David Cameron ordered an end to the ‘merry-go-round’ of Britain’s welfare state. Benefits paid to be people in work face deep cuts
The Prime Minister will single out tax credits for criticism, with workers taxed and then handed back benefits to top up low pay packets.
In a major speech on reforming the benefits system, Mr Cameron will call for a move from a ‘low wage, high tax, high welfare society to a higher wage, lower tax, lower welfare society’ reports Daily Mail.
The Tory government is committed to finding £12billion in savings from the welfare budget, but with pensions, disabled people and child benefit protected the axe is likely to fall on help for people in work.
There is growing criticism among senior Conservatives of the way large companies pay their staff poorly, knowing that their incomes will be boosted by tax credits from the government.
Mr Cameron will claim there has been ‘complacency’ about how to deal with the issue of low pay. In a speech in Runcorn, the Prime Minister will say: ‘There is what I would call a merry-go-round.
‘People working on the minimum wage having that money taxed by the government and then the government giving them that money back – and more – in welfare.
A study by Citizens UK this year showed that there were 5.2million low paid workers in the UK, receiving £11billion in state support.
It is argued that if their firms paid them the Living Wage instead of the minimum wage it would save the taxpayer £6.7billion in benefits.