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Labour let us down yesterday: Laurie Penny reports from A&E

The grim truth is that nobody in the Labour Party has any answers.

It's 2am, and I'm sitting under a strip light in the emergency unit of my local hospital, waiting for the doctors to finish attending to a young friend of mine who attempted to end her life tonight. When the paramedics arrived, they told us she wasn't the first -- for many Londoners, it seems, something about the news or the weather today gave the impression that a crisis point has been reached.

Apart from a shoeless shouting drunk growling at the nurses to give him back his confiscated footgear, the waiting room is quiet, strewn with ill, beaten-looking people patiently waiting to be seen. The frontline NHS personnel staffing the emergency desk were rushed off their feet even before massive public-sector cutbacks were announced a few hours ago, but they're doing the best they can. Somewhere behind my head, a machine that goes 'bing!' -- Monty Python observed that every hospital must have one -- seems, at this hallucinogenic hour of the night, to be taking the slow, trembling pulse of the nation.

The people of Britain have been badly let down today. The poor, the young, the old, the tired, the unwell: we have all been let down. Not just by the Tories, who let us know what was coming with all the oily subtlety of side-street sleaze artists; nor by the Liberal Democrats, from whom nobody expected any more than the stern, funereal complicity that they delivered during today's spending review. No: the people have been let down by Labour.

In 13 years of meandering and hawkish leadership, it seems that the Labour Party has utterly forgotten what effective opposition politics are supposed to look like. If its collective response to the greatest assault on social democracy in living memory is anything to go by, Labour has also lost sight of what it means to be a party of the left.

After laying out the details of his economic shock doctrine, George Osborne glibly asked the shadow chancellor if he had any other ideas. With all the panache of a sixth-form debater, Osborne repeated the question: did Labour's new economic spokesperson, or indeed anyone on the Labour benches, have alternative suggestions for fixing the economy other than tearing up the Attlee settlement, throwing a million on to the dole and destroying welfare?

Alan Johnson did not answer. Instead, he stammered, he clucked, he flapped, he did everything but lay an egg in an apparent attempt to mimetically re-enact the chickenish behaviour of his party over the past few weeks. The shadow chancellor gave no answer because he has no answer; nobody in the Labour Party, it seems, has any answers. They have knelt down and swallowed the Tory narrative that this recession is all Labour's fault, rather than the result of years of systematic global financial deregulation with which every major political party in Britain and the US was until lately in agreement.

The strongest criticism Mr Johnson could find was to suggest that the planned cuts were a little 'ideological' in aspect -- which is a shame, because the left could really do with some alternative ideology to counterbalance the Conservative Party's determination to wage class war with a calculator, and right now the Labour Party can't seem to find its ideology with both hands.

The grim truth is that the recoagulated Labour Party has no ideology and no new ideas. It was Labour that began the privatisation and withdrawal of public services in this country; now, today, with the Blairite model of intermittently caring neoliberalism buried at the crossroads of global economic crisis with a repossession order through its heart, even a new leader seems to have done little to raise any life from the ashes of the Labour left.

Labour has no answers; not for Osborne, not for its supporters, and certainly not for the weary Hackney residents currently curled up in this NHS waiting room, wondering if they can afford to spend a pound on a hot chocolate from the machine. The teenage boy next to me has started vomiting noisily into a cardboard dish; a drowsy-looking young woman is bleeding into her seat, a trickle of dark fluid slowly seeping on to the floor while her nervous partner holds her hand. My friend still has not returned. Alan Johnson doesn't have an answer for her either, nor for the hundreds of thousands of people who have felt despair shove its chill fingers into our hearts tonight.

That Labour does not have any answers for us is a disgusting display of the irrelevance of Westminster politics to the lives of ordinary citizens. If today's pathetic equivocation parade is a benchmark for the next four years of Labour politics, we will have to look elsewhere to find a voice in the hard, cold months ahead.

Laurie Penny is a contributing editor to the New Statesman. She is the author of five books, most recently Unspeakable Things .

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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.