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Young, angry and . . . right? Owen Jones meets the Occupy London protesters

In the spirit of the Wall Street action, a disparate group of protesters is taking over some of Britain's most iconic public spaces. But what will the legacy of Occupy London be, asks Owen Jones.

It was a few days before Margaret Thatcher marched into Downing Street in May 1979, but as far as the then Labour prime minister, James Callaghan, was concerned, the game was already up. "You know, there are times, perhaps once every 30 years, when there is a sea change in politics," he told his adviser Bernard Donoughue. "It does not matter what you say or what you do. I suspect there is now such a sea change - and it is for Mrs Thatcher." His pessimism was well founded. The postwar consensus, with its pillars of a mixed economy, strong unions and high taxes on the wealthy, was coming to an end. Callaghan could no longer preserve the disintegrating centre. What became known as Thatcherism - or neoliberalism - emerged victorious.

As I stood in Finsbury Square just outside the City of London, on Sunday 23 October, I could not help but be reminded of "Callaghan's Law". Around me was the first offshoot from Occupy the London Stock Exchange, a protest camp set up eight days earlier. A couple of dozen tents were neatly arranged in rows (apparently to comply with health and safety regulations) and several protesters were dancing cheerfully as a brass band called Horns of Plenty belted out left-wing anthems. It was just the latest addition to the fastest-growing political force on earth: the Occupy movement, which now has a presence in up to a thousand cities. Was this the most compelling sign yet of a "sea change" - of a global repudiation of the neoliberal order that began teetering when Lehman Brothers collapsed in 2008?

This drive to seize and hold urban space for political ends was born during the Egyptian revolution this year. Unlike the occupants of Finsbury Square, the Egyptian people directed their fury chiefly at a tyrannical regime, rather than the financial elite; but the images of defiant crowds occupying Tahrir Square beamed across the planet have inspired a new generation on every continent.

In May, thousands of young Spaniards, radicalised by a youth unemployment rate that has topped 40 per cent, defied legal bans and seized Madrid's main square during local elections. The indignados (the indignant) took on the political establishment: they urged voters to vote for neither the governing Socialists nor the opposition, conservative People's Party.

The wave of occupations specifically directed at financial centres began nearly six weeks ago on Wall Street, New York. Occupy Wall Street set the tone for all those that have followed: run by open assemblies and working groups with remits ranging from outreach to direct action, and organised primarily through Twitter. And there is the slogan - "We are the 99 per cent" - reflecting a sense that the overwhelming majority are being made to pay for the economic crisis while the wealth of the top 1 per cent continues to grow. You can see why this line of attack resonates in the US, where real wages have stagnated since 1973 and where - under George W Bush's benighted presidency - 65 per cent of economic gains went to the top 1 per cent of people.

“There is no typical kind of person that is attracted to the movement," says Karanja Gaçuça, who is co-ordinating press for minority groups at Occupy Wall Street. "We have professionals, students, unemployed folk, parents with their kids, as well as people who identify as the 1 per cent economically." The basis for unity is a deep-seated resentment at the response to the financial crisis. For Karanja, it is an attempt to take on a three-decade-long consensus based on low taxes for the rich, deregulation and privatisation; to reflect "shifting sensibilities", as he puts it. "There's a paradigm shift whereby people are thinking about the question of fairness and equality, and access from a human perspective rather than from a purely profit perspective as has been the sensibility over the past few decades."

The polls suggest that is true. A survey this month for Time magazine showed that 54 per cent of Americans had a favourable opinion of the Occupy movement; only half as many felt the same about the right-wing Tea Party. Of those familiar with the protests, 86 per cent felt that Wall Street and its lobbyists had too much political influence; nearly eight out of ten felt that the gap between rich and poor "has grown too large"; over seven in ten wanted financial executives prosecuted for their role in the economic crash; and nearly as many wanted the rich to pay more taxes.

By tapping in to these sentiments with clear proposals, the Occupy movement could become a progressive version of the Tea Party, transforming the political debate. And, according to a Wall Street Journal poll, that is the hope of many protesters. When asked what they wanted the movement to achieve, 35 per cent opted for influencing the Democrats the way the Tea Party has influenced the Republicans (the next most popular aim, breaking "the two-party duopoly", registered 11 per cent support).

Superficially, the hundreds of protes­ters camped outside St Paul's Cathedral and sites in other British cities, including Edinburgh, Newcastle and Bristol, are simply a British version of the US Occupy movement. They have yet to make the same impact, however, and the St Paul's authorities - after initially allowing the protesters to take shelter - announced that it would close its doors until the camp leaves. And although the occupiers feel strongly that they are part of a global struggle, it would be wrong to divorce these ongoing protests from the wave of actions directed at the Tory-led government over the past year - from the 52,000-strong student protest on 10 Nov­ember 2010 to the waves of university occupations, protests and public-sector strikes.

“It's not workers, it's not students, it's people from all walks of life taking over a public space in a way that certainly wouldn't have been possible without the student movement and without even things like the 30 June strikes over pensions by teachers and civil servants," says Michael Chessum, 22, one of the leaders of the student protests.

