Tax credit cuts promote hard work, says Jeremy Hunt

The government is right to press ahead with cuts to tax credits - despite claims millions will be worse off - because the UK must become as hard working as China, Jeremy Hunt has said.

The health secretary said the cuts - combined with a higher minimum wage - would send out the right "cultural signal" to low paid workers.

And he said he did not "buy" claims people would be left out of pocket.

A union boss called his comments "a disgraceful insult" to workers.

The government has faced calls to slow the introduction of the new rates.

The Institute for Fiscal Studies has warned it is "arithmetically impossible" for nobody to lose out under the changes, which come into effect at the end of the year.

Another think tank, The Resolution Foundation, which is headed by former Conservative minister David Willetts, said more than one million households would lose an average of £1,350 a year.

'Hard cash'

IFS director Paul Johnson told BBC News the move to a living wage - which will increase the minimum wage to £7.20 an hour from April next year - was a "big change" but "not a big enough change to compensate most of those who are receiving tax credits".

But speaking to Times columnist Danny Finkelstein at a fringe meeting at the Conservative conference, Mr Hunt said: "We have to proceed with these tax credit changes because they are a very important cultural signal.

"My wife is Chinese and if we want this to be one of the most successful countries in the world in 20, 30, 40 years time there is a pretty difficult question that we have to answer which is, essentially, are we going to be a country which is prepared to work hard in a way that Asian economies are prepared to work hard, in a way that Americans are prepared to work hard?

"And that is about creating a culture where work is at the heart of our success."

'Dignity'

He rejected claims that low paid workers will simply be worse off in "hard cash" terms as a result of the changes, because many will not be affected by the National Minimum Wage.

"The hard cash argument, I don't entirely buy because I don't think it takes into account the dynamic effects, I don't think it takes into account the extra hours that some people work.

"I don't want to pretend that it won't be very challenging but I do believe that moving to a culture where work pays and we are trying to help people be independent and stand on their own two feet is the most important thing we can do for people on low incomes."

He said that under Conservative philosophy how you earned money was as important as how much you earned - and not having to rely on state handouts promoted "dignity" and "independence".

But he also told the Times meeting that the party had to be "anchored in the centre ground of British politics," adding: "There is no future for us as a party if people think cuts in spending are motivated by political purposes."

Len McCluskey, general secretary of the Unite union, said Mr Hunt's comments "put paid once and for all to the Tories' ludicrous claims to represent hard-working families".