This is not the long-awaited progressive moment

The deal being touted in Westminster is a mirage that risks luring progressive politics into the wil

I have devoted a considerable part of my adult life to advocating and working towards a political realignment that would bring Labour and the Liberal Democrats together in a partnership of shared conviction. I worked for Robin Cook during Labour's first term as we strove to keep Lib-Lab co-operation and the prospect of electoral reform alive long after Tony Blair and many of those today calling for a "progressive alliance" had lost interest.

So, it is with great reluctance that I have to conclude that the deal now being touted in Westminster does not herald the arrival of the long-awaited "progressive moment". On the contrary, it is a mirage that risks luring progressive politics into the wilderness for a generation. With no doubt honourable intentions, Gordon Brown and Nick Clegg are leading their parties towards a doomed embrace, the only lasting result of which will be a new era of Conservative dominance and an end to any prospect of real change. They need to be brought to their senses before it is too late.

The vision of a new politics was conceived as a way of breathing life into British democracy by expanding electoral choice, weakening the grip of party elites, decentralising power and creating a more open, pluralistic and collaborative way of governing. The whole project now risks being discredited by the installation of a weak government, sustained on life support by endless rounds of tawdry deal-mongering and the self-interest of the politicians sitting in it.

Anyone who imagines that such a government could play midwife to a new democratic settlement is making a grave mistake. You can't fight corruption with con tricks.

The Conservatives' argument -- that they, as the largest minority party, have the right to govern -- is patently absurd. There is no reason why, in principle, smaller parties, jointly representing the clear majority of voters, should not join forces to claim a superior mandate.


A problem of numbers and discipline

The real problem is a practical one: Labour and the Liberal Democrats between them simply lack the MPs required to govern securely, and would become hostage to smaller parties of mercenary intent. This is to say nothing of how the awkward squads within the ranks of Labour and the Liberal Democrats might behave.

By any calculation, the whole "progressive alliance" idea is dependent on a constellation of forces that lacks both the numbers and the discipline to do what is needed in the interests of the country.

The Scottish National Party, Plaid Cymru and the Democratic Unionists are already licking their lips at the prospect of using their parliamentary leverage to extract concessions that would cushion voters in Scotland, Wales and Northern Ireland from the difficult cuts we all know are necessary. Is England to be left to face the pain of deficit reduction on its own? If so, the Conservatives can be expected to ride back to power on a wave of popular revulsion at the next election, and to remain there for a very long time after that.

The nightmare scenario is that a progressive coalition takes power, only to reprise the terminal phase of the Callaghan government, with parliamentary votes squeezed through thanks to shabby interest-bargaining and dying MPs being dragged out of hospital and through the division lobbies.

Does anyone really imagine that the British people, having seen the unedifying chaos a hung parliament had brought about, would then vote for a new electoral system that promised to make it the permanent condition of our national politics? Or are we seriously contemplating the democratic outrage of Labour ratting on its manifesto commitment and changing the electoral system without a referendum? Let's remember that what followed Callaghan was 18 years of Conservative hegemony.

I hate to find myself in the company of knee-jerk Labour tribalists such as Jack Straw and David Blunkett, but on this they are right. Painful as it may be, genuine progressives need to face the truth and let go. If not, the real "moment" may never come.

David Clark is a freelance political writer and analyst. He served as special adviser on Europe to Robin Cook from 1997-2001.

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David Clark is the editor of Shifting Grounds.

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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.