How the Tories can re-engage with working class voters

Rather than aping UKIP, the party should focus on the cost of fuel, the cost of housing, job security and the cost of travel.

The 'town hall debate' in the 1992 US presidential election was one of the most potent moments in modern western politics. An audience member asked, "how has the national debt personally affected each of your lives? And if it hasn't, how can you honestly find a cure for the economic problems of the common people if you have no experience in what's ailing them?" Billionaire Ross Perot was wrongfooted, George Bush Snr muttered something about the deficit, interest rates and his grandchildren. And then Bill Clinton stepped away from the podium and towards the lady in the audience who had asked the question, asking how the recession had affected her.

After establishing that the questioner knew people who had lost their homes and jobs during the recession, Clinton talked about the similar experiences of people he knew in Arkansas before relating it to his overall campaign themes. In a few seconds, Clinton had achieved the holy grail of modern politics - illustrating empathy and authenticity in difficult times. Bush and Perot failed to do that and paid the price. And modern British politicians are largely failing to do this as well, leading, at least in part, to the UKIP surge of last week.
"Politicians don't understand the real world at all." That was the firm view of over 80 per cent of voters in a poll last year. And last Thursday's elections saw the bursting of that dam of frustration with a Westminster elite seen as narrow and out of touch. If mainstream politicians don't act quickly to reconnect with hard-pressed, ordinary voters, they'll find that last week's results could mark the beginning of a trend, rather than a one-off howl of voter rage.
The same poll showed that, for the vast majority of voters, the Tories are seen as the "party of the rich, not ordinary people" - an impression that is one of the party's biggest electoral handicaps. But the leadership of the other parties also seem out of touch with the struggles of much of the country. As people struggle to make their pay packet last and worry about job security, senior politicians are not seen to understand people's everyday struggles.
And that, at least to an extent, has helped contribute to UKIP's surge and the general lack of enthusiasm about all of our mainstream political parties. As Lord Ashcroft's extensive research showed, concern about Europe is not the primary reason for UKIP's rise. Rather, UKIP voters are likely to agree with the statement that the party is "on the side of people like me" - something that they don't regard the mainstream parties as being.  Indeed, a recent YouGov poll found that 53 per cent of voters thought that Labour used to care about "people like me", compared to only 30 per cent today.
That helps explain why the shift to UKIP last Thursday wasn't, as conventional wisdom once suggested, largely from once Tory voters. Indeed, as Mark Pack and John Rentoul have argued, Labour may have lost more votes to UKIP than the Tories. And UKIP seemed to pick up votes from the skilled working class voters once courted so successfully by Thatcher and Blair. Both Labour and the Conservatives failed to capture the imagination of the skilled working class last time, with Labour's vote plunging from 51 per cent in Blair's biggest landslides to 29 per cent.
This disengagement of the skilled working class with the major political parties has hardly come as a surprise. In 1992, 75 per cent of 'C2' voters turned out to vote. In 2010, that figure was 58 per cent.  Parliament remains too middle class, with too few MPs who can genuinely relate to the struggles that accompany a squeeze in living standards. To many voters, frontline politicians all come from a narrow background and have little to no experience of 'the real world'. It was always inevitable that a party would come along that capitalised from this sense of disengagement.
There's no simple solution to this problem, of course, but one thing the mainstream parties mustn't do is to ape UKIP - that would look desperate and forced. Instead, politicians have to try harder to show that they understand the pressures that hard working people are under and do something about it. The Budget was a step in the right direction, but it's clear that so much more needs to be done about the cost of fuel, cost of housing, job security and the cost of travel. The political establishment also has to take active measures to broaden the social base of parliament.
Knee jerking and gesture politics are not going to re-engage voters with mainstream politics. Instead, through their words and actions, politicians have to display the kind of authenticity and empathy that Clinton illustrated to devastating effect a few decades ago.
David Skelton is former deputy director of Policy Exchange and is launching a new campaign group to broaden the appeal of the Conservative Party to working class and ethnic minority voters
David Cameron addresses Conservative Party supporters at the Amberside Sports Club in Nuneaton. Photograph: Getty Images,

David Skelton is the director of Renewal, a new campaign group aiming to broaden the appeal of the Conservative Party to working class and ethnic minority voters. @djskelton

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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.