All Consuming

Swap God for Gucci

The premise of Neal Lawson’s book is simple: our collective addiction to consumption has led us to the point of self-destruction. The deep global recession in which we are immersed is a result of greed, our inability simply to curb our desire for more.

It’s an argument rooted in politics and political economy. Lawson identifies the liberalisation of financial services during the Thatcher years as the source of our downfall. The dream we were sold was the dream of ownership: the right to buy became symbolic. Thatcherism, says Lawson, “created the moral and economic space for the retail industry to expand exponentially and take a grip on our lives”. Since then, we have shopped ourselves to the point of no return.

Indeed, for the first third of the book one feels as if one is constantly being told off. Every cheap flight, every item of clothing from Primark, every visit to a non-organic food shop becomes proof of the damage our consumerist lust has wreaked. In his analysis of the financial crisis, Lawson lists the usual suspects – bankers, regulators, politicians – who created the “consumer bubble”. But then he turns on the rest of us, until now the innocent victims of a system beyond our control:

But we bought the stuff. We wanted it. We defined ourselves by it. We allowed ourselves to drift into the comatose life of the turbo-consumer. We needed something to worship and something to believe in and had long since swapped God for Gucci. We had been living beyond our means, in debt beyond our ability to pay, in the naive and hopeless belief that this would be the first bubble that would never burst. We tried to defy economic gravity so we could just keep buying. Because that was all there was to do.

The drama of these lines and their admonitory tone exemplify Lawson’s approach to his subject. This is not just a book; it is also a campaign. After presenting his thesis on the perils of turbo-consumerism, Lawson examines the costs – to the environment, to family life and to our own happiness. But it is the final third that turns the book from a rant into a manifesto. Lawson attempts to set out a vision of a different society – one characterised by less consumption and more time, in which consumers become citizens again, wresting control of their lives back from marketing departments and advertising agencies. He also has some specific prescriptions, including downshifting, ethical shopping and boycotting certain consumer goods. However, he is also a believer in the power of the state to force us to modify our behaviour – by restricting advertising or imposing higher taxes on anti-environmental products such as 4x4s.

In other words, Lawson tells us what to do, as well as telling us off. This could easily have become rather wearing, but he is too clever for that. At every stage, he implicates himself: at the very beginning of the book, for example, where Lawson catalogues his morning rituals by enumerating his purchases (“I ready myself for the day with bottles of Gillette this and Dove that”), and elsewhere, with his use of the personal pronoun.

At no point does he hold himself up as the virtuous narrator, the model citizen. Yet he is trying to strike a delicate balance – how do you tell a society to change the way it lives without seeming to be a killjoy? Lawson is clearly struggling slightly with this himself. On the blog for his book, he recounts a turn on BBC Radio 4’s Woman’s Hour when the presenter wrapped up the discussion by saying it was all a bit gloomy. “I was crestfallen,” Lawson says. “I need to get better at making my case.”

In fact, he makes his case well enough. He has reams of statistics at his fingertips and uses an array of anecdotes that bring his subject to life. He often startles with his examples of modern consumption – the service that allows guilty children to pay for someone to visit their elderly parents for tea, or the book that teaches you to market yourself like a product so that you can date more successfully.

But perhaps his case is too wide. His prescription for change demands a complete overhaul of individual and state behaviour; and at times it can seem unrealistic to suppose that, beyond a committed minority, people will be willing to change their lives quite as drastically as he hopes. But Lawson, like Michael Sandel in his Reith Lectures this past month, wants to use this moment of economic and social crisis to change the way we live. He wants his book to start a movement, and intends it as a tool for activists to use against market fundamentalists. It’s a worthy ambition.

All Consuming
Neal Lawson
Penguin, 256pp, £10.99

Sophie Elmhirst is features 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.