Police corruption, the duck house of Hackgate and King Lear for girls

Rebekah Brooks's horse is the £1,645 duck house of Hackgate.

Leveson-watchers were expecting the second part of the inquiry, focusing on the relationship between the press and the police, to be the most interesting. And so it is.

On 27 February, we had Sue Akers, a deputy assistant commissioner at the Met, telling Lord Justice Leveson that there was "a culture at the Sun of illegal payments" to police officers and public officials, with one trousering £80,000 over a number of years. (Contrast that with the Times's report a few days after the most recent arrests, worrying that a Sun hack was "questioned over a £50 lunch claim".)

The next day, former BBC Crimewatch presenter Jacqui Hames told the inquiry that she was placed under surveillance by the News of the World after her husband, a police officer, became the "face" of one of several tortuous investigations into the murder of a man named Daniel Morgan. One of the suspects was Morgan's business partner, Jonathan Rees, a private investigator paid £150,000 a year by the NoW when it was edited by Andy Coulson. She told the inquiry that Rees, who was eventually tried for the 1987 murder in 2011 (the case collapsed), had "close links" to the paper's news editor.

So why was Hames put under surveillance? Paragraph 40 of her witness statement puts it clearly: "I believe that the real reason for the News of the World placing us under surveillance was that suspects in the Daniel Morgan murder inquiry were using their association with a powerful and well-resourced newspaper to try to intimidate us and so attempt to subvert the investigation."

If that is true, it's frightening. And the Leveson inquiry can never be mocked as a "celebrity hurt-feelings tribunal" again.

Her kingdom for a horse
Next to those two allegations, it was easy to miss the news that Scotland Yard had tipped off News International's chief executive Rebekah Brooks about the extent of hacking as early as 2006. Sportingly, they asked her if she "wishe[d] to take it further" than the arrests of Clive Goodman and Glenn Mulcaire.

The flood of new revelations not only makes the abrupt closure of the NoW more and more understandable, but the opening of the Sun on Sunday a provocative move. By Tuesday, things were looking so bad that some suggested the story of the Met "loaning" Rebekah Brooks a retired police horse had been deliberately leaked to divert attention. That's possibly a bit far-fetched - not to mention a terrible idea, given that the intricacies of claim and counter-claim are hard to keep up with, but "she was so close to police they lent her a horse" is easily digestible. It's the £1,645 duck house of Hackgate.

Out to lunch
I hope there's better to come from WikiLeaks's latest venture, the release of five million emails from the US-based intelligence firm Stratfor. So far, observations by this apparently shadowy organisation include the breathless: "I got a lot of info on [Swedish politician] Carl Bildt. . . Bildt apparently super tall, has photographic memory and is very smart. . . Bildt believes that Sweden should become a world power." (That was marked "SPECIAL HANDLING: Secure".)

Another email promisingly begins: "Admit nothing, deny everything and make counter-accusations." However, it turns out to be responding to Rob in the finance department, who complains that "someone has taken the lunch that I brought in. . . That's commonly known as stealing".

Past tents
My morning walk to work is a little less interesting now that the Occupy protesters have been evicted from St Paul's. Every morning, there was a quiet bustle of activity; later, there were talks in the "university tent" and pleas for food donations outside the canteen. Did the protesters achieve their aims? It's impossible to say, not least because their aims were so nebulous. Unlike many protest movements, they did not start timid and become more radicalised - they started off fighting for the dismantling of capitalism and ended up arguing for their right to exist. With the tuition-fee protests more violent and the outcry against the coalition's NHS and school reforms likely to be deeper and more widespread, I doubt Occupy will be more than a footnote in the history of David Cameron's coalition goverment. But still, as I trudge past the steps of the cathedral, its cream stone looks suddenly bare.

Setting the Vagenda
I gave up women's mags for blood pressure-related reasons some years ago, but I might be tempted back by the online-only Vagenda, which is acerbic and hilarious in equal measure. Its tagline is "Like King Lear, but for girls" - which is how Grazia described The Iron Lady - and it has the pasted-up look of an old-school underground magazine.

Vagenda was started less than a month ago by a group of largely anonymous female writers who decided "the women's press is a large hadron collider of bullshit and that something needed to be done". As someone who never again wishes to be told which £900 handbag is "this season's must-have" because its makers have bought a shedload of adverts, I applaud it.

Dislike a Virgin
Sorry to turn this page into First Thoughts on Virgin Media, but I read Peter Wilby's travails with the company with interest last week, as I had an engineer due round to instal my broadband on Saturday. Internet providers come just above letting agents (and below budget airlines) on my League of Companies Who Treat You Badly Because They Can Get Away With It, so I was shocked to my core when the whole thing went without a hitch. The engineer departed, I retired to my bedroom to work on my laptop . . . and the door refused to shut. Yes, he'd wired the cable right into the door frame.

Next week: Peter Wilby

Helen Lewis is deputy editor of the New Statesman. She has presented BBC Radio 4’s Week in Westminster and is a regular panellist on BBC1’s Sunday Politics.

This article first appeared in the 05 March 2012 issue of the New Statesman, The last Tsar

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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.