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Chancellor’s largest benefit cuts ‘are for those in employment’

Chancellor George Osborne’s biggest tax credits and benefit cuts are aimed at those who already have jobs, the Institute for Fiscal Studies (IFS) has revealed.

Paul Johnson, Director of the IFS, warned that Osborne’s proposed higher minimum wage would not compensate for the planned cuts to tax credits.

Johnson said: ‘There’s quite a set of cuts both for those in work and for those out of work. The Government’s said some people will be compensated by the introduction of the higher minimum wage for the over-25s – the so-called National Living Wage – and that will help some people somewhat but the scale of it is nowhere near enough to compensate for the cuts in benefits’.

The cuts will affect people with children as well as those in employment, with the latter likely to be the most affected.

Johnson explained: ‘The biggest cut will be for those in work and in particular the amount you can earn before you start losing tax credits has been pulled back a great deal’.

Research published by the Institute found that those who enjoy a significant wage rise as a result of the new National Living Wage will still be considerably worse off as a result of the Chancellor’s other Second Budget measures.

However, the Chancellor said at the time of the announcement that the new wage would provide people with ‘financial security’.