Has the Prime Minister broken a promise on tax credits?
13th Jul 2015
"When he [the Prime Minister] was last on this programme, with David, he was asked very pointedly, are you going to cut tax credits or not, and he said he wouldn't. What he has done just a few weeks after the general election has broken that solemn promise he gave on this show"—Chuka Umunna MP, Shadow Business Secretary, speaking on BBC Question Time, 9 July 2015
"I'll obviously be corrected but I don't think he did. I think the question he was asked was about child benefit and tax credits, and he was very clear about child benefit, which of course, has not been cut"—Anna Soubry MP, Minister for Small Business
Promises—particularly those made during TV interviews—can be less than clear and easily misunderstood. The Prime Minister did seem to rule out cuts to tax credits before the election, but the government suggests he may have meant to refer to child benefit. If so, it's clear a lot of listeners would have got the wrong idea based on what was actually said.
Tax credit rates weren't actually cut in the recent Budget—although they were frozen and so will likely lose some of their value over the next four years because of inflation. Some elements were scrapped, and some entitlements were restricted. Either way a pre-election promise not to 'cut' child tax credits would sit very uneasily with what was announced last week.
Big changes to tax credits
Last week's Budget saw significant changes to tax credits. Apart from being frozen for four years, parts of the payments are being scrapped, thresholds are changing to reduce the amount some people can claim and the 'Child Element' in tax credits is being limited to two children.
An unclear promise on child tax credit
Labour's Chuka Umunna was referring to claims made by the PM during the Question Time leaders special broadcast a week before polling day this year:
Audience member: Will you put to bed rumours that you plan to cut child tax credit and restrict child benefit to two children?
David Cameron [DC]: No 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 it again today
[Later] David Dimbleby [DD]: You said you didn't want to put to bed rumours that you were going to cut child tax credits—you meant you did want to put to bed the rumours?
DC: Yes—we have increased child tax credits.
The report the Prime Minister is referring to was a Guardian exclusive that morning: the Liberal Democrats had revealed that the Conservatives had 'planned' to limit child benefit and child tax credits to two children, and introduce measures to reduce the payments or entitlements for them. The PM said he had rejected the plans at the time and continued to do so.
Later the issue came up again:
DD: "Clearly there are some people who are worried that you have a plan to cut child credit and tax credits. Are you saying absolutely as a guarantee, it will never happen?"
DC: "First of all, child tax credit, we increased by £450.."
DD: "And it's not going to fall?"
DC: "It's not going to fall. Child benefit, to me, is one of the most important benefits there is. It goes directly to the family, normally to the mother, £20 for the first child, £14 for the second. It is the key part of families' budgets in this country. That's not what we need to change."
Chuka Umunna says these exchanges amount to a promise not to cut child tax credits before the election, a pledge that was broken because of the recent Budget.
We asked the Treasury for a response. We were referred to the words of Financial Secretary to the Treasury David Gauke on Newsnight last week, who argued the Prime Minister may have meant to talk about child benefit:
"I think the report he was referring to—I could be mistaken—I think was about Child Benefit ... I think the PM was dealing with the issue there of Child Benefit ... I think he was referring to a report that was about Child Benefit"
Child Benefit is unaffected by most of the changes mentioned above, although it is still being frozen along with other working-age benefits.
Labour hasn't always interpreted these comments in this way
Before David Cameron's appearance on Question Time Labour was saying the Conservatives had a 'secret plan' to cut child tax credits and child benefit. The day after the programme Ed Balls indicated the Prime Minister still hadn't given any guarantees on not cutting child tax credits:
"After days of weasel words and prevarication David Cameron is still failing to rule out cutting child benefit and tax credits again.
"All he has said again is he won't abolish child benefit, but he won't deny he plans to cut it or take it away from millions of families."
Michael Gove said Conservatives would freeze tax credits for two years
Another exchange which has come to light is one involving Michael Gove, interviewed on the World at One in April. It ended as follows:
Martha Kearney: "Just to be clear, because I think you said this but I just want to be absolutely certain, when I asked are you going to cut tax credits, you said no, is that right? You're not going to cut tax credits?
Michael Gove: "We are going to freeze them for two years, we are not going to cut them".
Labour has argued that this is an "even more explicit" denial than the comments made by David Cameron.
The policy on the freezing of tax credit payments also went further than this in the Budget—freezing them for four years.
Update 28 October 2015
We added the section on Michael Gove's interview on the World at One.