Leading article

Tearing tax credits away from the working poor is a battle of choice, not necessity

24 October 2015

9:00 AM

24 October 2015

9:00 AM

Just over 30 years ago, Margaret Thatcher’s government decided to look at local government finance. A young aide, John Redwood, outlined ‘some kind of poll tax which is paid by every elector’. Discussions continued, and bright young men (including the young Oliver Letwin) assured the Prime Minister that the figures would all stack up. Unpopular to start with, perhaps, but necessary. Later, Kenneth Baker had a niggle: ‘If I’m on Question Time and I’m asked “Why must the Duke and the dustman pay the same?” there’s no answer.’

Last week the energy secretary Amber Rudd was on Question Time. She was challenged by a weeping Tory voter who asked why, as a mother who worked ‘bloody hard’, she should have her tax credits taken away by a Tory government. There was no answer.

An awful sense of déjà vu is sweeping through the Tory party — not only because of Charles Moore’s second volume of his Thatcher biography, with its delicious details about how the poll tax was cooked up. Many Tories fear that now, as then, the government has come up with a scheme which makes sense on paper but which will end up being a political disaster.

Welfare reform was conducted by Iain Duncan Smith, who took great care to explain how he was out to save lives, rather than save money. Tax credit reform is being handled by George Osborne, who is less careful. Now and again, he snarls at those he suspects of ‘sleeping off a life on benefits’ — portraying them as villains rather than as victims of a cruel welfare system. He has been discouraged from talking too much about the subject; David Cameron’s more compassionate language has prevailed.


Until now there has been a clear moral purpose behind Tory welfare reforms: yes, life on benefits would be harder. But those who moved into work would find every assistance — including tax cuts. Millions accepted this bargain, and jobs have been created at an unprecedented rate. During the general election, Cameron had a new message: that the Tories were now the new workers’ party, and a vote for the Conservatives was a vote for economic security.

Now, Osborne is coming after the very people whom his party pushed towards work. Those on the breadline, trying to work their way up, are finding themselves treated like benefit cheats as a result of the Chancellor’s tax credits crackdown. A mother of two children who is paid £20,000 stands to lose £2,000 a year due to his reforms. Some seven million working families stand to lose an average £1,200 a year. Some workers may claw back almost £150 a year by the proposed minimum wage increase. But they also face a bitter headwind blown by a Tory Treasury.

Tax credits needed to be reformed. But Osborne had a choice. He could have stopped issuing new tax credits, and phased them out. That is how tax-credit cuts to larger families were handled in the last parliament. Besides, the new welfare system, Universal Credit, will steadily replace tax credits.

But emboldened by the new parliamentary majority, and seeing the Labour party in disarray, the Chancellor chose a faster route: to tear tax credits away from the millions who have them. Yes, he argues, it will be unpopular. But the next election is five years away. Now is the time to do unpopular things and tackle the £80 billion deficit. And if the low-waged find themselves losing money as a result, let them work harder to earn it back. Under Jeremy Corbyn, he argues, the government faces no effective opposition — so it is best to move now.

Having spent most of his adult life in Westminster, Osborne has come to view politics as a game of chess he is playing with the Labour party. As a result, he struggles to comprehend the human factor — the effect his policies will have on low-wage workers, who believed that the Tories were on their side; the effect on the party’s reputation; and the effect on Tory MPs, especially the new ones, who had themselves come to believe what the Prime Minister was saying about being in politics to support working families.

The Chancellor now seems to almost relish the battle ahead; but this is a battle of choice, not necessity. By wrenching tax credits away from low-waged families, rather than phasing them out, he will save about £3.5 billion. There are other ways to find this sum. He currently plans to increase foreign aid by £3.5 billion, for example, so he is making a political choice: to confront the working poor, rather than face the embarrassment of pausing his unpopular foreign aid giveaway. Or finding savings in the indefensibly generous pensions budget, or in the £120 billion health budget. Or giving himself another year to balance the books.

This battle raises a question: when the Tories said they would stand by those who worked hard, were they serious? Or was it just a ploy to get past the election? It would be a great error for Osborne to think that this is a matter of handling Tory rebels and managing the media. This is about the lives of the low-waged, but also about the identity, purpose and priorities of the Conservative party. If the Chancellor is serious about wanting to lead that party, he should think again.

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Show comments
  • Clive

    If you wanted a reason why I vote UKIP and not Tory – there it is right there, as the Americans say.

    ..then there’s Labour who have similarly let their voters down but by self-indulgence, lost in the politics of self-righteousness.

  • George_Arseborne

    Cutting Child Tax Credit for British Family by £3.5 Billion to increase Foreign Aid by £3.5 Billion is very interesting.
    I still stand by my point that this Wicked man Osborne will be come the Tory Leader after call me Dave step down sometime before 2020 but he will never become the Prime Minister of this Country.

    There is an old adage which states that Charity begins at home, yet we are not seeing that from this evil man who prefer to waste tax payers money on foreign aid rather than preventing British family from increasingly begging for food from Food Bank.

    He feels implementing it now , will long be forgotten before 2020, I bet you it will carry on to that time and that will be his down fall.

    George Osborne is a DEVIL

    • ohforheavensake

      It’s not a trade-off.

      • George_Arseborne

        if not, then what?

    • Matt Sharp

      Charity should begin where it does the most good.

  • Dominic Stockford

    I get tax credits (and live in a tied cottage) – and am on a low enough income to get free prescriptions. I don’t understand why they give me tax credits and was utterly amaxed when Labour brought in this ‘free money’ ideology, and we could survive without them – less of the luxury items I suppose, but they aren’t necessary. If I get mine cut I won’t argue – though the free presecriptions does help the teeth business (we need to sort out NHS dentistry).

    I wonder whether much of the fuss is confected by those on relatively large incomes (relative to mine) who are wealthy enough to be part of the ‘chattering classes’, but still get what I can only describe as “Labour’s Bribe”.

    I chose my lowly paid vocation, that is my choice. Others are now lowly paid because of Tax Credits, which mean employers (who are normally ‘bad’ in Labour terminology), particularly big business who pay low taxes, can get away with paying low wages. That needs to change. That’s what I would like to see change, and I believe that this plan is intended to force that change. Good.

  • Surely the Tories could plug the deficit by getting multinationals to pay corporation tax?

  • HJ777

    To be fair to Amber Rudd, she was faced with an angry and distressed woman about whose circumstances she knew nothing but who claimed she works “bloody hard” to provide for her family and who claimed that her money was being taken away from her. What’s more the outburst had nothing to do with what was being discussed at the time.

    Subsequently, we have discovered that this woman doesn’t actually earn anything and is almost entirely reliant on benefits to pay for her and her four children. What is more, it seems that she is unlikely to lose out as a result of these changes.

    This does not, of course, mean that there are not issues or that some people won’t lose out and that it won’t cause them problems, but it does show that we should look at the facts, not just take emotional outbursts as being reasonable criticism.

