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The Tories flirting with Ukip are feeling the siren lure of unelectable purity

Most Conservative MPs are not enjoying being in government.

Some ideas in politics are so bad that even disavowing them is getting too close. The notion of the Tories forming an electoral pact with the UK Independence Party is one. For Downing Street to mention it at all, even in a rebuttal, can serve only to advertise Ukip as the natural home for Conservatives who don’t like David Cameron and thereby accelerate the exodus.

Nigel Farage, Ukip’s leader, is an affable pub demagogue who can snaffle stray votes across the political spectrum. That is not a reason for a governing party to put him on a joint ticket. Yet some Tory MPs seriously entertain the idea. Eight are said to have held talks on defection.

This fringe flirtation springs from ideological affinity. Farage says aloud things about Europe and immigration that many Tories think but feel are taboo in Cameron’s party. When the Tory leader described Ukip as a haven for “loonies, fruitcakes and closet racists” in 2006, he told a number of his MPs, in effect, that their career prospects were over on his watch. That left them with three options: quit the party, agitate for new leadership or use the threat of rebellion as a remote control for steering Tory policy from the back benches. Talking up Ukip is a device for “keeping Cameron honest”, as one Tory MP puts it.

Shire calling

The problem, as Cameron knows, is that the Tories failed to win a majority in 2010 because too many voters imagined them a bit too Faragey already – all claret-faced in disgust at modern Britain. It is hard to see how inserting the real Farage into their 2015 manifesto will change those sceptical minds.

Dissident Conservatives argue that the economic crisis has changed the political landscape. There is, they say, a new appetite for right-wing populism and departure from the EU, as shown by opinion polls and Ukip’s harrying of mainstream parties in by-elections. The flaw in that argument is that it doesn’t distinguish between what voters feel on single issues and how ardently they feel it. Europhobia doesn’t damage the Tories because voters love the EU. They don’t. It hurts them by signalling a relapse into manias from the party’s most unattractive years.

There is a sad irony in Conservatives’ fantasies of congress with a party to make them look embittered and extreme, when they are already in a coalition that might – had relations been better managed – have made them look reasonable and moderate.

There is little public affection for the Liberal Democrats. Nick Clegg’s personal ratings mine depths from which few candidates return. Yet the party’s morale is surprisingly sturdy. That is because the Tories make it so easy for Clegg to present himself as a brake on their intemperate urges. Every tender glance that Cameron’s MPs throw at Ukip is a tactical boost for the Lib Dems. Their survival in parliament depends on holding seats in southern England where the nearest rival is a Tory. That means appealing to liberal-minded voters who shudder at the prospect of unalloyed Conservative rule but have written off Labour, either because it is too far behind locally or because it remains unforgiven for its record in office.

In the Deputy Prime Minister’s office, Cam­eron’s failure to rein in Tory MPs is viewed with pity verging on ridicule. Senior Lib Dems believe that the Prime Minister indulged his party’s fanatical tendency for tactical gain in early coalition power struggles – over electoral reform, for example – without understanding the monster he was creating.

“They really are the British Tea Party,” says one Clegg ally. “They’ve been allowed to grow because they once served a useful purpose but now it’s out of control.”

Lib Dem attitudes towards the Tory leader have hardened in frustration over negotiations ahead of the Chancellor’s autumn statement on the economy on 5 December. The Prime Minister is the obstacle to Clegg’s ambition to introduce wealth taxes – specifically a levy on expensive property. George Osborne, chastened by the fallout from his disastrous cut to the 50p top tax rate, is more alert to the hazards of looking cosy with the rich. Cameron remains adamant. His coalition partners say that this comes down to “shire Tory instincts” and loyalty to mansion-dwelling chums. “They’re the people he meets at dinner parties in Witney [the Prime Minister’s Cotswolds constituency],” says a Lib Dem cabinet minister. “And he wants to protect them.”

With levels of respect so low, it is surprising that the coalition works as well as it does. Each side accuses the other of being leaky, leading to petty complaints about the number of advisers in the room when sensitive matters are discussed. More decisions are passed up for negotiation in the quad – the coalition cockpit where Cameron, Clegg, Osborne and Danny Alexander sit. That allows more junior Tories and Lib Dems to go about their business without conflict or, indeed, without seeing much of each other. “You can almost pretend you’re not in a coalition,” jokes a Tory aide.

True colours

Despite the ebbing away of trust, the coalition has found a certain functional equilibrium. It is an arrangement that flatters neither side but it suits the Lib Dems slightly better. They are generally more relaxed about admitting to concessions and imperfections in their deals because they are in the coalition business for the long term and want to showcase it as a decent way to run a government. They also have an interest in being seen to be thwarting Tory ambitions. Most Conservatives have yet to discover the joy of compromise and still resent sharing power, having forgotten, it seems, the voters who decided that they couldn’t be trusted with power unshared.

The crucial difference is that most Lib Dems are enjoying being in government while a solid rump of Tory MPs are not. Their eyes are drawn to the lush political pasture on the side of the fence where Ukip grazes. There they see ideological purity and the chance to express their true opinions. It looks liberating, empowering. It is the siren lure of opposition.

Rafael Behr is political columnist at the Guardian and former political editor of the New Statesman

This article first appeared in the 03 December 2012 issue of the New Statesman, The family in peril

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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.