The controversy over how Nick Clegg’s £1bn jobs fund is to be paid for has overshadowed the announcement itself, much to the annoyance of the Lib Dems. This morning, John Humphrys spent most of his interview with Clegg asking him whether tax credits were going to be squeezed to pay for his plan.
I should point out that no tax is hypothecated: we should not think the tax credits money is going directly into the jobs fund. However these things are true:
1) There is a £1bn jobs fund paid for with new money
2) The Treasury is currently looking at how it can wring new money from the tax credit system
Now Liam Byrne has weighed in, writing to Clegg to demand more answers on what exactly is happening to credits. He says:
This would be an unacceptable further blow to low paid workers who have already seen a significant squeeze on their living standards, not least through January’s mistaken VAT rise.
Byrne also wants to know whether the money is going to go directly to employers or through the Work Programme. For more answers on that, see tomorrow’s FT.