THE shock government decision to shelve plans to axe tax credits is said to have caused a ‘collective sigh of relief’ for hundreds of thousands of families across the region.

Thousands of low paid families in Devon were expecting to see their benefits cut in April though those plans have now been shelved by the Chancellor George Osborne.

Mr Osborne said that higher-than-expected tax revenues and lower interest payments on government debt have opened up a £27-billion fiscal windfall which will be used to cancel the tax credit plans and ease back on the scale of spending cuts in other areas.

Tax credits are still to be phased out by 2018, to be replaced by Universal Credit.

UNISON South West regional secretary Joanne Kaye said: ‘More than 215,000 working families across the South West have breathed a collective sigh of relief. Since the cuts were announced in the summer, parents have faced increasing anxiety over losing the tax credits they rely upon so heavily.

‘The real credit for today’s decision goes to the many brave parents who talked publicly about their already stretched finances, and the distress and hardship the cuts would cause. Their stories convinced the government this unfair tax credits grab was wrong.

‘If the Government truly wants a high wage and low welfare economy it must now do more to encourage employers to pay staff more – at least the real living wage of £8.25 an hour. This would make a difference to the many low-income families still struggling to make ends meet.

‘In 2018 new claims for tax credits will stop, and the families receiving them will start to be switched on to Universal Credit. The Chancellor must not use this change as a way to revive his original plans and leave working families worse off in 2020 than today.’

MP for Central Devon Mel Stride said: ‘As a result of our responsible stewardship of the economy the Chancellor has been able to avoid the proposed changes to working tax credits. Changes to Universal Credit along with the increase in low pay as a result of our introduction of the new living wage will of course see working tax credits naturally decease through time. This has to be right given that huge sums are currently being provided by way of working tax credits to subsidise employers paying very low wages.’

MP for West Devon and Torridge Geoffrey Cox said: ‘I am very pleased that the Chancellor of the Exchequer has listened to the strong representations that I, and others, have made on behalf of low paid workers in Torridge and West Devon about the need to preserve tax credits until a living wage is introduced. This announcement will mean that nobody in work and receiving tax credits will lose out and it is a welcome further sign that the economy is continuing to grow under the Tory Government.’