Thanks for wading in, Mr Cameron - now this is what you need to do about flooding

The Prime Minister needs to reverse the foolish decisions his government has taken on flood defences.

As the Christmas floods continued, it was inevitable that at some point the Prime Minister would pull on his gumboots and go visit a flood-struck town. It was equally inevitable that - in a moment of life imitating art - he would be confronted, like an episode from The Thick Of It, by angry residents fed up at being ignored for so long by the authorities.

The press snickered at Cameron's red-faced apologies and hasty pledges of more support, but in reality there is little that even the PM can do to help with an emergency clean-up. No, the true measure of whether a politician is fit to deal with emergencies is whether they act to make the next one less likely.

Indeed, as Cameron said on Friday, "these events are happening more often". One might almost infer - perish the thought! - that the climate is changing. So, then: is the PM going to stick to his pledge to make flooding "a bigger priority for the government"? If he is, that is very welcome news. But to do so, he will first need to reverse a string of very foolish decisions his administration has taken that make Britain less prepared for increased flooding in future. Let's examine those decisions:

1. The coalition is responsible for a real-terms cut in spending on flood defences, when the Environment Agency says we need to be investing £20m more each year, on top of inflation, to keep pace with increased flooding due to climate change. On Friday, Cameron tried to claim that his government "is spending more on flood defences over the next four years than over the last four years." This is simply not true: however you spin the figures, they don't keep pace with inflation, and certainly don't keep pace with increasing flood risk. Cutting flood defence spending is a total false economy: every £1 spent on defences is worth £8 in avoided costs.

2. In 2014, the government is cutting the Environment Agency's budget by 15%, with 550 staff working on flooding earmarked to be sacked. So when the Prime Minister tweeted, "An enormous thank you to the @EnvAgency... who are doing an amazing job with the floods and extreme weather", it rang hollow. Farming groups have warned the cuts will increase flood risks; they have to be halted.

3. The government's new flood insurance plan fails to factor in how climate change will increase the risk of future flooding - potentially leaving half a million households outside the scheme and facing higher insurance costs.

4. Councils no longer have to prepare for the impacts of climate change - Eric Pickles, the Communities Secretary, scrapped this obligation in 2010. So much for Cameron's recent tweet, stating that he has "asked the Dept for Communities & Local Govt to ensure councils have robust plans in case of bad weather and flooding over New Year." Talk about closing the stable door once the horse has bolted...

5. The minister that David Cameron appointed to protect the country from the impacts of climate change, Owen Paterson, doubts that climate change is happening, hasn't bothered to get briefed on it by his scientists, and says it's not all bad anyway.  Paterson probably has fun cultivating his image as a green-baiting contrarian, but given the impact of increasing flooding on rural communities and farmers, the laughter's wearing pretty thin. Time for a new Secretary of State better suited to the task.

6. Defra's team working on climate change adaptation has been slashed this year from 38 officials to just six. If resilience to flooding isn't a priority at the centre of government, why should it be something local authorities take seriously?

And that's just for starters. If Cameron is to be able to look flood-stricken householders in the eye in future and say he's doing all he can to help them, he needs to reverse these foolish decisions, and fast. And he needs to remember the old adage, that prevention is better than cure. The best insurance we have against increased flooding in future is to tackle the pollution causing climate change in the first place.

David Cameron talks with residents and environment agency workers in the village of Yalding during a visit on December 27, 2013 in Yalding. Photograph: Getty Images.

Guy Shrubsole is energy campaigner at Friends of the Earth.

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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.