Is the future Conservative?

New Labour has created a more individualised and wealthier society, but not a freer or more equal on

It is time for the left to take on the New Tories. This challenge cannot be separated from the need to address the problems facing post-New Labour social democracy. By critically engaging with Cameron's Conservatives the left can rethink its principles and renew itself.

The New Labour project is exhausted. Its promise of change in 1997 was greeted with optimism – ‘things can only get better’. A decade on, and that change has become associated with the turbulence of global capitalism – fear of immigration and economic insecurity. New Labour has created a more individualised and wealthier society, but not a freer or more equal one. In its neglect of its core working-class support it has lost its roots and ideological purpose. Despite its extraordinary electoral successes it has failed to build a lasting coalition for transformational change.

With the onset of a recession, Britain faces acute problems in creating a more equal and sustainable economy. Large areas of the country have lost their economic base. Both Conservative and New Labour governments, heavily influenced by economic liberalism, have driven this process of restructuring the economy and society further and deeper than other European countries.

Manufacturing industry has been neglected and overshadowed by the financial industries. Institutions in education, health and welfare have been depleted by privatisation, outsourcing and marketisation.

Centralised micro-management has left many public sector workers demoralised and their organisational cultures risk averse. This low synergy between individuals and public institutions is reproduced in the political sphere, where there is widespread popular disaffection from political parties and the formal institutions of representative democracy.

As Oliver Letwin argues: "The social revolution we now need to achieve is as great as the economic revolution that was required in the 1980s and 1990s."

David Cameron has made the theme of ‘Breakdown Britain’ central to his politics: ‘the greatest challenge of the 1970s and 1980s was economic revival. The great challenge in this decade and the next is social revival’.

Labour’s response to this pro-social rhetoric has been dismissive. James Purnell has been one of its most vociferous critics: "What a strange rallying cry: stop the world, I want to get on. I can’t stress enough what an inadequate response to the modern world this is." But Purnell ignores New Labour’s own political crisis, claiming that ‘we have a vision of the good society that the Conservatives cannot match’. This is precisely what Labour does not have. It offers no coherent alternative.

In its reinvention in the 1990s New Labour jettisoned the language of ethical socialism, and so lost its capacity to match Cameron’s pro-social rhetoric and usurp his claim to value politics. It no longer knows how to talk about relationships, values, or even social justice. It doesn’t know how to talk about a culture of care and empathy, nor how to speak to people’s insecurities. Its silence over the super rich is matched only by the harsh language deployed against migrants or welfare recipients. It has become a politics without sympathy, unable to engage with everyday life. In contrast, Cameron’s ethical language of social life has resonated amongst many who in the past would never have considered voting for the economic liberalism of Thatcherism.

But how much has the Conservative Party changed? The New Conservatives have adroitly cultivated an aura of intellectual ferment and political renaissance. But the ferment remains shallow and narrowly defined. Old prejudices remain. Despite David Cameron’s early bold politics, the New Conservatives cannot find a way out of the orthodoxies of the 1990s. As an election approaches, the instinct is to retreat from the search for a new political paradigm. The New Conservatives have no coherent political economy with which to enact their pro-social politics and rhetoric of social justice.

Labour cannot easily exploit this contradiction because neoliberal economics has been its own blind faith. Nowhere is the government’s failure to counter the New Conservatives more abject than in the field of welfare reform where the Conservatives praise it for promoting one of their main electoral themes.

Similarly while Labour has rightly challenged the idea of a 'welfare society' with its proposed devolution of state functions, its own centralising instincts and micromanagement of people have allowed the Conservatives to strike a popular chord with their criticism of state control.

Despite its currently robust public face, the New Conservatism remains a tentative political project. Its current success has much to do with the political failure of Labour. In the 1990s New Labour incorporated economic liberalism into its politics and so redefined social democracy. It repositioned itself to the right, adopted a more populist authoritarian tone and defeated the Conservative Party of Thatcherism. But what was New Labour’s electoral strength then has now become its weakness. It has become both the party of the establishment and the party of insecurity. Security is the new progressive politics, trust in people the new political virtue. The New Conservatism lays claim to both and Labour offers no coherent alternative.

Whether or not the Conservatives win the next election, the future does not belong to the Conservative Party. Right now it belongs to a social democracy that is willing to bring liberal free market capitalism and corporate power back under control.

The debate is about how we secure this post-neo-liberal politics. The left needs to recover its ethical socialism and commitment to equality. It needs the political will to reject the easy option of marketisation and realise ideas for democratising public services and building an accountable, redistributive state. Power needs to be devolved to local government. There has to be a renewed argument for constitutional and electoral reform and the protection and extension of individual civil liberties. The conditions for trade unionism have to be improved and a new internationalism established. Perhaps most of all, and most difficult, the left needs an ecologically sustainable, pro-social political economy capable of generating both wealth and equitable development. The future is for the left to lose.

Is the Future Conservative can be downloaded at

Jon Cruddas is MP for Dagenham. Jonathan Rutherford is Editor of Soundings and Professor of Cultural Studies at Middlesex.University

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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.