The working class vote is up for grabs - will it be Labour or the Tories that seizes it?

Both parties have to make clear how they would cut the cost of living, increase the supply of housing and help low-paid workers.

We are increasingly becoming a working class nation. That is the view of almost two-thirds of the British public according to a report by the think-tank, British Future. Even a third of professionals describe themselves as working class.

Some commentators, such as Gaby Hinsliff, argue that this shift in class identity presents a big opportunity for the Labour Party. It’s not quite as simple as that. Both political parties have had major problems in reaching out to working class voters in recent years. Labour has become more and more a middle class party in terms of membership, ideas and voter base and the Tories have long struggled to win over blue collar voters. If Brits are feeling more proletarian, both political parties clearly need to up their game when it comes to appealing to ordinary working people.

It’s a sad truth that many working class voters have simply stopped voting altogether. In 1992, 75 per cent of the skilled working class and 77 of unskilled working class people voted. By 2010, that had plummeted to 58 per cent and 57 per cent respectively. And the 'class gap' in voting has become a chasm. In 1992, the voting gap between the proportion of professionals who voted and the skilled working class who voted was eight per cent. By 2010, this gap had increased to 18 per cent.

And our research has shown that more and more voters are feeling alienated from politicians of all parties. Eighty one per cent of voters believe that "politicians don’t understand the real world at all." Ed Miliband has a point when he argues that "Parliament is too middle class and doesn’t have the diversity that it needs to have." Recent research by Phil Cowley found that voters wanted to see more working class MPs and more MPs from their local area. A feeling that the 'political class' are separate from and don’t understand the concerns of ordinary working people can only increase a sense of disengagement.

There’s also substantial evidence that Labour, in particular, has lost the base and the sense of affection it may once have had among working class voters. In a recent YouGov survey, 53 per cent of people said that Labour used to care about "people like me", whereas only 30 per cent think the same today. Labour’s vote at the last election also haemorrhaged amongst the skilled working class to a mere 29 per cent, compared with Tony Blair in his first two elections who won over more than half of these voters.

It’s striking how much Labour’s membership has also reflected this received drift from working class roots. At the party's top table, it is much more likely that you'll be hearing the views of Islington coffee houses than the working men's clubs of County Durham.

In the 2010 Labour leadership election, the Blaenau Gwent Labour Party, once represented by Labour giants Nye Bevan and Michael Foot, distributed 310 ballot papers. Barnsley Central sent out 221. By contrast, Islington North CLP sent out 991 papers and Hampstead sent out 931 - a stark illustration of how the balance of power in Labour has moved from working to middle class areas and from north to south. As the Labour Party has become 'lattefied' it's views have gradually moved out of sympathy with voters in working class areas, on issues ranging from the EU to housing and crime and justice.

Indeed, a recent poll showed that middle class people were much more likely to describe themselves as "left of centre" than working class voters. Working class voters believe in aspiration – but this doesn’t mean earning megabucks, instead it’s seen as getting on in their job, improving their area, hoping for the best for their family, for example – but are also keen to ensure economic security. It’s pretty clear that neither party has been able to successfully balance aspiration and security in recent years.

These factors, combined with the collapse of the Liberal Democrats in the north and the midlands mean that the working class vote is up for grabs in a way that it hasn’t been for generations. Given that the next election will be fought in blue collar constituencies in these regions, the party that makes the most compelling appeal to working class voters is probably going to be the one that grabs the big political prize. And it’s not inevitable that this is going to be Labour, which has to take substantial steps to restore the enthusiasm of its working class vote. Both parties have to make clear how they would cut the cost of living, increase the supply of housing and help low-paid workers.

This also represents the first real Conservative opportunity for decades to make inroads in working class areas. But the challenge for the Tories in working class areas is greater, with 64 per cent of voters thinking that they are "the party of the rich, not ordinary people". Tories will be mindful of Mitt Romney’s experience in the USA, where a belief that he didn’t understand "people like me" proved his Achilles heel.

If the Conservatives want to be seen as the party of working people, they need more people from modest backgrounds on the front line and they also have to show that they can represent the shift worker, the cleaner and the checkout worker, as well as the small businessman. They also need to show that they have a vision of job creation and renewal in towns and cities still recovering from deindustrialisation. The party needs explicitly and repeatedly to present policies such as education reform as being designed not to help the well-heeled but, instead, to lift up the standard of education in working class areas - helping poorer children to make the most of their potential.

The Tories also need to tackle some preconceptions. Top Conservatives ought to remember that trade union members and public sector workers are valuable members of society and hard working contributors to the economy, as well as being potential voters. They should remember that one man's "excessive regulation" can be a working man or woman's right to spend time with their family.

But international evidence makes it clear that working class voting behaviour can change. For decades in Sweden, the Social Democrats were seen as the natural home for working class voters. Over the past decade, the centre-right Moderate Party has positioned itself as the workers' party - a home for hard working people with policies to match. Since 2006, the party has been in government - winning the votes of many working class Swedes who would previously have voted Social Democrat. In every other English speaking country, the centre-right has proved successful at winning over the majority of white, working class voters. There is no reason why the Conservatives cannot follow suit.

Given that more people describe themselves as working class than has been the case for decades, winning the working class vote is vital for politicians. With the right language, policies and people, both political parties have the potential of claiming this prize and becoming the party of choice for working class voters.

Ed Miliband speaks to reporters after Labour candidate Andy Sawford won the Corby by-election. Photograph: Getty Images.

David Skelton is the director of Renewal, a new campaign group aiming to broaden the appeal of the Conservative Party to working class and ethnic minority voters. @djskelton

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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.