Down and out in London

I am depressed that there has been a brothel operating right under my nose, and I knew nothing about

It is another exciting evening on the back terrace of the Hovel. I am exiled from the forward-facing parts of the house because the Thai restaurant over the road, following a power failure, has been supplied with a very noisy generator by the electricity company, which seems content to let the damned thing run for a week without sending any men in to solve the problem. (Thinking that this is good for at least a free meal for two – it’s not the best restaurant in the world, but it is, as far as Razors and I are concerned, the nearest restaurant in the world – I walk in one lunchtime and ask to see the manager, in the hope that he can perform the act of empathy that will enable him to comprehend how hard it is to go to sleep with a generator 30 yards from your ear. The waitress, in what turns out to be the closest we ever get to real communication, hands me a menu.)

Anyway, back to the terrace. It is, again, midnight, and I am catching up with Torchwood on the laptop when I hear an almighty noise coming from an unfamiliar direction. It sounds like a lorry has fallen on its side on the other side of the house. I idly wonder whether to investigate, but the menacing aliens have demanded 10 per cent of the world’s children and I wonder how long it will be before a cabinet minister suggests this might be a good way of ridding this nation in particular of its underachievers. (Not long, as it turns out. “What are league tables for?” is the excellent way the question is put, or answered.) I am gripped.

Just then a voice comes from behind me and to the left. “Excuse me, sir.” In nearly two years at the Hovel, no voice has ever come from over there, let alone one addressing me as “sir”. I am surprised at the way I don’t have a heart attack. “Excuse me, sir, but have you seen anyone come this way? We’re police officers.”

Police officers! I say no, but that I did hear a noise which might have come from the roof.

“Have you got a torch?”

Funny thing, a police officer going about his business in the middle of the night without a torch, but I refrain from saying so. Instead I volunteer to check the skylight and make sure that no vile miscreant is trying to murder Razors in his sleep and make away with our priceless collection of half-empty cereal packets.

All seems secure.

“So what’s going on?” I ask. When the Old Bill are trying to catch villains, I like to be public-spirited.

“There’s a brothel here. Quite common in W1.”

“Are you closing it down?” I ask.

“Yes, that is the general idea.”

My heart sinks. There are two incompatible attitudes to brothels: one, taken by the wit and dandy Sebastian Horsley, is that sex is the most beautiful experience money can buy (look his stuff up on YouTube, if you are so inclined); the other is less forgiving. It would appear that PC Plod takes the latter view. From the judge’s summing-up at the trial of Paul Pennyfeather for white slave-trading in Decline and Fall: “For these human vampires who prey upon the degradation of their species, society has reserved the right of ruthless suppression.”

For my part, I am just depressed that there has been a brothel operating right under my nose, or just round the corner from it, and I knew nothing about it. Leaving the rights and wrongs of prostitution aside for the moment, I think it adds a certain louche tone to an area to have a knocking-shop in the vicinity, especially if clients and employees are both discreet enough to keep their existence a secret for years.

My friend L– used to be a very vocal enthusiast for prostitution. He kept recommending I go to one establishment in Marble Arch, where the girls were beautiful, the prices far from extortionate, and they gave you a beer if you asked for one. I mumbled something about exploitation and human trafficking, and he
said: “Bollocks. These girls are all saving up for psychology degrees, sending money back home and are still making a packet. Well, more than you at least. Which I suppose isn’t saying much.” I never went. I wonder what has happened to L–.

I also wonder about the noise I heard earlier. I would imagine, of all indignities, to be caught in a raid on a house of ill repute is right up there. Was the noise I heard that of some terrified Lithuanian girl in her scanties knocking over a chimney pot?

Or, rather more exciting, is some respectable MP or judge, seeking to relieve himself from the cares of office, now hobbled by his trousers round his ankles, contemplating in raw panic the collapse of his career as he scampers along the rooftops of Marylebone?

Nicholas Lezard is a literary critic for the Guardian and also writes for the Independent. He writes the Down and Out in London column for the New Statesman.

This article first appeared in the 20 July 2009 issue of the New Statesman, King and Country

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Q&A: What are tax credits and how do they work?

All you need to know about the government's plan to cut tax credits.

What are tax credits?

Tax credits are payments made regularly by the state into bank accounts to support families with children, or those who are in low-paid jobs. There are two types of tax credit: the working tax credit and the child tax credit.

What are they for?

To redistribute income to those less able to get by, or to provide for their children, on what they earn.

Are they similar to tax relief?

No. They don’t have much to do with tax. They’re more of a welfare thing. You don’t need to be a taxpayer to receive tax credits. It’s just that, unlike other benefits, they are based on the tax year and paid via the tax office.

Who is eligible?

