Grayling pleads guilty to hitting the working poor

Tax credit changes mean some families will be better off on benefits, welfare minister admits.

Chris Grayling's startling admission (£) that tax credit changes mean some working families will be better off on benefits is an important moment. The welfare minister has pleaded guilty to the toxic charge that the government is penalising the working poor.

George Osborne's decision to remove tax credits from those who work fewer than 24 hours a week means 212,000 couples with children will lose up to £3,870 a year. Asked by Labour MP Ann Coffey what would happen to a family working 16 hours a week on the minimum wage, Grayling revealed that the weekly income of a couple with two children would drop from £330 to £257. That's significantly less than the £271 a week that they would receive on out-of-work benefits. In a letter to Osborne today, the Child Poverty Action Group warns that the policy puts "470,000 children at risk of being plunged into poverty".

Grayling's defence is that the anomaly will be resolved next year when the Universal Credit replaces all benefits and "makes work pay". Indeed, the same family will be £95 better off under that system. But until then, Ed Miliband has a potent attack line for PMQs. In one move, the government has undermined its claim to be on the side of working families, rather than "welfare families".

The government has suggested that couples will be able to increase their hours to retain the working benefit but this only makes it look even more out of touch. As the Resolution Foundation's Vidhya Alakeson noted: "In today's economy part-time workers are likely to find it extremely difficult to negotiate extra hours in any case." There are already 1.35 million people working part-time because they can't find a full-time job, the highest number since comparable records began in 1992.

Whether or not the Lib Dems secure a significant increase in the personal allowance, this policy will do nothing for those part-time workers who don't earn enough to pay tax. Now, to add insult to injury, the government is clawing back £73-a-week from their families. This may or may not be the long-awaited "10p tax moment". But the creation of a disincentive to work means the government is now failing even on its own terms.

George Eaton is political editor of the New Statesman.

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Donald Trump's inauguration signals the start of a new and more unstable era

A century in which the world's hegemonic power was a rational actor is about to give way to a more terrifying reality. 

For close to a century, the United States of America has been the world’s paramount superpower, one motivated by, for good and for bad, a rational and predictable series of motivations around its interests and a commitment to a rules-based global order, albeit one caveated by an awareness of the limits of enforcing that against other world powers.

We are now entering a period in which the world’s paramount superpower is neither led by a rational or predictable actor, has no commitment to a rules-based order, and to an extent it has any guiding principle, they are those set forward in Donald Trump’s inaugural: “we will follow two simple rules: hire American and buy American”, “from this day forth, it’s going to be America first, only America first”.

That means that the jousting between Trump and China will only intensify now that he is in office.  The possibility not only of a trade war, but of a hot war, between the two should not be ruled out.

We also have another signal – if it were needed – that he intends to turn a blind eye to the actions of autocrats around the world.

What does that mean for Brexit? It confirms that those who greeted the news that an US-UK trade deal is a “priority” for the incoming administration, including Theresa May, who described Britain as “front of the queue” for a deal with Trump’s America, should prepare themselves for disappointment.

For Europe in general, it confirms what should already been apparent: the nations of Europe are going to have be much, much more self-reliant in terms of their own security. That increases Britain’s leverage as far as the Brexit talks are concerned, in that Britain’s outsized defence spending will allow it acquire goodwill and trade favours in exchange for its role protecting the European Union’s Eastern border.

That might allow May a better deal out of Brexit than she might have got under Hillary Clinton. But there’s a reason why Trump has increased Britain’s heft as far as security and defence are concerned: it’s because his presidency ushers in an era in which we are all much, much less secure. 

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to British politics.