    • Clive

      She was an illustration of the politics of the change, regardless of the economics.

      Tax credits are so complicated it is difficult to work out whether you lose or not. Michelle Dorrell (for it is she) runs a nail bar business in the approved Tory way and she makes a loss. That would complicate her situation vis-a-vis tax credits to an even greater degree.

      • Dominic Stockford

        no, she paints nails of people who come to her house. That is not ‘running a nail bar business’.

        • Clive

          She paints the nails of people who pay her to do it. That is ‘running a nail bar business’

          http://www.telegraph.co.uk/news/politics/conservative/11937376/Tory-voter-who-confronted-minister-over-tax-credit-cuts-may-not-be-affected-by-reforms.html
          …She said runs a nail salon from her home in Folkestone but does not make a profit …

          • PasserBy

            That’s a poor way to run a business.

          • Spamfish

            This is intentionally done by the government and the DWP to lower their unemplyment figures. DWP staff have actually been suggesting and pressurizing benefit claiments to sign off of JSA where they have to look for work and face potential sanctions, and instead to claim they are self employed and receive the same amount of benefits but in tax credits rather than JSA. All so that the government can claim that unemployment is falling.

          • Clive

            What you are describing is the point of tax credits. Anyway, Michelle Dorrell worked in a call centre at one time and apparently wanted to open her own business.

    • Dominic Stockford

      A ‘nail painter’ – hardly ‘hard work’.

      • Clive

        Personally, having worked all my life in an office like a great many of those here I suspect, I doubt I could judge well what ‘working hard’ is.

  • Zhang Wei

    W e could keep the tax credits system intact and beg for more money from our Chinese masters to make up the shortfall.

    • Clive

      Mao Zedong managed to starve about 35 million Chinese people to death with the Chinese tax credit system – The Great Leap Forward

      Best they hang on to the money against another nutter running the place

  • Teacher

    You might well ask why this woman thought she could afford two children if she was only bringing home £20,000 a year.

    As for tax credits, my husband in his managerial role at work has always said that they have been a reason why employers don’t pay a living wage or pay rises.

    My own only experience of them is as follows. A close relation of mine and I were both teachers and we had children. I had the two I could afford and she had three. I carried on working full time and paid my childminder almost all of my taxed income to keep the job open. My relative stepped her hours down to 16 a week and claimed tax credits (and also nursery vouchers when they came out) until the youngest was in school. Purely a matter of choice for her to work less but take home the same dosh. It never seemed right to me that she had the option to do this as she was using what was meant to be a safety net for the poor and vulnerable to fund a lifestyle choice.

    Still, it’s never a good idea to take away something that people once had and is always less toxic to make it unavailable to new claimants in the future.

    • mickey667

      Yes. Homo-economicus may ask that, and someone detached from reality or the knowledge of this women’s experience and life before childnre and what she was earning then may ask that, normal people don;t

      • Clive

        O I dunno. People subsidising children for those richer than themselves might ask it

        • Mary Ann

          Of course if people want to cut immigration we have to encourage young women to have more babies.

        • mickey667

          I subsidise the children of the rich and their inheritance.

          Funding is taken directly from the working class and given to millionaire’s sprigs in inheritance tax cuts for God’s sake.

          • Marcus

            Heritance tax cuts are subsidised by you?

            That is a bizarre way of suggesting that the dying wishes for people’s
            already taxed money; are less important than your income.

            Very odd and very selfish.

            I subsidise rich foreigners by allowing tax free shopping, or do I?

    • Mary Ann

      Perhaps she stayed at home to look after her children because she wanted to actually raise her children herself. I did, and I loved it.

    • Fraziel

      Another selfish me me me priviliged individual detached from the reality of life for many ordinary folk.

  • KenMac

    The problem is not the Working Tax Credit, it’s the Child Tax Credit. You don’t need to work at all to be entitled to Child Tax Credits. It is a disincentive to work.

    • Mary Ann

      At least it keeps innocent children out of real poverty, costs the tax payer a lot less than taking them into care

      • Anonymous

        She’s right you know

  • JSC

    Cut tax credits, cut foreign aid, cut the deficit. Simples.

    • mickey667

      Which is why you’re not the Chancellor of the Exchequer

    • clarke kent

      fuck the deficit…..fuckem all..dont pay fuck all back… and jail all the BANKERS NO I MEANT WANKERS

    • Mary Ann

      Let the poor pay for the foolishness of the rich, you’re so kind.

  • mickey667

    I think this is the killer.

    “Having spent most of his adult life in Westminster, Osborne has come to view politics as a game of chess he is playing with the Labour party.”

    He is a great Parliamentary strategist, no doubt, but Parliament is not the main player in this game. The public are. The masses of working people counting their weekly budget over the kitchen table are the Queen piece of his game of chess and he doesn’t even know it.

    That Osborne has no experience or comprehension of the catastrophe that losing 1k from a yearly family budget could bring to people, he has no clue as to the anger and ferocity with which this big chess piece (the working public) will bring to bear on his game.

    • Clive

      I’m afraid your ‘killer’ applies even more to Jeremy Corbyn. He has spent almost all of his working life in politics and the past 32 years at Westminster

      I know he is against the changes to tax credits but his opposition is incoherent because he has no credible alternative

  • Derek Custance

    There is much commonsense in these comments but the point The Spectator makes about the Foreign Aid budget is the real killer. It is a deeply unpopular budget paid for by the British tax payer who watch their hard earned money largely squandered on vanity projects across the globe whilst his fellow countrymen at the bottom of the wage scale is further impoverished when they are trying heir hardest to stay in enjoyment. Sensible people see that Working Tax Credits are a rising burden on the taxpayer which cannot be sustained. In choosing the way to dismantle it the Chancellor must keep at the front of his mind the lessons of the Poll Tax or reap the consequences. Surely the Tories are not going to repeat the same mistakes again?

  • Derek Custance

    “Employment” not “enjoyment”!!

  • Andrew Finn

    Stop sending £38,000 a minute to the EU then the cuts to Tax Credits need not be so harsh.

    • Mary Ann

      No Being part of the EU is good for Britain that’s why the vast majority of MPs including the Tories want us to stay in.

      • Clive

        Being in the EU is not good for Britain and most MPs walk in the direction their parties point.

  • scampy

    Singapore one of the richest countries with a higher living standard and home ownership than UK without welfare benefits?
    Singaporean s would be horrified if their government took in huge numbers of uncivilized immigrants and paid them for not working like UK?

  • misomiso

    This is one of those reforms that is absolutely necessary for the UK Economy, but will be political Disastrous.

    They probably could have done it and communicated it better, but is things stand it could blow up in Boy George’s face; as a Spectator reader I am against class warfare, but I can’t help feeling that Cameron and Osborne’s gilded youth may have blinded them to the practical consequences of what they are about to do.

