Get a flat-pack divorce from Ikea

My wife has been accusing me of not having enough "Puritan" in my psychology, which is why, apparent

All week, I have been waiting for a baby to arrive. I do not yet know his name. Preparations have included a trip to Ikea to buy a sheepskin rug. As we entered, my wife remarked that so notorious is the shop's reputation for causing marital bust-ups, divorce lawyers should line up outside with leaflets. We resolved to be full of sweetness and light but still came out spitting, the ostensible reason being my addiction to buying shelving for an already overstuffed house. The real cause is competition for resources: hunting down the required item in a crowded space sets even loved ones at each other's throats.

Another reason for spousal disharmony is religion. Our first son, Esmond, is still not yet christened at two and a half. Tilly and I can't agree on denomination. I'm a half-Irish Catholic, she is an unbaptised quasi-Buddhist of Anglican extraction. I was hoping her brother Tristram Hunt's recent television series, The Protestant Revolution, would free her fixed ideas about the rightness of the established Church here in Britain. Alas, it's had the opposite effect. She has begun accusing me of not having enough "Puritan" in my psychology. This, apparently, is why I take so many taxis.

Old habits

We managed to attend another child's christening. That of Albert, son of our friends Mark and Antke de Souza. Mark's father, Fitzroy de Souza, one of Africa's greatest lawyers (a Kenyan of Goan origin, he represented Jomo Kenyatta and others in the Mau Mau trials), was present. At tea afterwards, Fitz and I spent an enjoyable few hours discussing the differences between the Portuguese and British African empires, along with a Portuguese journalist, Natal Vaz. The conversation then turned to the McCann case. Natal said the parents had come under suspicion because of a simple cultural confusion: the Portuguese, whose children stay up late, can't understand why anyone would put their children to bed at seven.

Esmond mostly adheres to British bedtimes, but this week he has been tricky. We think it is probably because he's nervous about the arrival of a sibling, and have just let him stay up. He entertained a dinner guest on Tuesday with gnomic remarks: "You're a mystery, Mum", and (studying the cover of one of the Booker Prize contenders I've been reading as a judge), "That's ordinary, Dada." Once he finally went to bed, our guest - who works at St Mungo's, the charity for the homeless - told us that drug addicts are getting older. This was confirmed the next morning when we went for a walk in our local park, where Islington Council is trying to move on a band of merry vagrants. But if they are displaced, where will the drug-crazed ancients go? Probably just to the next green space along.

Perhaps there is some arcadia where pensioners' bad habits might be turned to ecological advantage, but it won't happen here: a council gardener was recently sacked for attacking a crack fiend with his strimmer. I did not relate the case to Prashant Vaze, an economist at the Office of Climate Change (the department set up to co-ordinate government policy) when I visited him for a meeting on Wednesday. Despite the taxi taking, I'm working on a novel that promulgates environmentalism. Prashant has kindly agreed to tell me some of what the OCC is up to (more than changing light bulbs, George Bush's current proposal).

Carrot or stick?

The week is nearly over, the expected baby still not come. We have been eating curry and taking more walks. On Saturday I was reminded of international climate-change discussions during a stroll on Hampstead Heath, where Tilly, Esmond and I witnessed a set-to between pit bulls. Picture the scene. Mutually the dogs lock jaws - blood spilling over the path, arcs of saliva jetting into the air - while their benighted owners tug ineffectually at the hind legs of their respective animals. The only way, says my wife, who is medically trained, to get one of these creatures to release its powerful grip is to shove a stick up its bottom. Perhaps it will come to that with George Bush, too. But who will do the deed?

Giles Foden is author of "The Last King of Scotland" and contributing editor of the New Statesman

This article first appeared in the 08 October 2007 issue of the New Statesman, Election fever

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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.