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If Tory MPs can’t decide what kind of party they want, they’ll have to work it out in opposition

Whatever the change, all Tories want it to be harder and faster. That is not something the Prime Minister can deliver in a coalition.

Tory MPs know that repetitive disloyalty and conspicuous party division hasten electoral defeat. Yet they cannot line up obediently behind David Cameron. The refusal by more than half of them to accept the Prime Minister’s moral lead on gay marriage cannot be explained away by his granting of a free vote in parliament. It expresses a more profound reluctance to be led.

It follows that some Conservatives either do not care if they lose the next election or are actively pursuing that outcome. That is less bonkers than it sounds. Coalition has deprived many Tories of any sense of ownership of the government’s programme (as well as suffocating their ministerial career prospects). As their first loyalty is to the idea of being Conservative and that creed is not, in their view, paid proper respect in Downing Street, they already feel themselves to be in opposition. The usual explanation for backbench anger starts with Cameron’s failure to deliver the election triumph that was advertised asthe party’s reward for swallowing sickly “modernising” medicine. Another way of looking at the Conservatives’ problems is not as an aftershock of defeat but as a failure to adapt to victory.

The lack of a majority has hardly limited Cameron’s ambition. The coalition has turned public services upside down while imposing the tightest budget squeeze in a generation. Labour is doubly confounded. The opposition lost the economic blame game in the opening months of the parliament. Only slowly are voters beginning to cite George Osborne’s policies over Gordon Brown’s legacy as the bigger cause of their pain. At a deeper level, the left is affronted that a crisis in capitalism has somehow generated a Conservative chancellor.

That dismay is an extension of Labour’s discomfort with its own record. There is near consensus in the party that Brown and Tony Blair were too deferential to Big Money. Their accommodation to Margaret Thatcher’s economic legacy is seen as an intellectual surrender. Ed Miliband has no appetite for pursuing the “Blairite” model of public-services reform, with its emphasis on markets and competition. So the coalition has snatched that baton and giddily run off with it: churning out academy schools; having GPs shop for private treatments on behalf of patients; outsourcing welfare-to-work schemes and prisoner rehabilitation.

Throw in Labour’s vague acceptance of the need for budget constraint and it seems as if all the big battles are being waged on Conservative terms. Miliband’s “one nation” alternative looks like rhetorical homoeopathy – balm that comforts only those people with a predisposition to believe.

If Conservative ideas have the run of West­minster, why does Cameron look like he is losing? The obvious answer is that the ideas aren’t working. The economy is stagnant. The subtleties of public-sector reform are lost in unsubtle cuts. Most people’s experience will be of fewer and worse services.

Downing Street is still confident that the economy is poised for recovery and that time is running out for Miliband to define himself as anything other than a whingeing spectator. Cameron’s problem is that Tory MPs are not minded to accept their leader’s invitations to wait patiently for fresh political winds to carry them to victory.

While the left sees Cameron’s ultra-Blairism as proof of ideological zeal, the right banks it as technocratic continuity from the old regime and urges more radicalism, with more aggressive assaults on Whitehall control. Labour regards Osborne’s austerity plan as dogmatic butchery but noisy Conservative dissenters say spending and borrowing are still out of control. They want deeper cuts and lower taxes. Cameron cannot acquiesce to that demand without abandoning all pretence of centre-hugging moderation, the defining ambition of his leadership.

There is something absurd in the complaint that the Prime Minister is inadequately Conservative when he is implementing so many Conservative ideas – market reforms, deregulation, shrinkage of the state – in impeccably Conservative fashion. But Cameron is not a natural thumper of ideological tubs. His Toryism is instinctive and uncodified. He struggles to proselytise for his beliefs because, taking them as part of the natural order, he has never interrogated them with much rigour. Cameron’s hope of remaining Prime Minister rests on the belief that British voters will endure austerity if it is sold to them by a charming, mild-mannered gentleman who insists politely that there is no alternative.

He stands for business as usual, only poorer than usual. It is not a cheery proposition but it may be the Tories’ best chance of clinging to power. Cameron imagines himself to be a visionary leader but in reality his appeal is to that stoical strain in British culture that takes what it is given, makes do, muddles through and apologises when its toes are trodden on.

Backbench Tory MPs are not so deferential. They want ideological insurgency, not managed decline. There is no agreement over what new direction the party should take – more liberty, or social reaction? Whatever the change, all want it to be harder and faster. That is not something the Prime Minister can deliver in a coalition. Besides, it is not his style. Cameron sold himself to his party and the country as the first 21st-century Conservative leader. In truth, he represents the ultimate valediction of 20th-century Conservatism – the candidate you might cook up in a laboratory with political grafts from Harold Macmillan’s patrician elitism, Margaret Thatcher’s economics and John Major’s nostalgic moralism.

If his party thinks that is a monstrous creation, it faces a huge task working out what it wants to be instead. It is the kind of work that can only be done in opposition. 

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

This article first appeared in the 11 February 2013 issue of the New Statesman, Assange Alone

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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.