    This all helps the anti politics mood though so might make Brexit more likely, so keep going George!

    • Mary Ann

      As George now seems to be in favour of Britain leaving the working poor may realise that they are better off in Europe, after all the downwards pressure on wages is though to be less than 1p and hour, less that 40p a week and we get better employment rights with the EU

      • Clive

        We don’t need employment rights from the EU. We can make our own. We did that very successfully before we joined.

        Personally, if I were the working poor I wouldn’t want any downward pressure on my wages at all.

        So we need to leave the EU.

        • JosephJohnODonnell

          Except the Government has slashed all employment rights to the bone apart from those protected by EU law. If we were out of the EU it would be the factory acts only no doubt.

  • paul

    The Arrogant will fall !!!

  • PasserBy

    Tax credits were a Labour bribe, to voters (Let us take your money away and give it back to you after employing people to do the admin) and to employers (You don’t have to pay your staff enough to live on, we’ll pay them for you!).

    • edwardowen

      Fed up of people blaming the last lot,tax credits were brought in because bosses were not paying enough,the bill for it has trebled under this lot,when major was in there was f.i.s. so that was the same idea so the torys started it all.

      • PasserBy

        >Trebled under this lot.

        Of course it’s trebled; we’re in a population boom thanks to immigration and a ton of the current growth in jobs is for low paying jobs that aren’t matching inflation. Not to mention the fact that there was no way that anything could be done about that under the Coalition without risking its collapse and another election. Now, far too late, I agree, action is being taken to reverse.

        Saying the Tories started it with Family Income Supplement is ludicrous. FIS was never supposed to be anything like the monstrosity and pervading impact that Tax Credits became under Brown. In addition, even if the Tories are to blame for it ultimately, at least now they’re trying to rectify things.

        • edwardowen

          Thing is they are doing it off the backs of the poor the people they said that would not suffer,this is going to be their poll tax mate,its only early days but wach this space.

          • PasserBy

            There’s a big difference between the Poll Tax and Tax Credits. Tax credits hurt the nation and keep people in bad conditions while taking money away from other budgets, like Health, Education, Defence, etc, while supporting large companies who refuse to pay living wages, for starters.

          • edwardowen

            No difference as the well off never bothered about the poll tax only the middle class and poor,even the unemployd had to pay it,over 3 million workers will be effected + unemployd so thats a hell of a lot of people,just wait till next year as this lot will never last 5 yrs.

        • Mary Ann

          And if we didn’t have immigration and people having babies there would be nobody to pay your pension.

          • Christian

            Immigrants are financially neutral, at best. Love to know who’s pension they pay.

          • Mary Ann

            Anyone who has a pension from the state.

          • Christian

            If they’re financially neutral then they’re not paying anyone’s pension are they? Do try to think.

          • PasserBy

            I’m under twenty five. I’m never getting a good pension under the current system. I’d rather save privately for my pension and reap the long term benefits of the spiralling mechanization of society while suffering for twenty or thirty years then artificially inflate the economy by a tiny amount while adding millions of low level workers who will be made redundant and have contributed, through no fault of their own mind you, to a collapse in society cohesion, intense pressure on infrastructure and public services.

            Personally if we had to have chosen between not paying full pensions and the current situation where the payout and benefits were artificially inflated in the 60s and 70s, I’d probably suggest scaling down pensions.

          • Mary Ann

            You will change your mind as you get older.

          • JosephJohnODonnell

            It’s difficult as we are paying for your pension benefits that we won’t get ourselves.

  • sfin

    Re: The Poll Tax.

    “Later, Kenneth Baker had a niggle: ‘If I’m on Question Time and I’m asked “Why must the Duke and the dustman pay the same?” there’s no answer.”

    The answer, you fool, is that a Duke does not pay more for a loaf of bread, because he is a Duke! Commodities and services have a price and we all pay that same price regardless of who we are and how much we earn. The Poll Tax was right.

    Tax credits are a sinister evil, designed so that everyone is beholden to the state and the state can directly control labour markets.

    It needs eradicating.

    • Fraziel

      Except we dont as many products have vat on them and poor people pay a far higher percentage of their income on vat than the wealthy ,and can least afford it.
      “the poll tax was right” LOL. And off to the asylum for far right loonies you go.

      • Freddythreepwood

        Your argument is specious. There is no VAT on a loaf of bread, but poor people pay a higher percentage of their income for a loaf of bread. Poor people (purely a relative term in our society) pay a higher percentage of their income for anything they buy. There is no reason whatsoever that a rich person (I wish) should pay more for a loaf of bread than his poorer neighbour. There may be compelling reasons why a person should be provided with a free loaf of bread from time to time, but the reasons should be compelling and the arrangement temporary.

  • Leo McKinstry

    Judging by the hostile comments below so many recent articles about tax credits, including even in the Guardian, I increasingly think that Osborne’s critics have badly misjudged the public mood on this issue. Most of the public seems to loathe the system, especially because of the fundamental injustice it promotes, whereby a claimant working just 16 hours a week can be on a higher income than someone working full-time in exactly the same role. While Labour and parts of the media saw Michelle Dorrell’s histrionic performance on Question Time as a highly-charged indictment of the Government, taxpayers saw through her tear-stained sense of entitlement immediately. Indeed, the eagerness to hype up her case only exposed the emptiness of the opposition to reform. I feel that standing firm will turn out to be far more popular than climbing down.

    • Mary Ann

      I still remember men and women working alongside each other doing exactly the same job and the men earning twice as much as the women and everyone accepted it because they had to support their families, basic outgoings for a parent and two children are are higher than those for a single person, it’s two sides of the same coin. The difference, the government does it rather than the employers.

      • Christian

        Fantasy, or are you a liar?

        • Mary Ann

          Not very old, are you.

          • Christian

            Ah, anecdote is you have Ay? Diddums

        • even stares

          Mary Ann is largely correct, although I don’t know of examples of male employees earning twice as much as their female colleagues. We seem to easily forget the achievements of past governments in creating a more just society. Difficult to believe that within my working lifetime there were unions for male employees only who campaigned for such differentials.

          • Christian

            Why is it difficult to believe? The past was different. Sometimes worse and in many cases better. Men earn more because they do more highly skilled jobs and nature has decreed women must give birth.

        • Dominic Stockford

          twice as much for the exact smae job is not something I have come across. I got paid more than women doing the same job when much younger, but nowhere near twice as much.

    • Clive

      The ‘people on 16 hours earning more than those full time’ would probably be the result of having children involved. We pay people to have children.

      As of 2017 tax credits for new claims will only cover 2 children, no more – which is a good thing.

      The last thing a bunch of old Etonians need to be doing is beating up the poor. It does not create a good image. Besides that, this measure will take money directly away from about 3 million people. All voters.

      • Dominic Stockford

        I’d rather pay people to have children than have people smuggling children and families in to the country.

