Italy’s elections and the European “misunderstanding”

Does the political return of Berlusconi represent a realistic danger for Western democracy?

Will Italy’s parties be able to establish a proper government? How long will this last before calling for elections again? These are hectic times for European politics. A weak leadership is evidently part of a European landscape characterised by an inability to cope with the economic crisis and, in some cases, a popular disillusionment with the same process of European integration. Anti-EU propaganda is unsurprisingly getting stronger across the old continent. Socially and politically, all this may generate an increasingly painful impact. Along with a group of other southern countries such as Greece and Spain, Italy is one of the main areas where the future of the same Euro-project, and of western economy too, is being played out. 

The Italian peninsula is in a state of agitation following an election where political coalitions were unable to get a realistic parliamentary majority. In truth, the electoral result showed not only the (now “historic”) inability of the centre-left to deal with Silvio Berlusconi, but also the massive victory of the Five Stars movement, the under-funded and recent group led by comedian Beppe Grillo. These elections demonstrated the impressive endurance of Berlusconism, and dealt a tremendous blow to Mario Monti, as well as the European Central Bank and other overseas political and economic actors (including Germany), which fully supported him.

International eyes across the Atlantic are therefore focusing again, and with some preoccupation, on Italian affairs. In particular, there are questions about the endurance of the Italian economy with a non-technocratic governmental phase and poor government stability. Another concern is whether the political return of Berlusconi represents a realistic danger for Western democracy at large. Given this, and for a number of other reasons, many world leaders and international institutions hoped and, implicitly or explicitly, backed another Monti’s leadership. Yet, they showed only a very limited knowledge of the Italian context (and Monti’s electoral strength), and  of people’s disillusionment and the country’s moral crisis.

International pressures on national politics might, at times, lead to tricky outcomes too. The Cold War years are, moreover, well behind us. Where is the democratic legitimacy of these often perceived “intrusions” in domestic affairs? Would this pressure be acceptable or well received in countries such as, for example, Britain or Denmark? In some cases, the missing real political unity of the EU would suggest using diplomacy and international relations more proficiently. Numbers (and votes) are numbers after all, and they are supposed to be weighted similarly in all western nations. It is true that international elites were, for example, rightly worried about the overtly anti-EU and anti-Merkel rhetoric of Berlusconi. However, what have they done to stop this? Did they pay the same attention when world-leading economists criticise austerity plans and EU policies? 

Foreign politicians who offer suggestions to Italians on how to vote, or who overtly criticise the media tycoon, are and will be seen suspiciously by some sectors of the electorate – and it is now clear that this is not only an Italian trend. Instead, they gave vigor to Berlusconi’s extremist discourse: portraying himself as the champion of Italy’s freedom against the plot orchestrated by financial markets, the European Central Bank, the EU, German banks, the US administration, and a (nebulous) international technocracy. In truth, intercontinental preoccupations with the current state of democracy in a major Mediterranean nation are – at least partially – welcome and accurate. Smart observers may, however, wonder where is the “novel story” here, or why the leading political and financial global institutions have not acted before. Berlusconi led his first government with the presence of a neo-fascist party and the promoters of a sort of autonomy for the northern Italian regions in the early 1990s. This idea of “bad” EU, Germany, and banks, similarly contributed to an overall picture which helped Grillo’s propaganda (though this is far from being the only reason for his success).

Monti’s semi-technocratic and serious platform certainly offered, in other words, a better electoral option to voters, but this proved not to be enough. Without any form of violence and street riots (like in other southern European democracies), this vote represented, in many ways, the Italian response to these peculiar European socio-economic (and political) times. However, to avoid the recurrence of these types of democratic emergencies in Italian history, it would now be time to promote a genuine transformation in national and popular culture to overthrow some obsolete principles and ideas – like the one promoted by Berlusconism. It is, nonetheless, too early to say if the “common people” elected by Grillo will be the best answer to all this. International elites cannot, however, really do a lot about it.

Andrea Mammone is a historian of modern and contemporary Europe at Royal Holloway, University of London. He is author of a forthcoming book on transnational neo-fascism (Cambridge University Press) and coedited “Italy Today. The Sick Man of Europe” (Routledge). He has also been a commentator on the far right, Italian politics, and other European affairs, for the International Herald Tribune, The Independent, Foreign Affairs, Al Jazeera, The Guardian, The Observer, BBC, and Voice of America, among others.

A woman walks passed an electoral information banner at a polling station in Rome. Photograph: Getty Images

Andrea Mammone is a historian of modern and contemporary Europe at Royal Holloway, University of London.

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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.