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Tax credit rules slammed as working families fail to benefit

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A leading left-wing think tank claims that the government’s tax credit policy is penalising working families while rewarding unemployed single parents.

A report by the Institute for Public Policy Research shows that 1.4 million children live in households that are officially impoverished despite at least one parent going out to work.

According to the Telegraph newspaper, the report is scathing of Gordon Brown’s tax credits, saying they fail low-income families by punishing them financially if both parents work.

While Mr Brown often trumpets the government’s success in lifting 600,000 children out of poverty since 1997, according to the IPPR, almost all were in unemployed single parent families, added the newspaper.

By comparison, couples where one parent earns the minimum wage while the other stays at home are penalised and actually see their benefits reduced.

Half of all poor children, defined as living in a household with an income below £12,000, are in a family where at least one parent works.

The IPPR report, Working out of Poverty: A study of the low paid and the working poor, says under tax credit rules, it is often not worthwhile for married mothers to enter the job market.

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Annie Hayes

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