        • Clive

          I’d rather do neither.

          Our population should be going down.

          Given a choice, I’d rather have the immigrants because at least we get to choose them.

          • JosephJohnODonnell

            So who will pay for your pension which your probably get at 60 if the population falls?

  • Fraziel

    She was brave and is absolutely bang on. I have supported most tory welfare reform ( although Universal credit is increasingly looking like a disaster with staff administering it resigning and transferring in droves as its so complex, they are paid so little and the IT is not fit for purpose and thats before we look at how unworkable it is ) but this will hit people doing the right thing. Working, trying to get on and often paid peanuts.

    How any party can justify cutting thousands of pounds per year from the hard working low paid beggars belief. The lies and nonsense about a so called national living wage ( which is being set at over 60 pence per hour LESS than the current minimum wage ) cannot deflect from an appalling, cruel, unfair ,anti hard work policy that is targeted deliberately at the working poor.

    This is Gideon’s 10p tax moment. He should do the right thing and think again.

    • Dominic Stockford

      If they are indeed hardworking then their employers should be paying them a decent wage and taking less home in profits.

      • Des Demona

        Good luck with that.

        Good grief.

    • Daniel Maris

      Universal credit is nothing of the kind. It’s not universal at all – it’s a combined benefit. We need a universal citizen’s benefit that would do away with all that bureaucracy.

  • CommonSenseMatters

    Our current government is a Duumvirate – policy making ability described by the first syllable – folllowed by the roman numeral of how many years they have of making working people feel like the last five letters. You can never find a DeLorean when you need one these days.

    • Christian

      That probably made sense in your head.

      • mctruck

        In CSM’s head :
        Duum – vi – irate : the “policy making ability” is “dumb”. they have “vi” or 6 years left in office to make people “irate”.
        Unfortunately, the Latin Duum isn’t pronounced as the single syllable “dumb” but as “dyoo-umm”, the remaining life of this Parliament is at most 4 1/2 years and the current Government does have popular support.
        As for DeLoreans, it would seem that your search ability is on a par with your Latin and critical thinking skills:
        http://www.carandclassic.co.uk/car/C669388

        • Christian

          Don’t do drugs kids……

  • Augustus

    Here’s a quote I rather like about the Poll Tax….

    “What was so bad about it?”

    “It was terrible because those who used the services most, paid the most….oh, wait…”

    • Kate Pearson

      It was terrible because millionaires paid the same as cleaners.

  • davidofkent

    Poverty in the UK is relative. The problem with these various tax credits is that they were Gordon Brown’s way of bribing people to vote Labour and should never have reached these levels. It is ludicrous that working tax credit can well exceed the state pension (contribution-based). Welfarism is killing the West and must be reversed to encourage the commercial dynamism that once served the UK well.

    • clarke kent

      lets hope you never come out of work you wanker#

      • Dominic Stockford

        I have, on a number of occasions, been out of work. And I agree with david.

      • starfish

        This is what passes for informed comment?

    • KevinC

      Tax credits replaced the flawed and outdated Family Allowance
      introduced by the Thatcher government, they in turn had replaced the
      equally outdated Family Income Supplement introduced by Ted Heaths
      government.Tell us again about partys bribing people to vote for them.

  • George_Arseborne

    Robert Mugabe, Zimbabwean Dictator, Wins ‘China’s Nobel Peace Prize

    http://www.huffingtonpost.co.uk/2015/10/22/china-have-awarded-a-peace-prize-to-robert-mugabe_n_8356326.html?utm_hp_ref=uk

    Next year will be Osborne and Cameron

  • Spamfish

    Tax credits are an attempt to square a round hole. It is a internal contradiction of global capitalism, that it needs to improve the lives of a massively growing world population while also making sure that labour is as cheap as possible in order for business to be successful.
    You cannot have it both ways, so you will either have to accept that inequality and exploitation is fine or that free market capitalism is not going to sustain mankind.
    In the mean time badly thought out ideas like tax credits are the only option, A sticking plaster on a wound that will fester.

  • Maureen Fisher

    They should all try experiencing real austerity in Spain where there is no Government help of any description.

    • Dorothy church

      And how will you feel if you suffer misfortune, Ill health, etc and get nothing?

      • Maureen Fisher

        I would be grateful to live in the UK where help that Spaniards can only dream of is provided and I would whine a lot less than the average “hard done by” Brit.

        • Dominic Stockford

          Good point, well made.

        • Mary Ann

          The newspapers don’t print stories about those who do not whine, not newsworthy.

    • headgirlblues

      Yes – enjoy the race to the bottom. While others sop up anything smelling of money untrammelled.

  • Bert

    This is rubbish.
    Tax credits are a complicated way of subsidising employers and entrenching the minimum wage rather than making it a foundation to build on.
    Spectator is completely wrong on this. Its a reform that is necessary.

    • Dorothy church

      yes

    • JosephJohnODonnell

      That may be right -but it should be phased and matched by increases in the NMW. You are ignoring the human cost.

    • Josh Danby

      That’s true, but in John McDonnell’s recent interview with Andrew Marr he makes that fairly clear too – it’s actually the swiftness and severity of the cuts which even the so-called “hard left” shadow chancellor objects to – the problem is that in order to remove tax credits without actual effect on people’s lives you need to raise wages in accordance with that, not pull them disproportionately to people’s living costs and say “oh it’ll be marginally better by 2020”. The high cost of living is also a strain on people in this regard so had they committed to building some social housing they might have better means to make this transition too, but they instead inflated a housing bubble. McDonnell has even suggested to the chancellor that Labour would support them if they made the cuts proportionately to the rise in wages/personal allowance.

  • ExToryVoter

    Tax credits have made welfare junkies out of many of us; all part of Labour’s grand plan to create a client state of grateful supplicants, in thrall to their wise and beneficent political masters. Employers have ruthlessly exploited this dire state of affairs by driving down wages in the knowledge that tax credits will take up the slack. A Faustian pact which has diminished all of us.

    • Dorothy church

      Tax credits have kept wages down, the only people benefiting are employers

    • marksykes

      So address the employers NOT the recipients – I don’t see this government (or the last Labour one) doing that. Once the employers are paying a decent, living wage then there is no need for the tax credits

  • vi_sa

    “A mother of two children who is paid £20,000 stands to lose £2,000 a year due to his reforms.”

    Assuming this is is a single mother. Is the father not liable to contribute anything? Since when was the role of absentee fathers taken over by the State?

    • Dorothy church

      When they have no money themselves?

      • vi_sa

        So sorry, but still don’t get it – how did they decide to have a child if they had no money? Who did they think was going to pay for everything? I am genuinely trying to understand. At the moment, it only feels like people think tax credits are ‘magic’ money – it does come out of other taxpayers’ pockets. People (not only rich people) are having to work for a paycheck, and then give away quite a lot of money to pay for these tax credits for other people. How is that fair?

