The claim
“Both the Liberal Party and the Conservative Party will take child tax credits away from middle-class families in this country.
“Both of them plan to save hundreds of millions of pounds by cutting the very thing that is absolutely crucial to families during the difficult years of bringing up children.
“Both of them have formed a coalition of cuts against children in this country.”
Gordon Brown, visit to Forth Valley College in Stirling, 27 April 2010

The background
Labour were out in force this morning to condemn their main rivals’ plans for tax credits and child trust funds, calling it a “coalition of cuts” between the Conservatives and the Lib Dems.

Husband and wife team Yvette Cooper and Ed Balls took to the stage at a Labour press conference, alongside Lord Mandelson, to point out the ills of the rival plans. “Their plans would mean millions of children losing hundreds of pounds a year in support,” Cooper said.

Later, Gordon Brown used a visit to Forth Valley College in Stirling to describe how “angry” he was at his opponents’ policies.

It’s familiar territory to FactCheck. So just what do we know about the plans of the three parties on tax credits?

The analysis

Conservatives
The Conservative manifesto simply says they will “stop paying tax credits to better-off families with incomes over £50,000”.

“We support tax credits and will continue to provide the range of tax credits to families, although we can no longer justify paying tax credits to households earning more than £50,000,” the manifesto reads.

But there are previous statements from the party that we can look at to get more detail of the policy, including George Osborne’s defence of it on Channel 4’s Ask the Chancellors Debate at the end of last month. At that time Mr Osborne said his party would also “taper them away from people on £40,000”.

Labour says the Conservatives are looking to cut £400m from child tax credits – a figure the Tories have previously cited – and so they would have to cut child tax credit for families on over £31,000 a year, not £40,000, to meet this target.

The row is basically over which statistics you look at. In their election briefing on the parties’ plans for taxes and benefits released today, the Institute for Fiscal Studies repeats its previous analysis that the Tory plans would save £400m a year, assuming all families entitled to tax credits received them.

But not everyone claims their entitlement, so the actual savings will be less than this. Labour therefore says that they would have to lower their threshold to start tapering at £31,000 – the IFS says the difference is because the government has access to data that they don’t have.

It’s difficult to tell if Labour is right about the threshold – the lack of detail in the Conservatives manifesto means as a standalone document it does not commit them to finding the £400m from this budget as they have previously assumed.

The IFS points out that families with incomes above £58,175 do not get child tax credits under the current system anyway and families with a joint income under £40,000 would not be affected.

So the maximum that a family will lose is £545 (the family element of the child tax credit) for those with an income between £48,175 and £50,000.

But the IFS does criticise the Conservative manifesto for being “incomplete at best and misleading at worst” for not suggesting that child tax credits would be tapered off from £40,000.

Liberal Democrats
Labour criticises the Lib Dems for wanting to cut “over three times as much” from tax credits compared to the Conservatives. And indeed the party does want to do away with the “family element” of the child tax credit.

So, under the Liberal Democrats, their policy would mean that a family with “one non-disabled child (aged 1 or over) would no longer be entitled to tax credits if their income exceeded about £25,000, with each additional child increasing the point at which entitlement ends by about £6,000,” according to the IFS analysis.

But the IFS does point out that this would not increase child poverty as the threshold is still above the poverty line.

The Liberal Democrats say in their manifesto that this will save £1.3bn, but the IFS estimates it to be more like £0.9bn because, as with the Conservative numbers, not all families claim what they are entitled to.

The Lib Dems say that by removing the second income threshold and applying the taper rate consistently, they will remove 1.45 million families from the tax credit system, lowering administration costs, and will change the way they are paid. They also say that the households who are affected by the changes would gain more than they lose through their proposal to raise the income tax threshold.

Labour
Much of the Labour reforms, the IFS points out, were in the 2010 budget. During this campaign, Labour has consistently claimed that a vote for them would protect the child tax credits. “We will maintain tax credits, not cut them,” their manifesto reads.

Today they launched their Your Family, Your Choice manifesto, in which they commit to a “Toddler Tax Credit of £4 a week for families with children aged one and two years old” from 2010.

And they boast that “in April 2009 we supported families on low incomes through a £50 increase in the child element of the Child Tax Credit”.

But before we get too carried away, the IFS does point out that in the pre-budget report 2009, the Treasury brought forward the increase in child tax credits to this year so don’t expect a big windfall next year.

Peppa Pig
It would feel remiss to end this FactCheck without a nod to Peppa Pig. Labour’s attack was slightly overshadowed when the children’s TV character withdrew from a Labour campaign visit to a Sure Start centre.

Schools Secretary Ed Balls told media at a press conference this morning: “Unfortunately, Peppa Pig is a global media star, acclaimed around the world, very busy, there’s many dates in Peppa’s diary. But Peppa did tell me that not only is she a supporter of universal Sure Start but would be quite worried if George Pig lost his child trust fund.”

E1 Entertainment, which licenses Peppa Pig, said in a statement: “Peppa Pig is a well-known fan of Sure Start children’s centres but, in the interests of avoiding any controversy or misunderstanding, we have agreed she should not attend.”

FactCheck would also like to point out that Peppa’s little brother, George Pig, would not have any child trust fund payments already claimed taken away from him (assuming the Pig family have already claimed), but he may lose any future payments.

If Mr Balls had referred to future piglets, then he would also be assuming that the Pig family’s income is over £16,040 (perhaps reasonable since she is a global star) – the threshold the Conservatives would bring in over which families are no longer eligible.

For more detailed information from FactCheck on child trust funds, have a look here.