Blairites, nearly men and BBC hacks

Furious Labour hacks round on sainted Ed, how David resembles Heseltine, and why BBC political pundi

Gosh, the Blairites are cross! In the Independent on Sunday, John Rentoul, Tony Blair's biographer, put the boot into the sainted Ed with reckless abandon. "He . . . panders to every oppositional instinct in the party. There has been no position taken by the Labour government of which he was a member that he was not prepared to trash . . . Tuition fees, Iraq, the third runway for Heathrow: you name it, he disowned it." In fact, Iraq was invaded before Miliband E even became an MP, while the decision on top-up fees was taken before he entered the cabinet. As for the third runway, there is no reason to doubt that he threatened to resign over it.

The Blairites should calm down. If David had won, he would have tacked to the left, reassuring voters he wasn't a Blair clone. Now Ed has won, his conference speech suggests he will tack to the right, countering the charge that, to use the media's curiously archaic language, he is a "red" in thrall to "union barons". How can the Blairites spurn a man who has already mastered the art of sonorous sentences denuded of verbs and meaning, as in "Real help matched with real responsibility"? I wouldn't be surprised if Ed's leadership turns out fractionally to the right of where David's would have been. Perhaps, as a fervent old Labourite, I should have voted for Miliband D, after all.

Middle-class muddle

The Blairites say Labour must not return to the "comfort zone" of appealing to its core supporters. What comfort zone? The British General Election of 2010, the latest "Nuffield" election study (quote marks because, for the first time, neither of the principal authors, ­Dennis Kavanagh and Philip Cowley, is from Nuffield College, Oxford), has just dropped on my desk. It shows that, in constituencies where more than a quarter of the economically active population are working class, Labour's vote dropped by 7.9 points on average, against 4.9 points where less than 18 per cent are working class. A combination of working-class constituency and a sharp rise in unemployment was "especially toxic" for Labour, causing an average drop of 9.4 points, the study notes.

Nobody thinks Labour can win solely on working-class support, because routine and semi-routine occupations (as the government statisticians now call them) are no longer in the majority. The trick is to highlight how a disproportionate share of national wealth and income is being hogged by the top 10-20 per cent at the cost of everybody else, middle class and working class.

The Tories and their press allies shamelessly pretend that people earning above £60,000 a year constitute "Middle England", and the Blairites often behave as though they believe it. In fact, the median wage is below £25,000.

Close, but no hurrah

Most "nearly men" in British politics probably missed out because they didn't want it enough. Lord Halifax, Winston Churchill's rival in 1940, was more interested in riding to hounds than in high office; he took the Foreign Office in 1938 only after assurances that he could still hunt on Saturdays. R A Butler, who lost first to Harold Macmillan and then to Lord Home, said that, if not elected pope, "one can always be a res­pected cardinal". Rung by a cabinet colleague in 1963 and implored to "don your armour, my dear Rab", he replied: "I take note of your remarks, but now I really must doze off." Denis Healey and Kenneth Clarke both had an obvious hinterland beyond politics: photography and painting in one case, jazz and beer in the other.

However, some failures, such as Michael Hes­eltine, probably wanted it too much. Gordon Brown's misfortune was that his rival was equally single-minded. Having once been barged aside, Brown expended so much psychic energy trying to wrest back the prize that he was exhausted when he finally got it.

My impression is that David Miliband is more in the Heseltine/Brown than Butler/ Healey mould. There has always been something other-worldly about Miliband's intense engagement with politics. He once expressed surprise to me that there should be humour and articles about Christmas food in the New Statesman, and an Oxford contemporary recalled in the Mail on Sunday that he "never saw him even mildly drunk".

For him, the failure to win the leadership will be an immense blow whereas, to Ed, it would have come as no surprise - rather, just business as usual - to lose to his elder brother.


What is the point of the BBC political team?

As the results of the early voting rounds were announced at the conference in Manchester, Nick Robinson, the political editor, butted in to predict a David Miliband win, thus drowning out figures for the destination of some second preferences which, to political anoraks like me, were important.

I was reminded of when Gordon Brown resigned and the political hacks insisted he wouldn't be going to Buckingham Palace that night, even as his car turned down the Mall. Sometimes, pundits should just shut up.

Neither beer nor there

The medical profession's latest bright idea, it is reported, is for pubs to stop serving drink in glasses and instead give us plastic beakers, lest we cut each other's throats. I couldn't care less about wine, which is never much good in pubs anyway, but beer served in plastic cups tastes flat and flavourless.

Still, you can't be too careful. Perhaps all furniture should be removed from pubs in case we start throwing bar stools around (I've seen it happen in films). Or maybe pub landlords should inspect the length of our nails to ensure we don't gouge anybody's eyes out.

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 04 October 2010 issue of the New Statesman, Licence to cut

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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.