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Mehdi Hasan hears the sound of a consensus cracking... now everyone loves Ed

Breaking news! Right-wing pundits now admit that they underestimated Ed Miliband.

What's that I hear? The sound of a consensus cracking?

Since 4.50pm on Satuday 25 September 2010, commentators on the right and on the so-called "centre" of the political spectrum have queued up to dismiss Ed Miliband as a lightweight, a cipher, a left-wing loon, "Red Ed", who would consign Labour to electoral oblivion in 2015 and beyond. They collectively mourned his brother David's narrow defeat.

"By choosing Ed Miliband, Labour has handed David Cameron the next election," read the headline to Matthew D'Ancona's column in the Sunday Telegraph the next day.

"On Saturday, David Cameron won the next general election," declared D'Ancona in his opening line, adding: "Could it really have chosen the wrong Miliband? Yes, it could."

"Will Labour be dead with Red Ed?" read the headline to Martin Ivens's column in the Sunday Times, also on 26 September.

"In No 10 last week some were looking forward to an Ed victory for the least flattering of reasons," wrote Ivens. "'There will be rejoicing in Tory towns all over the country if Ed wins,' a top Conservative strategist told me."

"The party voted for David Miliband but got the Panda instead," read the headline to John Rentoul's column in the Independent on Sunday.

"Ed Miliband, who would have struggled against David Cameron in the House of Commons in any event, is going to be roasted every week," argued Rentoul, an ardent Blairite, adding: "I fear that he fights with both hands tied behind his back."

Now, however, more than a year and a half later, following a shambolic budget from George Osborne and impressive gains for Labour in the local elections, those same commentators (and others) have changed their tune and are queuing up to warn against the new and looming threat posed by the Labour leader.

Here's D'Ancona in yesterday's Sunday Telegraph:

It is time to start thinking seriously about Prime Minister Miliband – to roll those words around your mouth. Whatever response the 42-year-old Labour leader provokes within you – and he has always inspired a broad range of reaction – only a fool would ignore his party’s steady progress in the local elections and commanding lead in the opinion polls (15 points ahead of the Tories in the last two YouGov surveys). The cement of popular opinion has not yet set in Miliband’s favour. But let us be objective: after two months of Coalition “omnishambles”, one has to consider that it might yet do so.

To be fair to D'Ancona, the former Spectator editor also added:

When the younger Miliband defeated his brother for the Labour leadership in September 2010 by a tiny twist of the DNA helix, many – including the present writer – thought he lacked the bearing of a future PM. But it must be conceded that he is learning, and fast.

Here's Martin Ivens in yesterday's Sunday Times:

[O]ne May morning in 2015 we could wake up with Ed Miliband as prime minister — even if there are no cheering crowds to greet the dawn with him as they did Tony Blair. Apathy, despair over a miserable economic outlook and a low turnout could return Labour to office...

The headline of the column?

How Miliband could make it to No 10

Meanwhile, in yesterday's Independent on Sunday, John Rentoul, through gritted teeth, acknowledged how

Cameron has allowed Ed Miliband to re-forge the coalition of the Blairites and Brownites. Peter Mandelson co-authored an article on the economy with Ed Balls, and Andrew Adonis returned to the fold to review Labour's industrial policy.

The political consensus has been well and truly cracked. The pack is on the move. Finally. It's taken a while but they seem to have got there in the end.

"Having spent the past six months studying him for our book, I have one piece of advice for Ed Miliband's conservative critics: don't misunderestimate him," I wrote in a column in the Guardian back in June 2011.

Those were the days when I got knocked by the right for daring to write such pieces. So, Matthew, Martin, John - great to have you onboard!



Mehdi Hasan is a contributing writer for the New Statesman and the co-author of Ed: The Milibands and the Making of a Labour Leader. He was the New Statesman's senior editor (politics) from 2009-12.

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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.