Nights at the Circus

Unless your home really is a castle, it's unlikely you'll have been confronted with an image of your own flat in an exhibition, but that's what happened to me at Riba's "A Place to Call Home", which traces the history of British homes from Georgian times to the present. Then again, I do live in the world's first-ever council housing, the Boundary Estate in Shoreditch, built in 1899 by London County Council on the rubble of east London's "blackest streets" (its original inhabitants were nurses, clerks and, oddly, cigar-makers).

There it is, my block, in a grainy photograph taken some time in the 1970s. The tree in the courtyard looks a bit less bushy and the car parked outside is one of those boxy Austin Allegro types but otherwise not much has changed. I wonder who's living in the flats: they would certainly have all been council tenants back then. This was at least a decade before "Right to Buy" and the windows on every floor are still uniformly net-curtained. I imagine the residents being anything from cockney to East End Jewish, or Bengalis who had fled the Bangladesh liberation war and whose offspring are many of my neighbours today.

In 1900 the LCC invited the mairie of Paris to London to show off the completed Boundary. And with good reason - everything was fully integrated here: shops, schools, workshops, laundry, the wonderfully "improving" bandstand and, of course, the flats themselves. The seven streets that radiate off the Circus are wide and tree-lined; the red-brick blocks are handsomely proportioned and in a Dutch-gabled or arts and crafts style, no two exactly the same.

Inside, the rooms are generously proportioned, with sash windows, high ceilings and wooden floors. There are black, cast-iron rubbish chutes, but they were designed for Edwardian potato peelings, coal ash and the odd torn petticoat rather than modern-day waste.

Today the primary school still resounds with childish chatter, while the secondary has become an arts centre. The workshops house graphic designers as well as carpenters, and the central bandstand and gardens have been refurbished thanks to the active Friends of Arnold Circus.

Hip replacement

Despite gentrification of the surrounding streets, much of the Boundary (for now) remains defiantly council-owned. But as flats have been sold off, the make-up of the estate has changed again. Hipsters and students abound, estate agents circle hungrily, yet a community spirit remains.

There is a sense of history here but the founding principles of the Boundary remain modern - this is a template for living that has been much replicated but seldom bettered. Those early planners and architects understood the right formula for happy inhabiting and people still want to live here now.

As witnessed in the Riba show, many postwar high-rise schemes perhaps proved a utopian vision too far - designs that look great on paper (or in Marseilles) translate to depressing, isolated hulks in the drizzle and poverty of Glasgow. The Boundary is social engineering at its most human.

Riba, London W1, until 28 April

Thomas Calvocoressi is Chief Sub (Digital) at the New Statesman and writes about visual arts for the magazine.

This article first appeared in the 12 March 2012 issue of the New Statesman, The weaker sex

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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.