Nick Clegg has robbed my party of its soul - he must go now

Those on the left of the party have been treated with contempt as Clegg seeks to transform the Lib Dems into a free market sect.

I am in mourning. In mourning for my once great and principled party which, judging by the past week, believes in very little that it once held dear.

From opposition to nuclear power to being against a replacement for Trident and supporting a 50p tax rate for the highest earners, we’ve seen these and other totemic policies abandoned. It makes me think some commentators are right when they say that Nick Clegg has all but completed his transformation of the Liberal Democrats from a party which was to the left of Labour (or at least New Labour) to one that is now an annex to the Conservative Party. 

I’ve long argued that what Clegg wants to do is turn the Lib Dems into a British version of the German FDP. The free-market FDP wins a very small percentage of the vote but seems to remain permanently in government as a parasitical attachment to the conservative coalition led by Angela Merkel.

That kind of thing must surely not be the aim of the Liberal Democrats. Of course we’re pluralists and believe in working with other parties. But we shouldn’t ignore our own history and rubbish our own principles just so our mnisters can keep their hands on red boxes.

Our history brings up names like Keynes, Beveridge, and Grimond, radical social liberals. And, yes, other names such as Roy Jenkins and Shirley Williams. As councillor and London Assembly Member Stephen Knight reminded us at a fringe put on by Liberal Left at this week’s Liberal Democrat conference, our party is a successor to two fine traditions, not just liberalism but also social democracy. Some would like to wipe the SDP from our history, but others, such as Vince Cable, continue to self-define as social democrats and we will not allow that fine tradition to be forgotten.

But over and above policy matters, what has upset me most this week has been the way some in our party, including Nick Clegg, treat those on the left. We’re belittled, patronised and treated with ridicule. Like embarrassing relatives, we're tolerated but not wanted.

Perhaps the worst example of this came during Clegg’s Q&A session when, before she’d even asked a question, Clegg made belittling comments about my colleague and friend Linda Jack, the chair of Liberal Left and one of the nicest and most principled people in our party.

When Linda did ask a question, she asked Clegg whether people such as her still had a place in the party. Clegg answered by not answering; he just talked about that morning’s economy motion. Any reasonable leader, regardless of whether they agreed with a certain individual, would have said, "Of course you have a place in our party, we’re a broad church". 

He said no such thing, which makes many of us feel like he’d really quite like us to leave the party so the transformation of the Liberal Democrats from a social liberal party to an economic liberal party will be complete.

Well, I have a very clear message for Mr Clegg and his acolytes: we’re going nowhere. As Janice Turner of the Social Liberal Forum said at the Liberal Left fringe, "this is our party too." Of course we’ve done good things in government, from re-linking pensions to earnings, to enacting Equal Marriage, but we’ve also compromised and capitulated too often and acquiesced too much.

So, after three years of biting my tongue, hoping for a better day and defending his leadership, I now call on Nick Clegg to go. What residual respect I had left for him was destroyed this week by the way he and his ilk referred to and dealt with those who dared to disagree with them.

Those of us on the centre-left of our party, who I believe continue to be its mainstream, will, despite it all, continue to fight for what we believe. A couple of years ago, at a Lib Dem conference not long after the coalition was formed, Nick Clegg told delegates, "we’ll never lose our soul."

Sadly, I fear we have.

Mathew Hulbert is a Liberal Democrat borough and parish councillor in Leicestershire

Nick Clegg delivers his speech at the Liberal Democrat conference in Glasgow. Photograph: Getty Images.

Mathew Hulbert is a Liberal Democrat Borough and Parish Councillor in Leicestershire

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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.