10p tax cuts hit home

The real effect of the 10p tax cuts hit home in a stark way recently. As Chair of a local playgroup committee I was startled when a member of staff who had undertaken two weeks of cover for the manageress, at a higher rate than her normal rate, asked to meet with me in a distressed state. The additional reponsibility she undertook was a challenge, one which she performed magnificently. As an employer we're really keen to encourage and support self-development and opportunity, and we recognise that additional responsibility should be recognised financially as well.

I was presented with a pay chitty in which practically all of the extra that she had earnt had gone in tax, and her tax bill had doubled. We are talking about a dedicated child carer who works around her family, and who earns more than the minimum wage, but nonetheless who is still not earning a full-time salary. Someone who is not relying on benefits, but has found a way of working around young family, to input financially as well as being there when kids come home from school.

I looked at the chitty and frankly thought a mistake had been made, and then it hit home. Her tax had more than doubled. She wasn't funny - she understood that as employers we weren't responsible for the government's strange decision to take away the best thing that it did for those on low incomes, and par-time sessional workers have been hit harder than most. For two years our committee has tried incredibly hard to put our wages on a competitive footing, and to make our package attractive and fair. We felt we had succeeded, even supporting training with an allowance, but when the government make a decision like this which disadvantages the very people the 10p tax rate was there to encourage and support, I wonder why people bother implementing good practice when the government can render it all meaningless with a single act.

I talked with the staff member about tax credits. It transpired that she had been ineligible previously and with her oldest now finished in full-time education, chances of being eligible were slim. Tax credits are calculated on number of children and household income, and for her she won't benefit from changes in the tax credit. For her it was simply a massive increase in tax, and a reduction of income, at a time when cost of living is raised massively. And ironically in a month where she should have seen the reward of self-improvement, she saw quite the opposite.

So Mr Brown. I set you a challenge. Not that I suppose you really care. Come and join me when I do the staff pay review, at a time when you and Mr Darling are asking for restraint, and help me explain to 6 women, all part-time workers around young families, why your MPs get a pay rise, and my staff have effctively had a pay cut?