        • Kate Pearson

          speaking as someone who until recently was in receipt of tax credit (not any more), I can answer in three ways:-

          1. when I had children I was married to my husband and in a single home. I did not know that due to his habit of visiting prostitutes that I was going to be forced to divorce with two young children. A household income that was sufficient for one household is often insufficient for two, and my ex husband earns a more than reasonable wage, but housing costs etcetera being what they are it would be churlish of me to expect him to support two households. Without this assistance, many children would be forced into poverty through no fault of their own. Whether you consider it to be my fault or my ex husband’s fault, one thing you can’t say is that it is my children’s fault that their parents divorced.

          2. Supporting young mothers in particular back into the workforce, even on a part time basis on a very low income, is positive for families, positive for the economy and positive for the well being of the mothers. It reduces the impact of career breaks on women’s professional lives, which was once crippling. A few years of assistance through tax credit can save a fortune in retraining or the problem of women with no career prospects whatsoever due to a prolonged absence from the employment market.

          3. It is not “magic” money, it is effectively a reduced tax rate for people on a low income in order to allow people, as outlined above, to participate in the world of employment, even on a part time basis, where previously it would have been inconceivable.

          • vi_sa

            I agree with your point about supporting young mothers back into the workforce in principle but I am yet to see an example that I wholeheartedly agreed with.

            I am afraid just because you feel it would be churlish of you to expect him to contribute doesn’t mean it is the duty of all other taxpayers to contribute? Has he moved on to start another family of his own? If he has, I am afraid he does have a case to answer – for not supporting his first family. It is not the children’s fault but it is not taxpayers’ fault either and it is the parents who need to take more responsibility surely? Why blame the State?

            I call it magic money because people think the State owes it to them and don’t think about where it comes from. It is tax money out of other people’s pockets. If anything, it is the employers who need to pay their employees more instead of the State topping up low incomes.

            Anyway, let’s just agree to disagree. A lot of people on both sides of the argument here.

          • Daniel Maris

            Reductionist views are rarely helpful. If the government demands business pay a living wage then the money for that will also be magic money, from “other people’s pockets” (as you have it) since business will immediately pass on the costs to consumers who pay for their products and services. There might be some very marginal improvement in producitivity but that will probably involve higher unemployment.

            The tax credit system – seriously imperfect though it is – at least reflects a social consensus (hitherto) that we don’t want people to live in extreme poverty and that generally speaking we like adults to work and contribute to economy.

        • Norman

          The biggest factor when determining how many children a woman is likely to have is their level of education. Let’s cut education funding so we have more uneducated women having children, who will later in life be working in low page service industry jobs, because we have no manufacturing industry left. How is it fair that some people get a poor education and then limited options in life?

        • Mary Ann

          Most people don’t choose to have children they choose to have sex, and women are more receptive when they are ovulating.

      • Flintshire Ian

        But almost certainly have the latest iPhone and an ipad

  • Northern Sense

    A comment in a blog last week was from a single-parent working in an insurance company for about 20k per annum. With two children he relied on the child tax credit to get by. He didn’t know how he was going to cope when the changes came in… In this one blog, the whole of the tax credit issues were laid bare.

    Firstly we have to accept that he was happy with the situation of 20k+tax credits, or least reasonably so not to have done enough to change things. If he was unhappy he had three options: he could ask his employer for more money, even looking to move to a higher paying firm if he was not satisfied. Over time his salary would increase as, presuming he was adequate at his job, it would cost more to replace him as opposed to increase his salary. If he earns more so do his peers who compete with him. So problem 1: Tax credits suppress salaries, not just for those on tax credits, but all those in similar jobs and salary ranges.

    Option 2 would be to be more productive at work, work more hours, look for promotion, become more valuable/ useful to the employer and hence earn more. Problem 2: tax credits lower productivity.

    Finally he could look to up-skill or retrain, take additional courses etc. Again this would raise his salary. So problem 3 is that tax credits entrench low skills.

    The most worrying piece however is that he didn’t know what to do? This is the client state in operation. Creating a reliance on the state to provide income undermines basic human desires for advancements.

    Tax credits need to end and the current reforms do not go far enough. The shock will be great and some cushioning is needed as people adjust, but any cushion should be temporary and time limited such that we end this poisonous welfare trap.

    • Dorothy church

      What you are saying is a load of total and complete rubbish, you obviously live in a different world to the rest of us, are you a Tory MP by any chance ?

    • Dominic Stockford

      An excellent exposition of the matter. And I get Tax credits.

    • Norman

      Wow, great reasoning there to back up your obvious lack of empathy or understanding of those living and surviving on a low wage. I’m guessing you aren’t in the position of someone presented with these 3 options.
      Here is an alternative narrative around the 3 options, and this man knew the options open to him. You don’t have to worry any more about this aspect.
      Option 1: He knows if he goes to his employer and asks for an increase in salary, the employer might just think I’ll go to market and find someone who will work for the same or possibly even less money. They believe they owe their employer nothing in the current employment market. Employers want to suppress salaries to increase their profit for them and/or their shareholders.
      Option 2. He knows he could work harder and longer hours for the same pay. He also knows he won’t see as much of his family doing this and his employer might take his additional effort for granted and offer nothing because they can easily replace him if they want to.
      Option 3. Sure he can afford to up-skill or retrain, with all of that disposable income he has being on a low income, supporting a family and getting tax credits. His employer would be happy to pay for the training, safe in the knowledge that their employer won’t go and get a job elsewhere.

      • JosephJohnODonnell

        THIS

      • Daniel Maris

        This is mostly nonsense. If every person on a low income retrained and developed more skills, that doesn’t mean our economy would be able to use them. Part of the problem in places like the Middle East is that there are loads of trained engineers and no employment for them, because the demand is not there. You can only do as much as the productive base of your economy allows.

        However, I would agree tax credits provide only a weak incentive to work for those at the bottom end of the income scale. Universal citizens benefit could replace tax credits and provide a strong incentive to work. It would also make it easier for people to retrain, look for new employment or check out possible new locations to live in, where there might be more demand for their skills.

    • Mary Ann

      And what if he simply lacks the ability to improve his situation, not everyone can be high fliers.

  • Raimo Kangasniemi

    Welfare policy in UK has always been driven by politics, not facts, and the supreme fact has been that the state prefers welfare policies where the individual is seen as lacking because of unemployment instead of the fault being found in the state, society and economy.

    That’s mainly because people who end up at the top of the system are of course not going to radically change what was behind their own rise to power and tend to see their own ascent as proof that the system is working. Deep down they compare everybody who “failed” at themselves, no matter the difference in circumstances and context.

    • Alex

      They’re even thicker than that I’m afraid. It should be patently obvious to anyone who reaches the top of the pyramid that everyone by definition can’t do it at the same time. Osborne’s success required others to fail – and then he asks why the failures had not been successful. What difference would it have made? Had any of those he berates actually been successful, Osborne would have joined the ranks of the failures instead, and things would be no different.

