The good cardinal, psychic computers and forbidden fruit

The Pope has picked the wrong cardinal to beatify. Also, ruminations on the incapacity benefit, Gmai

I don't understand the process by which the Pope selects people for beatification (or even what beatification is exactly) but I'm certain that, in honouring John Henry Newman, he has got the wrong Victorian cardinal. Newman may have been a fine writer and a brilliant intellectual but he had almost nothing to say about the great social issues of the 19th century and his chief legacy was an elitist boys' boarding school in Oxfordshire.

Henry Edward Manning, by contrast, was a people's cardinal. For his funeral in 1892, hundreds of thousands lined the streets of London - more than when the Duke of Wellington was buried, 40 years earlier - and the cortège was followed by trade union banners. An opponent of laissez-faire and a supporter of fair wages and shorter working hours, he sided with the London dockers during their strike in 1889 and helped settle the dispute, winning the men's demands for sixpence an hour and union recognition. They collected £160 in appreciation and wove his face into a union banner.

If it helps Pope Benedict, Manning - like Newman - was a convert from Anglicanism and, if anything, more reactionary on narrow doctrinal matters.

Right-wing target

One question I have not heard posed during the furore over welfare cuts is whether we need incapacity benefit (as we aren't now supposed to call it) at all. Shouldn't we just abolish it, simplifying the benefits system, saving doctors time and depriving right-wing newspapers of one of their favourite targets?

No, this is not satire, nor (I hope) another appearance of the fascist beast that lurks within me. It's just that I don't see why, if you can't find a job, your medical condition should make any difference. It may limit your employment opportunities but so do a host of other things: lack of skills, low levels of education, ethnicity, age, an unappealing appearance or a charmless manner. Your employability is also influenced by where you live. The "disabled" may find it easier to get work in the south than able-bodied people do in the north.

If you are out of work, you need help. That is all there is to it. The Employment and Support Allowance (ESA), as incapacity benefit is now called, seems to me to create a spurious distinction between the deserving and the undeserving. Few people are incapable of any kind of work. If they are, they are almost certainly entitled to disability allowances to meet higher living costs. These, subject to means tests, should be enhanced and eligibility criteria possibly widened. Out-of-work benefits should be higher (as should wages), though lower than the present ESA level.

The government may say that this isn't going to save money. But, sorry, that's their problem, not mine. The entire cost of ESA is roughly equivalent to what the 1,000 wealthiest people in Britain avoid, perfectly legally, in taxes.

Not the perfect match

American scientists, it is reported, have decoded words from brain signals. Some commentators fear that computers will soon be able to read our minds. But are we sure they can't do so already? Every time I google or use Gmail, the information is transmitted to some electronic entity in California. Usually, within seconds, it tries to sell me something. Often it gets the wrong end of the stick, offering me a book about insects when I've been searching for information on cricket - which shows that, though they can do wondrous things, computers are still quite stupid.

There are other examples. After I exchanged views on Gmail about the failings of the Labour Party, an invitation to join the Conservatives popped on to my screen. I recently tried Vote Match - a website that, after you've put in your views, recommends the candidate you should support for Labour leader - and learned that my first preference should go to Diane Abbott, my second to the sainted Ed Miliband. I was then invited to become a social worker in Australia.

A lesson in capitalism

My former boss David Montgomery is "retiring" from Mecom, the media company he founded in 2000. His career is a lesson in how modern capitalism works. He was a specialist in "downsizing"; his expertise was slashing costs, particularly staff. Shareholders and investors adored him, both at the Mirror Group, where he was chief executive between 1992 and 1999, and at Mecom, which he persuaded the City to back heavily. But his vision of how papers should develop - except that they should employ as few journalists as possible - was less evident. Montgomery stepped down from both Mirror Group and Mecom after investors realised even he couldn't keep cutting for ever.

As editor of the Independent on Sunday (which the Mirror Group then owned), I once ran a front-page story headed "Guru of downsizing repents". It was about a Wall Street sage who had suddenly decided that the cost-cutting and staff firings that he had advocated for years had gone too far. Though the story was widely followed in other newspapers, Montgomery was unimpressed - and some said it was a factor in his sacking me some months later. Perhaps he should have read the story more carefully.

Ripe and juicy

I live close to Epping Forest, which, at this time of year, groans with ripe, plump, juicy blackberries. Most weekends, I go to pick them. This is free food, for which the only costs are a few scratches and purple stains. Yet I have never seen anyone else picking them. On the contrary, people frequently stop to warn that the berries may have been sprayed with dog, cat, horse or even human urine. I explain that I shall be sure to wash them.

Peter Wilby was editor of the New Statesman from 1998-2005

Peter Wilby was editor of the Independent on Sunday from 1995 to 1996 and of the New Statesman from 1998 to 2005. He writes the weekly First Thoughts column for the NS.

This article first appeared in the 20 September 2010 issue of the New Statesman, Catholicism in crisis

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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.