the tax, welfare and wage changes announced in the Budget. Think tanks and analysts have spoken of how tax credit claimants would lose hundreds of pounds in entitlement from April. In its tax credit guide, consumer group Which? says it is "virtually impossible" for people claiming tax credits to work out what they are entitled to. This debate on the impact of planned changes is hardly making it any clearer, but here we look at what they will really mean.