The insider - Paul Routledge sees Baroness Jay upstage Clinton

Breakfast with Big Ears, and Baroness Jay steals the show from Bill Clinton and Kevin Spacey

New Labour's leaders did not withdraw the national executive committee statement on Iraq because they had second thoughts about the war. They pulled it because the unions rebelled behind the scenes. The TGWU boss, Bill Morris, was "99.9 per cent happy" with the statement. But his new left-wing deputy, Tony Woodley, led a revolt and the union's delegation unanimously rejected the weasel-worded formula. Unison and the GMB followed suit, compelling the ignominious retreat. Shahid Malik, the only Muslim on the NEC, must have been relieved. He was due to move the statement at the conference.

It went down well with the seagulls, but it bombed in the conference hall. Paul Boateng was seen pacing up and down the seafront, declaiming his conference speech in the cool morning air. But the Chief Secretary to the Treasury was slow-handclapped for his performance. He completely misjudged the delegates' mood, and the chair ignored a note from Christine Shawcroft, a member of the NEC, urging "Get him off!"

Timing is everything. Had Andrew "Big Ears" Marr waited a day to deliver his "sanctimonious shit" tirade to Peter Oborne, he could have done so in the presence of his boss, the BBC chairman, Gavyn Davies, who breakfasted with his wife, Sue Nye, in the Imperial Hotel the next morning. Marr shouted at Oborne: "You'll write anything for money!" Grow up, Big Ears.

Mark Mardell, lard bucket doyen of the BBC's Six O'Clock News, clearly fancies himself as John Sergeant's successor as political editor of ITN. "They haven't approached me, yet," he was heard saying on the conference fringe. "And ITV isn't a very nice outfit. But then, there is a title . . ."

Out of the mouths of babes and BBC presenters . . . An interviewer with Three Counties Radio asked the handsome young Foreign Office minister Ben Bradshaw if he would "give Edwina Currie one". Bradshaw, probably the most high-profile front bench gay, declined to answer.

The Labour Party's website proclaims that "we welcome your questions" and offers an e-mail address to pose them. Our education correspondent, Francis Beckett, asked for a timetable for the London mayoral contest. The reply? "Thank you for contacting the Labour Party. . . . The Labour Party values all your comments and questions . . . it is not always possible to personally answer your inquiry in detail. However . . . we appreciate the time and trouble people take to contact us. . . . Answers to the questions most frequently asked can be found on our website."

In other words, get lost.

To the glitzy gala dinner in Blackpool, where the guest of honour was ex-President Bill Clinton, who absurdly is still introduced as "president". He was outshone by the appearance of Kevin Spacey, who, I am reliably informed, is an American actor. Spacey did the round of autograph-signing to cooing from lady delegates. But the real star was Baroness (Margaret) Jay, who gestured grandly to Lord Levy, new Labour's top fundraiser, and said: "I see Lord Levy is hiding his face in Kevin Spacey's seat!" It was her best speech since she became a peer, and it brought the house down.

Paul Routledge is chief political commentator for the Mirror

This article first appeared in the 07 October 2002 issue of the New Statesman, In defence of Edwina Currie, the woman who dared

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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.