Poor families likely to be hit unfairly by £12bn welfare cuts, says thinktank

Head of right-leaning Institute of Economic Affairs suggests tax credit reform can be done in way that encourages full-time work

David Cameron's plans to focus 12bn of welfare cuts on slashing tax credits and other working-age benefits look set to be "extremely unfair" on the families who will lose money, the right-leaning Institute of Economic Affairs thinktank has said.

The prime minister argued on Monday in a speech delivered in Runcorn, Cheshire, that the UK should pay out less in tax credits - which top up the wages of low-earners - suggesting companies should offer workers higher salaries instead.