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Why the Chinese cyber attack is the ultimate scare story

Obama in Britain, the Queen in Ireland, Kate and Wills in Canada. The news value of such “events” li

News reports seem to inform us every day of a "historic" event. Wills and Kate's forthcoming trip to Canada, the Queen's recent visit to Ireland, and, lest we forget, Obama. It was, we were told, the first time a US president had addressed both houses of parliament in Westminster Hall. Not the first time a US president had addressed both houses of parliament in the Palace of Westminster - Ronald Reagan did that, as did Bill Clinton. Not even the first time a president had addressed both houses of parliament in Westminster Hall. Nelson Mandela did that. But the first time an American president had addressed both houses of parliament in Westminster Hall.

When reports rely on "first time" claims, you know you are in the presence of symbolic news. It isn't that anything happening is significant; it's what the whole event is intended to mean. We love America. We love Obama. He loves us. The world is OK. State visits are all about such symbolism. There is no other particularly good reason for a head of state to parade around another country attending banquets.

You can schedule most of the reporting of a US president's state visit before he arrives. There will be stories about the size of the convoy, the special ambulance, his limousine. There will be something about whether or not his detectives have been given special permission to carry guns in the UK. There are details of the accommodation, photos with the Queen and the "first lady/PM's wife" meeting, with plenty of stuff about dresses and some spurious detail about whether they got on well or not. There are the speeches, the dinners, the handshakes. All signifying pretty much nothing.

Concave image

Symbolic news takes on increasing importance in a world in which national leaders are losing control. The death of Osama Bin Laden was nothing but symbolic. His survival for so long after the 11 September 2001 attacks had symbolised the impotence of all the US soldiers in the world against a threat that was hidden, diversified and technological - the image of modern risk in a globalised world. That the US repeatedly suggested Bin Laden was hiding in a cave was a counter to that symbolism: no hi-tech threat here, just a skulking caveman. The symbolic importance of Bin Laden was such that, if we couldn't see the pictures of him being shot by US soldiers, we could see pictures of the US president and his advisers watching it live on television instead: death by Disney.

Late last month came another greatly symbolic story, the "revelation" by Beijing that it has an "elite cyber-warfare unit", trained to defend China against cyber attack. The Times told us that the so-called Blue Army consists of 30 hand-picked mega-hackers to patrol the new state boundaries of computer networks. China insisted that the squad was defensive, not aggressive. Within hours, the Blue Army was being blamed for stealing data from agencies and firms around the world, including Google, the Pentagon, Nasa, the US navy, Morgan Stanley and the Foreign Office as well as the Treasury. (In 2004, the FBI named the first known Chinese cyber attack Titan Rain - just to stress how international governance has become like a giant game designed by Nintendo.)

The "cyber attack" is the ultimate scare story for our networked age: it is invisible and incomprehensible (to most of us), and could strike anywhere at any time, in any area of your life from air-traffic control to the local nuclear power station or your online bank account. All it lacks is a picture; a phalanx of intense and inscrutable young Chinese people hunkering down in a basement full of computer screens would be ideal. Preferably all wearing blue, like those impassive paramilitaries who shoved their way around London carrying the Beijing Olympic torch three years ago.

We citizens are surprisingly sanguine about cyber crime. There is no accurate data on it and no effective international legislation, due to
jurisdictional issues, legal differences and the difficulty of investigation. In many countries the laws are not up to date. A decade ago, two Filipino men created the "ILOVEYOU" virus, which spread through people's email address books, making it look as if the message had come from friends. It infected millions of computers around the world within days and eventually required parliament and the Pentagon, among others, to shut down email systems to protect themselves. The men who created it from a flat in Manila were identified within days and arrested, but they eventually went unpunished, as there were no laws against that sort of cyber crime in the Philippines at the time.

Safe as houses

States and businesses are wary of confessing to cyber attacks. It underlines their vulnerability, and makes citizens, customers and investors feel insecure. Cyber crime strikes at nations' ability to ensure the security of their own citizens, long thought the fundamental duty of a national government. Even the Convention on Cybercrime, drawn up in 2001 by the Council of Europe (plus Canada, Japan, South Africa and the US, among others) has been ratified by only half the 50 or so countries that signed up to it: the legislation is more symbolic than effective.

As citizens, rather than relying on governments, we routinely hand over our personal financial security to the computer experts at Amazon or NatWest, and trust them to protect us because it is in their commercial interest to do so. We buy internet security packages for use at home without the faintest idea what they are doing - "A threat has been detected and resolved", eek - and cross our fingers, and hope.

And we watch reassuring pictures of the first US president to address both houses of parliament in Westminster Hall, under that hammer-beam roof and amid 900 years of history, and think, well, hopefully that's OK, then.

This article first appeared in the 06 June 2011 issue of the New Statesman, Are we all doomed?

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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.