A new kind of republic

Experiences of connecting cities and their citizens are different around the world, but a common the

A new political and economic phenomenon is emerging in cities around the world as a result of their approaches to connectivity. Experiences of connecting cities and their citizens are very different, but a number of common themes suggest that we are on the brink of some very significant changes.

People construct the complex architectures of their cities over time - driven by their desire to be with each other, learn from each other, and grow economically, culturally and spiritually. To satisfy these desires, we have developed physical spaces such as the street, the marketplace or the coffee shop. In recent times, these have been supplemented by digital spaces. As the means for the instant exchange of digital information are built, a new dynamic emerges at the heart of what makes a city - information can flow towards people rather than people towards information.

The consequences are subtle but profound. Looking at connected cities, three themes emerge. The first is the changing nature of work, as the boundaries of the working day and the workplace begin to blur, and more collaborative ways of working and decision-making emerge.

The second theme is the growing realisation that cities, in order to change in the way enterprises have changed, require the kind of information exchange environment that businesses now take for granted. In the process, they may have discovered the next pervasive social infrastructure to follow water, roads, power and telecoms.

The third theme is political - a new model becomes possible when new ways of working are combined with a new pervasive social infrastructure. These cities are collaboratively reconstructing themselves around the needs of their citizens.

In Milan, a unique set of circumstances allowed the service provider e-Biscom to take off in an impressive way. It benefited from the availability of venture capital in the late 1990s, the lack of pre-existing cable that might have slowed take-up of its services, and the density of housing. The driver in Milan was not the desire to put e-learning into schools or to do health consultations in people's living rooms. Rather, it was demand for video telephony and entertainment, as well as private communication applications. And Italian cities are only just beginning to look at the wider set of applications enabled by the technology infrastructure.

The Swedish capital lies at the other end of the spectrum. There was a very clear vision in Stockholm that the building of a knowledge economy, the attraction of inward investment and the provision of better public services would all be facilitated by a fibre-based communications infrastructure. And indeed, the benefits are clear. For example, as people in the city begin to telecommute one or two days a week, strain on the transport infrastructure is being reduced. High-speed or "real" broadband is expensive, but it's a great deal cheaper than roads and railways. This development is more or less at the forefront of what is happening in the modern city. There is already a different approach to work and the workplace in Stockholm, and there are plans to turn the city into a wireless hot spot. The Stockholm model reflects the more general Swedish belief in the public provision of fundamental infrastructure.

Then we have mixed models. These are often very complex and affected by the local political environment as well as legal and economic factors. One model is like a utility that is majority-owned by the city but has a lot of private sector money and investment. Wroclaw in Poland is a good example. When the city was damaged by flooding at the turn of the century, the repair work gave existing utilities an opportunity to wire the city, and its holes in the ground are now used as a public/private vehicle to develop the technology infrastructure.

Hamburg also offers a mixed model, where the private sector leads and the public sector encourages and invests. Here, the public sector will intervene as and when necessary, and will ensure that, through the services provided, Hamburg remains a growing and successful trading hub.

New York has made what appears to be a small step forward, but it is in fact a crucial one. The city has long been opaque to its citizens because there have been 25 or so different depart-ments dealing with different things - if you want your garbage picked up you ring one department, if you want your water turned off it is another one, and if the people next door are noisy it is yet another. Now the city's networked information system allows New Yorkers to pick up a phone, dial 311 and be put through to the right person to solve their problem. This is a clear example of how the city has reorganised itself around the needs of its citizens, not vice versa.

Several years ago, Barcelona rearranged its network around a portal that reflected the way people live their lives and the problems they have. This sounds very obvious, but public servants find it difficult to make the fundamental shift from "this is the way we are arranged" to "this is how your needs as a citizen are arranged". Clearly, they are not going to reorganise their departments around citizens' needs every week. People's needs are different; they are constantly changing; they overlap and contradict each other. However, once citizen and official are networked, they can collaborate. The official finds himself or herself working in a great virtual contact centre where inquiries can be routed to the appropriate destination. It is what the government of Ontario calls "No wrong door". And when information is networked, citizens see it is transparent and become ready to engage with authority, which they now see as offering them a service.

In this international and fast-changing environment, it may be useful to try to look at what is happening in more conceptual terms. This may allow us to develop a framework within which we can see what is common to these success stories.

The republic in political history was an idea that broke with the concepts of monarchy, oligarchy and timocracy and established the idea of rule by the "polis". It was in the small trading-hub cities of Greece in the sixth-century BC that the democratic project truly began.

The prospect of a "connected republic" now presents us with the opportunity of giving greater power to the people. A connected republic is an environment in which people reconnect with each other politically and at the same time rediscover the connection they have lost with their elected leaders. And the natural geographical confines of the connected republic are, as in ancient Greece, those of the city state rather than the nation states that dominated the past century.

All cities have to grapple with the issue of how to re-engage with people who are becoming disengaged. Governments have to become transparent: citizens must be able to see what government is doing. Communications technologies unlock the possibility of reorganising and presenting information in a way that is digestible and appealing to citizens.

This is an extract from the book Connected Cities: essays from urban innovators edited by Simon Willis (£9.99). Cisco has made 150 copies available free to New Statesman readers, obtainable by calling Premium Publishing on 07974 176708

Simon Willis is director of the European public sector team in Cisco Internet Business Solutions Group

This article first appeared in the 31 May 2004 issue of the New Statesman, Another fake

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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.