Mitchell’s “plebs”, lunch with Grey at White’s and the mystery of Vince

The New Statesman's editor ponders upon the man in the black fedora.

I enjoyed Vince Cable’s speech at the Liberal Democrats’ conference in Brighton, especially the “pleb” gibe made at the expense of his Conservative cabinet colleague, the heavily fringed Andrew Mitchell. The more tortuously virtuous and self-pitying his leader, Nick Clegg, becomes, the more Cable, who will be 70 in May, seems to be enjoying himself. For those who don’t know him well – and even for those who do and work alongside him – Cable remains a mystery and an MP without close political friends or allies.

What I like about Cable is that his politics and ideas are never predictable – he supports wealth and land taxes and the free market – and, unlike most politicians, evades easy categorisation. He has been called many things: a socialist (which he is not), a flinty Gladstonian (by his Tory colleague David Willetts, the higher education minister), a left libertarian (by Samuel Brittan of the Financial Times), the government’s oneman think tank (by Robert Skidelsky), an “antibusiness” business secretary (by Tory MPs who support deregulation and supply-side reforms) and a social democrat (his self-description).

I never believed that he would quit the government out of unhappiness or contempt for his Tory colleagues, as was widely predicted in the early months of the coalition. His lugubrious countenance disguises a jaunty sense of mischief and resolute ambition. It’s long been clear to me – I’ve interviewed him and he has been a guest several times at the NS editorial lunch – that he enjoys the responsibility of power too much and here he is, once more, positioning himself craftily to be the man in just the right place should Labour come a-wooing.

Minority report

Does anyone older than 30 doubt that Mitchell used “pleb” as his police tormentors claim? It’s just the kind of word you’d expect someone of his generation and background, so alert as he and so many of his friends are to the gradations of the class system, would use to describe the grubby struggles (or, in this case, interventions at the gates of Downing Street) of mass man.

This week, our economics editor, David “Danny” Blanchflower, erupted into the office as he does from time to time. We talked about Mitchell and the narrow social backgrounds of the cabinet and what this tells us about social mobility in Britain by comparison with the US. Danny is a professor at the Ivy League Dartmouth College, in New Hampshire, which, like Harvard, Yale and Princeton, operates a needs-blind admissions policy and actively seeks to privilege bright children from poorer families.

More than a third of Dartmouth’s students are from minorities and 13 per cent receive Pell Grants, which are mostly given to students with a family income under $20,000. Universities such as Dartmouth and Harvard do not simply take SAT test scores into consideration when selecting students but are as interested in contextual data – school, family circumstances, interests. “It’s all about determining ability and potential,” Danny told me. “Harvard and Dartmouth take the black kid from the Bronx with a high IQ, who will get a free ride for all four years. Oxford takes the rich white guy every time.”

Peer group pressure

Talking of rich white guys . . . to the high Tory White’s club on St James’s Street for a London Magazine lunch hosted by Grey Gowrie, the flamboyant hereditary peer who served as a minister in the Thatcher government and was a friend and confidant of the American poet Robert Lowell. I sat next to Ferdinand Mount (the baronet and author most recently of The New Few, a book about the excesses of irresponsible/ predator/crony capitalism and much admired by Ed Miliband), close to Melvyn Bragg (a life peer) and opposite a poet who was also a knight. Titleless in such company and in such a setting, one felt, to use the word of the moment, something of a pleb, an expression that I heard used a lot in the Eighties and Nineties but not much since. Grouse was served, as you would expect at White’s at the start of the season of mists and mellow . . . etc, with a good red Burgundy and, after I was called alongside him for an intimate conversation, it was amusing to listen to Gowrie reminisce about the (Lady) Thatcher years.

Return to sender

The London Magazine, now owned by a benevolent businessman, Burhan al-Chalabi, and edited by Steven O’Brien, has had a long and often troubled history. In the 1820s, it published Keats, Shelley and Wordsworth, as well as instalments from Thomas De Quincey’s great memoir of addiction and the disintegrating self, Confessions of an English Opium-Eater. At various times, it has disappeared altogether because of an absence of funds and readers, only to be optimistically revived.

In its present incarnation, it has been continuously published since 1954. For many years, it was edited by Alan Ross, minor poet, cricket enthusiast and belletrist, to whom in my early twenties I once sent a short story. It was promptly sent back to me a few days later, accompanied by a short, handwritten note from Ross, politely declining my story and reminding me “next time” to enclose an “SAE”.

I was pained by the rejection but delighted that he had bothered to reply at all. As it turned out, there would be no next time and I remain grateful that the late Mr Ross rejected my story. Had he accepted it, I might have spent many wasted years attempting to write many more.

Jason Cowley is editor of the New Statesman. He has been the editor of Granta, a senior editor at the Observer and a staff writer at the Times.

This article first appeared in the 01 October 2012 issue of the New Statesman, Labour conference special

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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.