Like its US counterpart, the British occupation has been criticised for lacking a clear plan of action. This is not entirely fair. The Occupy London general assembly agreed on a statement of overall aims on the second day of the protest, denouncing the financial system as "unsustainable", refusing to accept cuts in public spending "as either necessary or inevitable" and demanding "structural change towards authentic global equality". Chessum believes it is far too soon to be developing detailed demands. "I don't have a plan and I don't trust people who at this early stage do have a plan . . . Concrete alternatives will take a while to emerge. That could be months or it could be years."

The sentiment is echoed through the camp. "It's about raising consciousness, isn't it?" says Matthew, a 38-year-old IT worker. "I think it's disingenuous to put the emphasis on us to provide all the answers. It takes time to come up with answers." But, for other activists, the movement will have to settle on a defined list of demands at some point. "I think the main issue at the moment is that the protest is about what we don't like and what we don't want," says a 24-year-old charity worker named Chanelle. "I think what's missing is what we do want and what we can practically do."

Links between the protesters and the unions aren't as close as they are in the US, but there are signs of future co-operation. The Occupy London founding statement pledges support for the 30 November public-sector strikes, and Unite - the biggest union in the country - has been distributing blankets. When St Paul's closed its doors and asked the demonstrators to leave, the union called on its members to support the protest. "I think the occupations are very significant. They're a very visual, high-profile image of anger," says Unite's general secretary, Len McCluskey, who addressed the camp on 20 October. "I've been making the point that, in a coalition of resistance, joining all kinds of groups together, civil disobedience is one of the weapons at people's disposal."

However, building an alliance between the occupiers and the unions may not be straightforward. Most protesters I spoke to were not trade unionists; some did not even understand the purpose of unions. Twenty-six-year-old Jack summed up the thoughts of many succinctly: "They have a role but I don't know what they've become." Others were more hostile, arguing that the unions were insufficiently vocal in the face of the government's cuts agenda.

“I think that mistrust will exist on both sides at the moment - no doubt about that," says McCluskey. "There are individuals who have long believed that the leadership of the bureaucracy of the labour movement has betrayed them and let them down - and there's perhaps some good reason for them to take that view."

Though it may prove difficult for the protesters to forge a relationship with the unions, that is as nothing compared to the obstacles in the way of any relationship with the Labour Party. "I think there's a strong attitude that's shared by a lot of us that Labour at the moment isn't an alternative to anything," says Steve Maclean, 31, who is helping to publish the occupation's newspaper, the Occupied Times. "I think a lot of people are very disappointed that there's this grass-roots movement and sentiment, and Labour isn't leading or driving it." It's a frustration shared by Dave Robinson, 31, an unemployed graduate and Labour Party member. "I feel very let down by Labour, and I'm not even on the left of the party." He voted for David Mili­band in the 2010 leadership election.

One source close to the shadow cabinet told me that the occupation wasn't "even on the Labour leadership's radar". If that is to change, it was put to me, "They need to be more specific about what they want to happen, how it can happen and what the Labour Party can do to make it happen." But it is only 17 months since Labour lost the election and the disappointment of the New Labour era runs deep. The last thing most of these activists want is for their cause to be co-opted by the Labour leadership. Many of the Blairite old guard remain influential in Ed Miliband's court. "My concern is that the Labour leadership is so cut off and so behind the political curve that [it is] still playing the New Labour triangulation game of only move when it is completely safe to do so," says John McDonnell, de facto leader of Labour's embattled left. "They are missing the boat."

The Conservatives and their media allies successfully transformed a crisis caused by the banks into a crisis caused by Labour's profligate spending. This movement refocuses attention on the real villains. "It strengthens Labour's argument that people want a different approach to the economy and that the coalition is blaming the wrong people," says Chi Onwurah, MP for Newcastle Central, who has visited the occupation in her own constituency.

It has been an extraordinary year of econo­mic crisis and global tumult - and the international Occupy movement is just one more component of that. "These are all skirmishes of something much bigger and epochal," says the freethinking Jon Cruddas, Labour MP for Dagenham, whose son is taking part in Occupy Edinburgh. "We're in that interregnum [after the crisis] before the new is born and created."

Back in 1979, Callaghan correctly sensed that history had turned against the postwar settlement. Thatcherism offered a powerful and coherent (if undesirable) alternative. History has yet to turn again. "We know, don't we, from past experience, how resilient capitalism is and that this window will not last long," McDonnell says. "Every one of us on the left has a responsibility to seize the moment."

We can see how the pieces could slot together in this country: thousands occupying public spaces, linking up with the students and workers who are due to take to the streets and strike on the day of mass action in November.

A global community of activists is emerging, aware that there is no national solution to this crisis. Labour's leadership may find itself forced to offer a coherent alternative to neoliberalism, whether it chooses to or not.

Owen Jones is the author of "Chavs: the Demonisation of the Working Class" (Verso, £14.99)

Owen Jones is a left-wing columnist, author and commentator. He is a contributing writer to the New Statesman and writes a weekly column for the Guardian. He has published two books, Chavs: the Demonisation of the Working Class and The Establishment and How They Get Away With It.

This article first appeared in the 31 October 2011 issue of the New Statesman, Young, angry...and right?

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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.