Mr Balls argues that tax and benefit changes will hit families across Britain Labour says benefit cuts coming into force later will make it a “Black Wednesday” for families across Britain.
As the new tax year begins, a series of tax rises and benefit cuts come into force aimed at tackling the budget deficit, estimated at £146bn this year.
Labour highlights the freeze in child benefit, changes to tax credits and the way benefits are linked to inflation.
But the Treasury says the poorest 80% of households will, on average, gain from the changes.
A series of tax and benefit changes begin on Wednesday – including a 1% rise in employees’ National Insurance contributions. Credit Action, a financial education charity, has calculated they will leave households £200 a year worse off.
Labour are focusing on the changes to the way benefits are linked to inflation – they will be uprated in line with the consumer price index, rather than the retail price index – which is usually higher.
And they have flagged up changes to working tax credits, child tax credit and the freezing of child benefit for three years.
Shadow chancellor Ed Balls said reductions to what parents could claim in childcare costs through the working tax credit alone would leave some families worse off by up to £1,560 a year.
“This little noticed change will have a huge impact on hundreds of thousands of families but particularly women with children who work part-time and on low pay.”
He accused Chancellor George Osborne of going “too deep and too fast” with spending cuts and said they would hit families on low and middle incomes “hardest of all”.
“All the pain, all in one go, aimed at families with children, is not just deeply unfair it will hamper our economy too.
“By going too deep and too fast George Osborne is damaging consumer confidence – which is now at a near 20-year low – and holding back an economy which should be growing strongly this year.”
Other changes due to come into force on Wednesday include a £1,000 rise in the threshold at which people start paying income tax, a freeze in the inheritance tax threshold, an extra 5% on stamp duty for homes worth more than £1m and restrictions on tax relief on pension contributions for those on more than £150,000 a year.
The Treasury accepted that the average impact across the population of all the changes was a “marginal loss” but said the figures were “heavily skewed” by the losses at the top of the income range.
It said that the top 10% of households would suffer the most as they do not gain from the increase in personal allowances and would pay the most increased NI contributions.
Treasury Minister Justine Greening said: “Labour left behind a complete mess with no plan to deal with it apart from run up more debts for the next generation to pay off. They want to hand over their financial mess to our children, when instead what we need to do is start sorting out the problem now.”
She added: “This government has come up with a credible plan to reduce the deficit which is keeping interest rates lower and managing to ensure that the burden falls on those with the broadest shoulders.”
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