Anyone aged over 16 (for child tax credits) and over 25 (for working tax credits) who normally lives in the UK can apply for them, depending on their income, the hours they work, whether they have a disability, and whether they pay for childcare.

What are their circumstances?

The more you earn, the less you are likely to receive. Single claimants must work at least 16 hours a week. Let’s take a full-time worker: if you work at least 30 hours a week, you are generally eligible for working tax credits if you earn less than £13,253 a year (if you’re single and don’t have children), or less than £18,023 (jointly as part of a couple without children but working at least 30 hours a week).

And for families?

A family with children and an income below about £32,200 can claim child tax credit. It used to be that the more children you have, the more you are eligible to receive – but George Osborne in his most recent Budget has limited child tax credit to two children.

How much money do you receive?

Again, this depends on your circumstances. The basic payment for a single claimant, or a joint claim by a couple, of working tax credits is £1,940 for the tax year. You can then receive extra, depending on your circumstances. For example, single parents can receive up to an additional £2,010, on top of the basic £1,940 payment; people who work more than 30 hours a week can receive up to an extra £810; and disabled workers up to £2,970. The average award of tax credit is £6,340 per year. Child tax credit claimants get £545 per year as a flat payment, plus £2,780 per child.

How many people claim tax credits?

About 4.5m people – the vast majority of these people (around 4m) have children.

How much does it cost the taxpayer?

The estimation is that they will cost the government £30bn in April 2015/16. That’s around 14 per cent of the £220bn welfare budget, which the Tories have pledged to cut by £12bn.

Who introduced this system?

New Labour. Gordon Brown, when he was Chancellor, developed tax credits in his first term. The system as we know it was established in April 2003.

Why did they do this?

To lift working people out of poverty, and to remove the disincentives to work believed to have been inculcated by welfare. The tax credit system made it more attractive for people depending on benefits to work, and gave those in low-paid jobs a helping hand.

Did it work?

Yes. Tax credits’ biggest achievement was lifting a record number of children out of poverty since the war. The proportion of children living below the poverty line fell from 35 per cent in 1998/9 to 19 per cent in 2012/13.

So what’s the problem?

Well, it’s a bit of a weird system in that it lets companies pay wages that are too low to live on without the state supplementing them. Many also criticise tax credits for allowing the minimum wage – also brought in by New Labour – to stagnate (ie. not keep up with the rate of inflation). David Cameron has called the system of taxing low earners and then handing them some money back via tax credits a “ridiculous merry-go-round”.

Then it’s a good thing to scrap them?

It would be fine if all those low earners and families struggling to get by would be given support in place of tax credits – a living wage, for example.

And that’s why the Tories are introducing a living wage...

That’s what they call it. But it’s not. The Chancellor announced in his most recent Budget a new minimum wage of £7.20 an hour for over-25s, rising to £9 by 2020. He called this the “national living wage” – it’s not, because the current living wage (which is calculated by the Living Wage Foundation, and currently non-compulsory) is already £9.15 in London and £7.85 in the rest of the country.

Will people be better off?

No. Quite the reverse. The IFS has said this slightly higher national minimum wage will not compensate working families who will be subjected to tax credit cuts; it is arithmetically impossible. The IFS director, Paul Johnson, commented: “Unequivocally, tax credit recipients in work will be made worse off by the measures in the Budget on average.” It has been calculated that 3.2m low-paid workers will have their pay packets cut by an average of £1,350 a year.

Could the government change its policy to avoid this?

The Prime Minister and his frontbenchers have been pretty stubborn about pushing on with the plan. In spite of criticism from all angles – the IFS, campaigners, Labour, The Sun – Cameron has ruled out a review of the policy in the Autumn Statement, which is on 25 November. But there is an alternative. The chair of parliament’s Work & Pensions Select Committee and Labour MP Frank Field has proposed what he calls a “cost neutral” tweak to the tax credit cuts.

How would this alternative work?

Currently, if your income is less than £6,420, you will receive the maximum amount of tax credits. That threshold is called the gross income threshold. Field wants to introduce a second gross income threshold of £13,100 (what you earn if you work 35 hours a week on minimum wage). Those earning a salary between those two thresholds would have their tax credits reduced at a slower rate on whatever they earn above £6,420 up to £13,100. The percentage of what you earn above the basic threshold that is deducted from your tax credits is called the taper rate, and it is currently at 41 per cent. In contrast to this plan, the Tories want to halve the income threshold to £3,850 a year and increase the taper rate to 48 per cent once you hit that threshold, which basically means you lose more tax credits, faster, the more you earn.

When will the tax credit cuts come in?

They will be imposed from April next year, barring a u-turn.

Anoosh Chakelian is deputy web editor at the New Statesman.