      • marksykes

        Add to that the fact that he was in a very privileged minority in the first place so didn’t actually ‘work’ his way to the top

    • Mary Ann

      What they need to do is to realise that not everyone has what it takes to get to the top, also they couldn’t get there without the people at the bottom.

  • Andrew Smith

    The current debate often focusses on what its immediate Impact will be. I am missing an understanding for the fact that the UK is in penury and should be cutting an awful lot more than it is.
    Surely Great Britain was not a third-world nation in 1996?

    • JosephJohnODonnell

      Britain had much more generous benefits in 96 which have been eroded by inflation.The immediate impact is people have budgeted on having this income. Losing it is a blow. You are obviously not very empathetic.

    • Mary Ann

      The UK is one of the richest counties in the world and our children should be well looked after.The immediate impact is important if you have no savings.

      • Andrew Smith

        With the debts levels as they are, we are impoverishing future generations. I’ve nothing aganst slowing down the rate at which tax credits are phased out: the point I wanted to raise was that something here has to be done, if not now then later. We seem to be forgetting the masive debt pile on which we are sitting.

  • andywade

    Universal Credit… oh yes! Tell us how that’s going to work again (giggle)

    • Clive

      ‘us’ ? Are you a hive entity ?

  • peter_dtm

    why must working tax credits go ?

    Because it is not the tax payers job to keep businesses in business if their business model relies on paying peanuts.

    • Dominic Stockford

      Exactly so. It is positive for the employed if thier employers pay them porperly. It is positive for the country if employers pay their employees properly. And for those of us who are in low incomes because we chose a calling, knowing it pays little, we will continue to get on with it, wihtout this unasked for and rather self-defeating governmental largesse. Getting it didn’t make me more likely to vote Liebour, but it did make me wonder about the sanity of politicians taking away in order to give back. Losing it won’t make any difference to my voting Tory, which I don’t anyway.

    • Mary Ann

      But if they pay more that will increase inflation.

      • Andrew Smith

        Wages are but one (and not the most important) of the drivers of inflation. As we have an inflation rate close to zero and a consumer based econonomy, higher wages would be a good thing at this point.

        • Mary Ann

          Except of course those on fixed incomes.

          • Andrew Smith

            That makes no sense. Increase wages by making the employers pay a real wage, even (especially) for those on fixed incomes. What has fixed incomes got to do with it?

          • red2black

            ‘making the employers pay a real wage’? Even more State interference in the drive towards a Free Market economy.

  • Jethro Asquith

    Only read this quickly – so may have got it wrong and am sure some kind fellow will come along and help me out here. Someone earning £20K will be paying £2080 tax ((£20000 – £10600 = £10400) x 20%). So if they are able to lose £2000 on the new scheme then this means they can be paying NO MORE than £80 in effective tax – £2080 – £2000. I am sure I have this wrong because even our politicians wouldn’t dream up such a silly scheme. So effectively, simplistically speaking, some people have a £20k tax free allowance?

    • Clive

      Yes, tax credits are tax free

    • Clive

      Yes, tax credits are tax free

    • Clive

      Yes, tax credits are tax free

    • Clive

      Yes, tax credits are tax free

  • paul

    The Nasty Party are the Political Wing of the Bankers & Hedge Funders in the UK !!!

    • Matthew O’Malley

      As opposed the the sweetness and light of the Trade Unions?

      • Mary Ann

        Sauce for the goose.

  • Peter Stroud

    Not another omnishambles, surely. Osborne does not need this sort of thing, if he has any hope of being leader.

  • NobbyNobbs

    Well as an ex Etonian millionaire who has never done a proper days work in his life and had everything handed to him on a plate, including the family business, is it any wonder the man can’t empathise with the working classes, who coincidently the Tory party most certainly DO NOT represent.

    The Tory party is nothing more than the political wing of the businesses who pay such shit wages that the state have to subsidise the low paid with tax credits, go figure!

    • vi_sa

      I am a middle class taxpayer and I definitely support this change. You are right businesses need to pay more, but that doesn’t mean the rest of the taxpayers should pick up the bill. This is money out of my pocket.
      Maybe it is time to blame Labour for importing people who will work on low wages. Maybe it is time to blame Labour for discouraging the ‘old fashioned’ family structures. Most of this money goes to supporting single mothers while the dads don’t take on any responsibity for the family they have abandoned.

      • John Brindle

        Are you completely unaware that immigration records were broken this year under a Tory government and that if the trend continues, the numbers since 2010 will exceed those imported between 97 and 2010? That wouldn’t fit your propaganda narrative and therefore you ignore these inconvenient facts.

        The only people to benefit from immigration are big business fat cats. If you have any intelligence, that should make you pause for thought.

        • vi_sa

          Erm, at least this govt. tried to bring non-EU immigration under control. Plus a crack down on bogus students – both things that Labour completely ignored. Those are facts too – even if they don’t fit into your narrative. Do not question my intelligence. I agree big business fat cats do benefit but it is not as if Labour was in any way their enemy.

          Under Labour, even discussing immigration became ‘racist’ somehow. (And I speak as an immigrant myself of Indian origin.)

          If you are so concerned about immigration records, why is Labour supporting the IN campaign? Travel without restriction from the EU is the sole reason for this increase in numbers, surely? Or do you dispute that?

          I am definitely voting to Leave so that only the UK can decide who to let in, so that we can address a skills shortage, not be engulfed by low skilled migrants who drive down wages even more.

          • NobbyNobbs

            What part of more immigrants have entered the UK under this Tory government than the last Labour government are you not understanding?

            Tories love immigration as it floods the job market with cheap labour, and creates a permanent pool of around 2m unemployed which drives down wages.
            All of which suits the Tory donors, ie: Big business

          • Jethro Asquith

            It was Labour that set the rules for immigration that is allowing them to come in. There is little the Conservatives can do (unless we leave the EU)

          • Mary Ann

            The points system introduced by Labour only affects those from the rest of the world, the government have made changes to it already, they can do so again if the spirit is willing. PS it was the Tories who took us into Europe, and closer union, (yes pamphlet)

            http://www.theguardian.com/uk-news/2015/jul/09/couples-protest-18600-minimum-income-rule-foreign-spouse-uk

          • Mary Ann

            There is less immigration from the EU than there is from the rest of the world

            http://www.bbc.com/news/uk-30243472

          • Daniel Maris

            This government has completely relaxed rules on business visitors. Did you know an astonishing 8 million (yes 8 million – about double what there was 10 years ago) business visitors come here each year.They are taking up housing and school places and forcing us to expand our transport infrastructure. Business visitors are not policed in any way, so many of them are here on a semi-permanent basis.

