Dame Elizabeth Butler-Sloss, a former High Court judge, faced calls to step down from the moment she was appointed.
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Dame Elizabeth Butler Sloss resigns as head of child abuse inquiry

Former High Court judge steps down over conflicts of interest. 

It's another shambles for David Cameron: the government has just announced that Dame Elizabeth Butler-Sloss has stepped down as head of the child abuse inquiry. No.10 insisted at this morning's lobby briefing that the decision was her own and that Cameron and Theresa May continued to believe that she was the right person to lead the panel. May spoke to Butler-Sloss by phone at the weekend but only after she had made her decision to resign. 

Here's Downing Street's statement on the news:

[Lady Butler-Sloss] has taken the decision to step down as chair of the panel inquiry. It is entirely her decision. The government's view hasn't changed, that she would have done a first-class job as chair. The reasons for her appointment still absolutely stand in terms of her professional expertise and her integrity, which I don't think has been questioned from any quarter whatsoever, and rightly so.

Calls for the former high court judge's resignation began almost immediately after her appointment last week owing to the fact her brother, Michael Havers, served as Margaret Thatcher's attorney general from 1979 to 1987, the period when many of the offences are alleged to have taken place (No.10 insists that Cameron was aware of this). They then intensified when the Times reported on Saturday that she excluded allegations about a bishop from of a review of how the Church of England dealt with two priests allegedly involved in paedophilia because she "cared about the Church". 

Here's Butler-Sloss's statement in full:

I was honoured to be invited by the Home Secretary to chair the wide-ranging inquiry about child sexual abuse and hoped I could make a useful contribution.

It has become apparent over the last few days, however, that there is a widespread perception, particularly among victim and survivor groups, that I am not the right person to chair the inquiry. It has also become clear to me that I did not sufficiently consider whether my background and the fact my brother had been Attorney General would cause difficulties.

This is a victim-orientated inquiry and those who wish to be heard must have confidence that the members of the panel will pay proper regard to their concerns and give appropriate advice to Government.

Nor should media attention be allowed to be diverted from the extremely important issues at stake, namely whether enough has been done to protect children from sexual abuse and hold to account those who commit these appalling crimes.

Having listened to the concerns of victim and survivor groups and the criticisms of MPs and the media, I have come to the conclusion that I should not chair this inquiry and have so informed the Home Secretary.

I should like to add that I have dedicated my life to public service, to the pursuit of justice and to protecting the rights of children and families and I wish the inquiry success in its important work.

Theresa May, who will face questions on the subject when she appears before the home affairs select committee at 3pm, said:

I am deeply saddened by Baroness Butler-Sloss’s decision to withdraw but understand and respect her reasons. Baroness Butler-Sloss is a woman of the highest integrity and compassion and continues to have an enormous contribution to make to public life.

As she has said herself, the work of this inquiry is more important than any individual and an announcement will be made on who will take over the chairmanship and membership of the panel as soon as possible so this important work can move forward.

A new chair for the wide-ranging inquiry, which will examine how the government, the NHS, the BBC and other public institutions handled allegations of abuse, will now be appointed. Given the seriousness of the issue, and the imminent cabinet reshuffle, this self-inflicted mess has come at a bad time for Cameron. 

The key decision facing the government now is whether to appoint another establishment figure to lead the inquiry, or whether, as many would prefer, to recruit a more distant outsider. 

George Eaton is political editor of the New Statesman.

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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.