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Those wondering where the expression ‘a week is a long time in politics’ comes from need look no further than the last week. Post party conference season commnetators were talking about a Conservative government lasting until at least 2025 and it seemed that David Cameron was untouchable. It took one week for that comfortable assumption to be challenged, through opposition to the government’s policy to reduce working tax credits – a scheme introduced by Gordon Brown when he was Chancellor of the Exchequer, which was intended to effectively re-imburse low waged workers from the tax that they pay, and incentivise being in work rather than relying upon benefits. After the massive plaudits for the ‘Living Wage’ announcement in his emergency Budget, George Osbourne has instead faced accusations that he’s taking money from those in society who need it most.
To comment on this emotive topic, I felt it was best to refer to an excellent book that I had the good fortune to buy for £1.00 in a Kindle sale – easily the best pound I have spent on a book:
The Blunders of our Governments is well worth reading, because it is a rigorous and academic study of mistakes made by British governments of all complexions, and hence is largely free of partisan bias. It lays in mercilessly to Conservative administrative blunders such as the Poll Tax, but doesn’t spare the rod for Labour administrations either. Chapter Ten indeed devotes attention to the very topic under present discussion – tax credits. Whatever impact the policy may have had (and the authors do recognise that it had some impact on relieving poverty), the chapter nevertheless observes the following:
- The system was needlessly complicated, and often caused intolerable and unncecessary stress to poor and vulnerable people by overpaying the benefit, then demanding repayment in one lump sum.
- By the spring of 2007, HMRC had: “in effect given up on clawing back more than £2 billion (my emphasis) it had overpaid claimants.”
- The Parliamentary Ombudsman had reviewed 393 complaints about the system in 2006-7, of which 74% were fully or partially upheld.
- Independent commentators (which I may say include left-wingers Polly Toynbee and Tottenham MP David Lammy) said that for all of the good done, the policy had been “an administrative nightmare” and ultimately no more than “a sticking plaster.”
The rest of the chapter (and the book) is well worth the investment, so I would encourage you to read it for yourself. As we debate the impact of tax credits however, it is entirely reasonable to make one clear point: just because a policy appears on the surface to leave a section of society better or worse off, does not mean either that the policy necessarily will have that impact, nor that the motivation behind the policy is misplaced.
One of my core convictions regarding politics is that we’re not divided in our aspirations for what we want government to achieve – only in our beliefs as to how those aspirations are to be achieved. It is entirely counterproductive to believe, as sadly significant numbers on the left do, that anyone who proposes a different policy to you must be pathologically committed to the oppression of the less fortunate.
The present debate on the future of tax credits broadly reflects something that authors note – that governments don’t always get it right; not through malicious malintent, but because all of us are subject to human error, or on occasion the necessity to choose a course of action where the best course is not evident beforehand. That the Conservative Party dare challenge the Chancellor on this is far from a sign of weakness, nor is it conclusive proof that the policy is flawed. It shows a party so determined to do right that it will listen to dissent, recognise the right motivation, and assess if the means really will achieve the ends. Conservatives are motivated by a society where families have the dignity and security of regular work, where welfare is (as most Labour moderates would agree) as it is meant to be – a safety net rather than a foundation, and where there is no need for tax credits because only those who can afford to pay tax do so.
On the whole I support the Chancellor’s aspiration to wean the country off tax credits. While I recognise the very real pain of the potential short term cost, I believe it is both better for society and administratively most efficient that we should pay less tax on higher incomes, rather than to have our taxes recycled back to us through HMRC. Not only does it remove the unnecessary, expensive and inefficient administrative burden the authors of the book highlight, it also coincides with two basic principles – you should not pay tax beyond your means to pay, and if you are capable of supporting yourself through work, then you should not need to rely upon state support just to get by.