Libel reform needs to keep writers out of court, not make it easier to win once they're there

When Ben Goldacre wrote in the Guardian about a man who claimed to South Africans that "multivitamin treatment is more effective than any toxic AIDS drug" (pdf), he was sued for libel. After fighting in court for 17 months, and spending £535,000 on legal fees, he won the case, and costs were awarded. Three years later, Goldacre has been paid back £365,000. The cost of successfully defending a libel suit – even one over the seemingly open and shut question of whether vitamin pills can cure AIDS – is almost one and a half years of your life and £170,000. Thankfully, the Guardian bankrolled his case. Others aren't so lucky.

The Libel Reform Campaign (a loose coalition comprising Index on Censorship, English PEN and Sense About Science, amongst others) was created to fight for a change to this situation, because Goldacre's story is not the first, nor the worst.

Peter Wilmshurst, a cardiologist, was sued by a manufacturer of a heart implant for casting doubt on its efficacy in a medical conference; his case only ended when the company, NMT, went bust, leaving him unable to claim any costs. Simon Singh was taken to court for pointing out that there is no evidence that chiropractors can treat conditions such as colic by spinal manipulation. That case was dropped by the claimants, with Singh thousands of pounds out of pocket.

It isn't only science writers who face punishment under our overbearing libel laws. The novelist Amanda Craig wrote in yesterday's Telegraph of being threatened for libel by an ex-boyfriend who claimed that a fictional character was a libellous representation of him, based, among other things, on the brand of shoes he wore. The website Legal Beagles was served notice by Schillings LLP for writing and hosting discussions about Retail Loss Prevention, a company which sues alleged shoplifters but has been accused of running a "parallel justice system". David Marshall, the in-house lawyer for consumer affairs magazine Which?, says that "corporations are commonly using libel as a form of reputation management, as they might use a press release". He says that frequently, they are hit with solicitor's letters before negative reviews are even published, threatening action when the lawyers cannot possibly know if the content is libellous.

All these cases, and more, lead to libel reform becoming a cause célèbre. At the LRC's rally yesterday, Brian Cox, Dara Ó Briain and Dave Gorman all spoke passionately of the need for change, and Labour's Robert Flello MP joined with Conservative David Davis and Liberal Democrat Lord McNally to make the point that the aim of libel reform is shared amongst all three parties. And since it made it into the manifestos of all the parties, the coalition is now passing a defamation bill, aimed at fixing the situation.

Unfortunately, the bill is not fit for purpose. The consensus among libel lawyers is that after it is passed, "nothing will change". All of the cases mentioned above would still exist were the bill to pass. Although it improves the situation in some ways, by introducing a protection for peer-reviewed scientific journals, Evan Harris, the former Lib Dem MP, argues that it is actually retrograde in others, especially when it comes to free speech online.

But the biggest single problem is that exemplified by Goldacre's case. If you are sued for libel, it doesn't really matter if you win. The cost of defending a claim is so high – 17 months work and enough cash to buy a small house – that only a fool would open themselves up to that risk. The campaign met yesterday to push, not for a way to win more cases, but for a way to prevent needless court cases occurring at all.

Their proposals include a higher hurdle for corporations to clear before they can sue individuals, as well as a much broader public interest defence, and, crucially, an agreed upon system for restitution outside the courts.

All these points are dearly needed. "Libel is used by rich people in a game of poker to get poor people to go 'all in'," said Dave Gorman. Yet it's even worse than that; if you go all in on a game of poker and win, at least you come out with profit. If you are taken to court for libel, you are going to lose either way.

Worse, because there is no requirement for injured parties to attempt to redress claims out of course, it's not enough to offer retractions or corrections. The only sure-fire way not to end up in court over libel is not to write things that people may sue over at all. "What we haven’t heard about are the tens, hundreds, thousands of cases that didn’t go to court because they were silenced," Gorman points out. "It’s these cases we haven’t heard about that are even more important."

Even some claimants don't like the way the law is now. When Luke Cooper sued the Daily Mail for libel - and won - he would have been happy to settle for £5,000 and an apology, but the all-or-nothing nature of the system meant that the Mail forced him to fight all the way to court, which ended up costing them hundreds of thousands of pounds.

If the defamation bill goes through as it stands, Dara Ó Briain argues that there will have been basically no change from 2009, when a group of supporters organised by David Allen Green first met in the basement of the Penderel's Oak pub in Holborn to discuss Simon Singh's defence. But Lord McNally was having none of it. There is at least one thing which will have changed, he told Ó Briain: they are now meeting in a committee room of the House of Commons. Even if the first attempt wasn't successful, the group will hopefully turn British libel law around.

Updated 11:03 on Friday to correct a reference to the Penderel's Oak meeting.

The Libel Reform Campaign present a petition with 60,000 signatures to Downing Street

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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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.