The fags and booze crackdown that wasn't: or why we need a register of lobbyists

Why can’t we see how much is being spent by private healthcare companies to push for NHS reform, why can’t we see which companies thought the Work Programme was a good idea?

Senior Tories are determined to axe the “Lib Dem hobbyhorse” of a statutory register of lobbyists . . . one Tory source said the proposal was effectively dead as ministers focused on “big issues” instead of devoting resources to an idea cherished only by the Liberal Democrats.

“We need to tackle the issues that the country cares about such as immigration, benefits and the economy,” he said. “It is ironic that Nick Clegg is gunning for the lobbying industry when he was a lobbyist once upon a time.”
Now, about this “next big scandal waiting to happen”. Bluntly, one has to wonder at what point our Prime Minister will deem said scandal to have happened. The Queen’s Speech of 2013 was most notable not for what was in it, but for what wasn’t. 
For a start, lobbying reform wasn't there. But that wasn't the thing which caused a stink: that was the issue of plain cigarette packaging. It seems a pretty obvious policy to adopt. Rightly, the government is keen to make smoking a frowned-upon, niche activity on a par with watching hentai porn or Morris dancing, and having upped taxes and hidden the packets in supermarkets, this seemed the next logical step. I’m certainly OK with it, and I speak as an enthusiastic social smoker. (I only smoke when I'm out drinking. And quite often when I'm not. Anyway.)
Maybe you don't like the idea, but that's not the point. The point is that it was suddenly binned. Why? Because Ukip had been selling itself as the pro-smoking, or if you prefer, pro-lung cancer party? Or was it more to do with lobbying from the tobacco industry? Department of Health minutes show that lobbyists had met government officials in January and February and told them that the industry would have to source its packaging from abroad, resulting in job losses. Other arguments included the contention that it would boost the trade in illicit cigarettes - although commercial sensitivity laws mean we can’t actually see the workings behind this.

Fine. The tobacco lobbyists have as much of a right to put forward their view as anyone else. (For more on this, Thank You For Smoking is a brilliant film, by the way). But then the links between the Prime Minister’s aide, Lynton Crosby, and tobacco firms were exposed - and challenged by a Tory MP, no less. The PM’s spokesman said Crosby had no impact on the decision, but don’t the quotes in that FT story sound rather like his lines in this Mirror piece about “getting the barnacles off the boat”? This, incidentally, is the old lie that we should forget about this - and lobbying reform itself, and gay marriage for that matter - because the Government’s like me trying to walk and send a message on its phone: it can't try to do too many things at once or it'll end up inadvertently sending its mother a sex text before walking into a lamppost.

And of course, it wasn’t just tobacco packaging that was conspicuous by its absence. The Government seemed all excited about a minimum unit price for alcohol a while back - look, it even made a commitment on it - but that’s died a death too. So which argument won the day? Of course there’s a debate to be had about punishing responsible drinkers, but how much weight did threats from the alcohol industry to pull out of the government’s Public Health Responsibility Deal carry? Should we take Jeremy Hunt’s word that it’s been delayed solely due to a legal dispute in Scotland?

Here’s the uncomfortable truth about lobbyists. We need them. Many MPs will freely admit that they couldn’t do their jobs without the information they provide. They highlight the concerns of charities, businesses and individuals who otherwise wouldn’t be heard. But the problem is that without a statutory register, a compulsory code of conduct, and an obligation on all politicians and civil servants to declare their meetings, the industry simply comes across as sordid. Countless Government decisions appear suspicious, when they may very well not be.

Let’s stick with the tobacco industry. Last year we learned that JapanTobacco International has wined and dined 21 MPs, of whom 19 were Conservative. Crispin Blunt had gone to see England play India (£694), and Philip Hammond and his wife had been taken to Chelsea Flower Show (£1,132.80). This raises a serious question, quite apart from who in God’s name would pay over a grand to look at some plants. Given the vast sums of money being splurged on influencing the views of our elected leaders, why aren’t we kicking up a bigger stink about transparency? Why can’t we see how much is being spent by private healthcare companies to push for NHS reform, why can’t we see which companies thought the Work Programme was a good idea?

The Alliance for Lobbying Transparency has made a couple of very good points on this. First, this isn’t a left/right wing issue. Look at how lobbyists in favour of HS2 have worked to “shit up” opponents of the scheme - many of them Conservative. And secondly, the Government’s plans, as they currently stand, are inadequate.

We have to tackle this issue, for the good of our democracy. Lynton Crosby would presumably tell you all this is a distraction from the big issues. But then Lynton Crosby would say that, wouldn’t he? One can only hope that’s a response echoed by our ministers. And we shouldn't just have to hope.


A smoker. Photo: Getty

Alan White's work has appeared in the Observer, Times, Private Eye, The National and the TLS. As John Heale, he is the author of One Blood: Inside Britain's Gang Culture.

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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.