Gay marriage could be a defining issue for Cameron

Barack Obama's support for the idea has strengthened Tory liberals' resolve to take on the reactiona

Barack Obama’s decision to support gay marriage has no doubt been timed with careful attention paid to the US electoral cycle. The American Commander-in-Chief definitely did not factor in the political travails of David Cameron on a small rain-lashed island several thousand miles east of Washington. Had he done so, he might have postponed the announcement by a day or two.

It isn’t the biggest story to come out of yesterday’s Queen’s Speech, but people who were watching carefully for prime ministerial capitulations to the Conservative right found one in the absence of proposals to give gay couples equal rights in marriage.

As I write in my column this week, this is an issue that has acquired emblematic status in the battle over what kind of a Conservative party Cameron leads. In his speech at last year’s Tory party conference, the Prime Minister made the case for gay marriage robustly:

Yes, it’s about equality, but it’s also about something else: commitment. Conservatives believe in the ties that bind us; that society is stronger when we make vows to each other and support each other. So I don’t support gay marriage despite being a Conservative. I support gay marriage because I’m a Conservative.

The fact that the hall applauded at this point was subsequently held up as evidence of the great strides in “modernisation” that the party had taken under Cameron’s leadership.

But it turns out that the party grass roots are less signed up to this view than Downing Street likes to think. I have heard a number of MPs complain that gay marriage was a “hot button” issue in their constituencies and that it provoked Tory voters to abstain or back Ukip in last week’s local elections. It cost the party council seats, say back benchers. Nonsense, comes the riposte from Downing Street. It’s the economy and weeks of headlines about incompetence that hit the party's poll ratings. The very last thing we should do, say Downing Street aides, is veer off into illiberal reaction.

Both are right up to a point. At a national level it is crazy to think that Cameron’s support for gay marriage makes the difference between a majority in 2015 and another hung parliament. At the same time, at local level, it is plainly a problem when activists are outraged by their leader’s opinions.

The gay marriage issue is currently out for formal consultation, so Downing Street could clearly act on it if it was felt to be important enough. The Lib Dems are ardently in favour and would quite happily probe and provoke Tory prejudice on the subject to remind voters that (as they see it) Nick Clegg leads the modern, caring, tolerant wing of the coalition. For precisely that reason, senior Lib Dems very much doubt that Cameron can change the policy. He wouldn't want to give the Lib Dems such a handy stick with which to beat the Tories. He might, however, want to postpone dealing with it to avoid looking as if he is deliberately antagonising his back bench enemies.

Obama’s move makes that approach that little bit harder. Suddenly, everyone of a socially liberal disposition in Westminster  - in all three parties – is fired up and praising the US President’s brave moral stand, pointing out how it casts gay equality as a contemporary civil rights issue and puts Mitt Romney on the wrong side of history, held back by Republican tea party fanaticism etc. That is not necessarily company Cameron wants to be keeping.

Liberal Tories, meanwhile, have been watching the party’s right wing mobilise in recent weeks and are feeling the need for a counter-attack. As I have written before, joining the coalition postponed a difficult debate about what kind of movement the Tories want to be – what is their model of 21st Century Conservatism? The leadership is not seriously in question. Cameron is personally secure for now. But the party’s soul is still up for grabs. There is a feeling that Tory internal culture wars are brewing. Gay marriage could end up being much more of an issue for Cameron than he expected when he made that speech last year.

Rafael Behr is political columnist at the Guardian and former political editor of the New Statesman

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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.