As a raft of changes to tax and benefits come into force today, shadow chancellor Ed Balls claimed it was a ‘Black Wedneday’ for British households, with working families set to see their incomes reduced by up to £1,560 a year.
Although the personal income tax allowance has been raised by £1,000 to £7,475, National Insurance employee contributions have risen by 1%, child benefit and working tax credits have been frozen, and the rate of the childcare element of the working tax credit has been reduced from 80% to 70% of total costs.
Combined with the 2.5% VAT rise in January, increases in basic household costs such as food, fuel, gas and electricity, it seems many families are set to have their already-squeezed finances, squeezed even further.
The treasury attempted to parry the critical jabs by releasing figures showing a couple with one child and a combined income of £25,000 will be £12 a week better off, a couple on a combined £60,000 with two children will gain £5 a week, and a lone parent on £12,500 with one child will gain £10 a week.
As political blows were traded across the media, Labour attempted an uppercut with its calculation that, as a result of the three-year freeze on child benefit, a family with one child would be at least £130 a year worse off by 2013.
To sum up, financial organisation Credit Action said that, of the 44 changes taking place today, 26 would have a negative effect on household income, while just 13 will have a positive effect.
So, are we all in this together? Tell us how the changes will affect your family and future below.