      • marksykes

        I am a middle class taxpayer too and would happily pay more in tax to support those who, for whatever reason, are less fortunate than I am.
        Go figure!!

      • Daniel Maris

        “Business” won’t pay more. The costs will be passed back to the consumer, regardless of their ability to pay.

  • BarryFromEastEnders

    When I worked at the car lot I used to earn a good crust, no need for living wage for Barry. Me and my Janine we got on just fine. Pukka in fact.

    • John Brindle

      Good for you, baldy.

  • “the identity, purpose and priorities of the Conservative party”

    Battles long lost to the pampered Cabinet.

  • JDrakeify

    This article is broadly correct, though I would say that it is wrong to argue that this policy was motivated by the feeling that they can get a way with it because a Corbyn led Labour party does not provide an effective alternative. That could be true, but it wasnt a motivating factor in this policy, seeing as Osborne announced it in the budget, long before Corbyn won the leadership contest, and even before he was being taken seriously as a contender.

  • Identity, purpose and priorities of the Conservative party?

    Identity: Posh boys with no idea about the realities of most
    people’s lives looking after their own whilst pretending, with the support of stupid
    people and the media to be natural leaders.

    Purpose: Protect their own – individually and in business.

    Priorities: Protect rich people. Stay in power. Prevent the
    electoral system from becoming democratic. The last one is vital to their
    survival!

    • LordJustin

      The right wing Elite are odious; the left wing Elite even more so. A plague on both their houses. Just leave me the f*** alone to earn a living and not have to support other, less hard working individuals from my taxes.

      • That’s a very right wing view though! Extreme individualism.

  • James Earp

    He gives away £34 billion per year to his rich associates and supporters through the Mayfair Loophole. If he stopped this, in 2 years, we would erase the deficit. He promised to reduce this by £5 Billion by 2017 and then afterwards, quietly changed this to a £1 Billion cut by 2020. This is a clear cut case of him penalising the poorest to fund the richest. It’s disgusting.

    • sylvia scaife

      Is this true, if it is people should be made aware of it big time. They are getting away with too much because no one is highlighting what they are up to.

      • James Earp

        Unfortunately it is true. Only 2 newspapers reported on it because the others are generally Tory supporters. Rupert Murdoch, for example, openly uses his entire media network to bash the other parties and create pro-tory propaganda. He is one of the biggest people benefitting from the Mayfair Loophole. The daily Telegraph didn’t report it because HSBC saves billions through the loophole and is the Telegraph’s biggest advertising client. They pressured the telegraph to drop the story or lose their funding – a senior editor turned whistleblower on the subject and quit in protest but none of the papers reported it. Google “Mayfair Loophole” and an article by the Independent will come up – it says how large corporations can save up to £700 million in tax avoidance and they largely donate it back to Tory support to keep the loophole open. I asked my local MP how much was lost and she said it was now cumulatively £34 Billion a year and rising.

        • sylvia scaife

          Yes I can totally believe that, look how Murdoch killed off competition to Sky & now monopolises the press. You only have to look back to see that whoever wins an election does so because of the press.
          So now the problem is how do you get that information out to sufficient numbers of the public for it to be under the spotlight.
          Problem with people in general is they only hear what they are told and not understand what is really going on.
          I will Google it and try to get others to do the same. If enough people spread the word then just maybe we can get it out there without the press.

    • LordJustin

      It is both wrong and shameful to work part time and expecting other, full time, workers to subsidise your life style of choice.

      Tax credits are wrong in principle. They keep everyone poor and dependent.

      • James Earp

        It’s both wrong a shameful to lie to the British public about the cost of welfare when you are giving a vastly bigger amount away to those already rich.

        Tax credits need to be phased out for a better alternative, but there is no need for it to be done so immediately at the sacrifice of our poorest.

  • Mark Armstrong

    both cameron and osbourne are self seving scum, the sooner they both end up in the patch of ground that slime ball thatcher has gone to the better….the only good tory is a dead one.

    • LordJustin

      Oh, dear! ANOTHER leftie who thinks debate is about dishing out personal insults to duck the issues.

      • James Earp

        Osborne gives away £34 Billion a year in corporate tax avoidance to his supporters through the Mayfair Loophole. For a party so hellbent on the deficit, it’s funny they can’t see how abolishing this would erase the deficit in just over 2 years. Osborne promised to slash the Mayfair Loophole by £5 Billion by 2017, he then went back on this ‘promise’ and said he would cut it by £1 Billion by 2020. In the meantime, he’s making up the money by targeting the country’s poorest.

        Tax credits do need to to be phased out for a better alternative, but the way Osborne is doing this will leave many decent families in a very bad place financially.

        Labour haven’t asked to keep the tax credits, they’ve simply ask for them to be delayed until an alternative can be implemented without any detriment to the british public. I think that’s pretty decent.

        How do you feel about taxpayers funding £34 Billion per year given away by Osborne? £4.4 Billion seems insignificant compared to that, especially when there is a plan to cut that but absolutely no plan under the Tories to cut the Mayfair loophole.

        I can understand personal insults when the public are being so blatantly deceived.

        • Dougie

          You seem a bit confused. CGT raises less than £4B per year, so your suggestion that £34B is being avoided annually seems totally implausible. Who is your MP and are you sure she knows what she is talking about?
          You also appear unaware that the Mayfair loophole was agreed by the last Labour government and that Osborne took action by raising CGT from 18% to 28% in 2010.

          • James Earp

            This is where arguments usually falter; they’re made about parties and ‘sides’. I have no preference. Although this may seem implausible, unfortunately it is true, it’s not just through CGT, it’s wealthy individuals as well. I am well aware that this was introduced under the previous labour government, which is why my criticism was of Mr Osborne, not the conservative party. Where my criticism extends to them is that they have no intention of abolishing the Mayfair Loophole, whereas Corbyn does. Google “Mayfair Loophole” and have a look for yourself.

          • Dougie

            Unlike some, I always do my research before posting. The Mayfair loophole is about CGT. Since you say you got the figure of £34B from your MP, it’s not unreasonable for me to ask who she is and what her source is for the £34B.
            In fact, it turns out that this sum is an estimate of the annual “tax gap”, I.e. the total of uncollected tax from all sources. These sources include plumbers doing jobs for cash as well as hedge fund managers describing income as capital gains, and everything in between.
            May I respectfully suggest you do some Googling yourself? Start with “tax gap” and CIOT.

          • James Earp

            Dougie, I have to apologise. You are indeed correct and it’s the tax gap that has extended to £34 Billion. It was Karen Buck who responded to me and she mentioned the tax gap – in the context of her email though, it seemed like she was referring to it as being caused by the mayfair loophole. My mistake.

            Although I was admittedly wrong on this figure, I still stand by the fact that Osborne reneged on his promise to cut the mayfair loophole by £5 billion by 2017. Instead, it would appear he is trying to gain back this loss by cutting tax credits instead. Do you think that it’s the right stance to cut credits for the poorest over removing blatant tax avoidance for the wealthy?

