Family breakdown and the riots: Frank Field

A stable family is key in a child's early years.

The Labour movement grew in strength as it was nurtured by two driving principles. The first was that working people could collectively improve their pay and working conditions and, through a political party, change their country. The second centred on a belief that, in building strong families, they would improve the quality of their lives, irrespective of the wider forces around them. Here was the basis of the great march towards a respectable society, in which children were brought up on the principle of tough love. Clear boundaries were set, but within those boundaries children were loved and nurtured. The impact of Labour's success can be seen in many ways, not least in the falling crime rates from the period between the closing decades of the 19th century to around 1960.

In the early postwar years, however, Britain began to return to its historic norm of widespread, low-level barbarism. One sign of this is the escalated crime rate. For example, in many of our constituencies, there are now more violent crimes than there were 100 years ago in the whole country.
For a number of reasons, the tough-love approach to parenting has been undermined, at a time when neuroscience is spelling out the importance of the first few years of a child's life to the character of the adult who will emerge and whether he or she can empathise with other people. Good parenting, which ideally requires two involved parents, with additional support from grandparents, can trump poverty by expanding a child's life chances. Poor Chinese children outperform all other children except rich Chinese children.

We can see the collapse of the working-class-initiated tough-love model of parenting when children are presented for their first day at school. In extreme cases, they do not even know their name, while others recognise it only when it is shouted at them. Some children cannot sit still, see a pencil as a stabbing tool, cannot take off their coat and shoes and put them back on and are not potty-trained. Primary school teachers report that more, not fewer, children are being presented on their first day of school failing to meet the basic requirements of school-readiness.

The Labour leadership's proclamations that the shape of families doesn't matter has played a part in this social collapse. It is something that many women of the working and lower middle classes resent, women who increasingly see combining a job with a stable family as the source of their greatest happiness. The decline in support for Labour among these two groups that were turned off by our rhetoric helps to explain the huge loss of Labour votes since 1997.

Young people want their schools to teach them, through the National curriculum, how to be good parents. They have high aspirations for the children they will one day have, but they don't expect to be able to achieve these aspirations. Labour's social rethink must involve the question of how we should put stable families centre stage of our aspirations, while pursuing an economic strategy which will ensure that the aspirations that tomorrow's parents have for their children can be realised.

Frank Field is MP for Birkenhead (Labour) and led the 2010 Review on Poverty and Life Chances, commissioned by David Cameron

Previous: Diane Abbott: Single mothers need support, not lectures.

Next: Will Straw: Encouraging marriage by tax breaks is pointless.

This article first appeared in the 22 August 2011 issue of the New Statesman, The answer to the riots?

Show Hide image

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.