Better Together’s dismal campaign will weaken the UK in the long-run

Unionists might be ahead in the polls, but they are losing the argument.

Alex Salmond’s belief that independence will be achieved on the back of a “rising tide of expectations” is drawn from recent Scottish political history. It’s no coincidence that support for the SNP boomed in the 1970s following the discovery of oil and gas in the North Sea then slumped in the 1980s as the UK economy entered a severe downturn. 

The near doubling of Scottish rates of poverty and unemployment during the Thatcher era sapped Scotland’s economic confidence, reinforcing the defensive and conservative instincts of the Scottish electorate. No doubt last week’s news that British output has begun to recover after the worst recession in living memory was greeted with the same sense of relief in Bute House as it was at the Treasury. 

Combined with the continued narrowing of Labour’s Westminster poll lead and an increase in English anti-European sentiment, a period of sustained growth (however modest) could help swing things in Salmond’s favour over the coming 13 months. The launch in November of the SNP’s heavily trailed White Paper on Independence might have a similar effect, particularly if it succeeds in restoring the party’s credibility on a range of key policy issues, not least the currency. 

Some senior nationalists think their prospects have already begun to improve. They are convinced Better Together, the official vehicle of unionism, has made a strategic error in trying to flood the media with - as the first minister puts it - “a diet of unremitting negativity”. There could be some truth to this. Even Downing Street was embarrassed by the MoD’s ludicrous suggestion that London might try to designate Faslane nuclear base sovereign UK territory if Scotland becomes independent.

Better Together’s reliance on casual dishonesty as a campaigning technique represents another potential weakness in its approach. A few months ago, it claimed a leaked Scottish government memo contained an admission from SNP finance secretary John Swinney that monetary union would mean a Westminster veto over Scottish budgets. In reality, the document did little more than acknowledge some form of fiscal agreement would be necessary to anchor any prospective post-UK “sterlingzone”. Shortly after, a Better Together press release alleged, quite baselessly, that abuse aimed at unionist politicians by pro-independence activists had been co-ordinated by the SNP leadership. 

As well as lowering the tone of debate, incidents such as these highlight a serious and far-reaching problem for supporters of the Union: even if a steady flow of misinformation and innuendo is enough to win the immediate referendum battle, it is insufficient as a long-term response to the challenge of nationalism. Unionism’s struggle to articulate a compelling, progressive case for Scotland’s on-going membership of the UK lends credence to SNP claims that no such case exists. 

British political leaders do not seem overly concerned with the absence of positive arguments in favour of the current constitutional set-up. They should be. Much rests on the nature of the referendum result. Assuming Better Together prevails (still the most likely outcome at this stage, despite the SNP‘s renewed optimism), failure to secure more than 40 per cent of the vote would be hugely demoralising for the independence movement, while a 40 to 45 per cent vote share could be passed off as a respectable defeat. Anything above 45 per cent, on the other hand, would ensure Scotland’s future constitutional development remained under nationalist control.

With the backing of almost half Scotland’s voters, unionists would no longer be able to dismiss independence as the obsession of a bullying minority at odds with mainstream Scottish opinion. Moreover, the 2016 Holyrood elections would become a bidding war between the SNP and the unionist parties over enhanced powers, something the unionist parties couldn’t possibly hope to win. Any subsequent increase in the competence of the Scottish Parliament would be met with growing calls from the Tory right to restrict the ability of Scottish MPs to vote on English-only matters.

All this underlines the need for Better Together to do more than simply point out the contradictions and inadequacies in the SNP’s independence proposals. Unionism’s intellectual credibility depends on a clear explanation of how Scotland’s social and economic life will benefit from London government over the next 10 or 15 years. Currently, unionists are ahead in the polls but losing the argument. Stemming the tide in 2014 is one thing; holding it back indefinitely is quite another.

Alex Salmond at the launch of the pro-independence campaign last year. Photo: Getty

James Maxwell is a Scottish political journalist. He is based between Scotland and London.

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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.