          • Dougie

            Thank you, James, for your gracious response. I don’t think it’s an either/or issue. The tax gap needs to be reduced (even though, at 6.4%, it is low compared to most similar economies) and welfare spending also needs to be reduced.
            I dislike the word loophole as it is frequently misused. The Mayfair loophole is a good example: it isn’t a “loophole”, as the government that introduced the mechanism did so in full knowledge of its ramifications. Rather, it is an intentional feature of the tax system, albeit one that many think is inappropriate and should be eliminated.
            It may appear to you that Osborne is trying to recover the tax lost through the Mayfair Mechanism (see what I did there?) by cutting tax credits but to another observer it will appear equally obvious that Osborne is trying to achieve that aim by cutting the defence budget, or by holding down public sector pay, or by … choose any one of a hundred measures you happen not to agree with.
            The Tories won the election with a clear manifesto commitment to cut welfare spending. It would indeed have been helpful if they had given more detail about how that was to be achieved but, since tax credits make up such a large proportion of non-pension welfare spending, it shouldn’t have surprised anyone that they were in the frame. I do worry about the high marginal tax rate that applies to those on WTC who extend their working hours as this appears to act against IDS’s heroic efforts to remove the dependency traps in the welfare system and make work pay.
            I dare say some sort of fudge will emerge over the next few weeks – it usually does.

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    • Mary Ann

      You are off topic.

      • Des Demona

        Off her head too I suspect.

  • Mary Ann

    So Osborne now accepts that his cuts will hurt the poor.

    • LordJustin

      I doubt it, because they WON’T. What hurts the “poor” is ENTITLEMENT – telling them that they only have to work part time to earn a full week’s wages because other, harder, workers will be forced to top up their pay.

      • James Earp

        Osborne gives away £34 Billion a year in corporate tax avoidance to his supporters through the Mayfair Loophole. For a party so hellbent on the deficit, it’s funny they can’t see how abolishing this would erase the deficit in just over 2 years. Osborne promised to slash the Mayfair Loophole by £5 Billion by 2017, he then went back on this ‘promise’ and said he would cut it by £1 Billion by 2020. In the meantime, he’s making up the money by targeting the country’s poorest.

        Tax credits do need to to be phased out for a better alternative, but the way Osborne is doing this will leave many decent families in a very bad place financially.

        Labour haven’t asked to keep the tax credits, they’ve simply ask for them to be delayed until an alternative can be implemented without any detriment to the british public. I think that’s pretty decent.

        How do you feel about taxpayers funding £34 Billion per year given away by Osborne? £4.4 Billion seems insignificant compared to that, especially when there is a plan to cut that but absolutely no plan under the Tories to cut the Mayfair loophole.

  • David Mortimer

    A delay is not a defeat for the Government. Sadly we will now see
    millions of people made to suffer completely unnecessarily at the hands
    of those who are supposed to act in the publics best interest.

  • Chris Hobson

    Funny how Lawson the thatcherite chancellor was against this, presumably his corporate friends did not want to pay higher wages and reduce their profit margins.

  • LordJustin

    This is NOT about rich and poor – as the self-righteous, and oh-so-intellectually-fraudulent left would have you believe. It is about tax payers who work a full week being forced to find £4.4bn to subsidise people who refuse to work more than 16 hours a week as it will affect their tax credits.

    Osborne is right, Labour is wrong, and the Lords are so out of order that only slapping them down, hard and permanently, will solve the problem.

    • James Earp

      Osborne gives away £34 Billion a year in corporate tax avoidance to his supporters through the Mayfair Loophole. For a party so hellbent on the deficit, it’s funny they can’t see how abolishing this would erase the deficit in just over 2 years. Osborne promised to slash the Mayfair Loophole by £5 Billion by 2017, he then went back on this ‘promise’ and said he would cut it by £1 Billion by 2020. In the meantime, he’s making up the money by targeting the country’s poorest.

      Tax credits do need to to be phased out for a better alternative, but the way Osborne is doing this will leave many decent families in a very bad place financially.

      Labour haven’t asked to keep the tax credits, they’ve simply ask for them to be delayed until an alternative can be implanted without any detriment to the british public. I think that’s pretty decent.

      How do you feel about taxpayers funding £34 Billion per year given away by Osborne? £4.4 Billion seems insignificant compared to that, especially when there is a plan to cut that but absolutely no plan under the Tories to cut the Mayfair loophole.

  • Dougie

    Tax credits are yet another political time bomb left by Gordon Brown for the Tories. Successful in its own terms but, unfortunately, incredibly expensive for the long-suffering British taxpayer. Tessa Jowell told Sky News the other day that Brown had assured her that tax credits would only cost £600M a year. Now they cost you and me over £30B per year. It’s got to stop.

  • commenteer

    What’s hard about working sixteen hours a week in order to qualify you and your children for maximum tax credits? Sorry, I don’t buy it.

  • Dave Siddons

    I agree with the general concensus that this is too sudden as families have become dependant on it. They should raise the number of hours permitted to work in steps at the same time as reducing the credit. I appreciate that some people can only work part time (single parents) and they should be handeled as special cases. I personally think disability benefit should be hammered. i think this only from personal experience as I know a number of claimants who are in no way incapable of working. One example which sickens me (and this guy isn’t ashamed of it as he shows off all he has) is a fella I know that injured his foot at work many years ago. He received significant compensation and has blown that. He has never worked a day since (over 16 years) blaming this injury. He takes his family away for 2 week breaks in ibiza twice a year. He gets a new iPhone every year and has all the latest gaming consoles and top of the range 4K TVs. He gets a brand spanking car from motobility every three years (currently a BMW 1 series with maual gearbox) which is not modified at all (that is a clear indication of the severity of his affliction). he occasionally remembers to limp. He has had 3 unsuccessful operations where they have failed to find the cause of the pain/problem (and loves to post photos of the surgery to gain sympathy). He still insists he cannot work. For heavens sake I know a guy who lost half his leg in a gritter who went straight back to work for the council and still in a manual labouring role. I doubt this is an isolated rip off claimant.

  • Anthorny

    A brilliant piece, as I would expect from The Spectator.

    It has answered a question that was in my mind; how does the Foreign Aid waste of borrowed money stack up against the forthcoming Tax Credit debacle.

    It was answered herein; Tax credit cancellation saves £3.5 billion. Wasteful foreign aid is to be increased by £3.5 billion.

    Given the choice what would voters (Tory, Labour or anyone else) rather see happen?

    This is an avoidable political disaster. It proves Osborne could never be PM. He shows cowardice as he’s happy to steal from the voiceless working poor, yet dare not face the wrath of the BBC and Guardian readers with Foreign Aid cuts.

    Cameron would do well to reshuffle out the spineless Osborne at the earliest opportunity.

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