Monday, June 24, 2024
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Tax credits and Thurrock: A councillor’s view

Chancellor’s Choice: The Great Tax Credit Debate.

By Martin Kerin.

Last week, as the Chancellor of the Exchequer suffered a famous defeat over his proposed changes to the tax credit system, I wasn’t gloating, or, indeed, feeling smug.

As a Labour member of Thurrock Council, and a disappointed voter watching on despondently as my Party settles into its second consecutive spell of opposition, I should have been delighted that the new Conservative government had fallen flat on its face within months of winning an unforeseen majority.

Instead, a feeling of bewilderment was what I was actually feeling. The issue of tax credits is intertwined with the issue of the national living wage. Therefore, I was bewildered because, on the actual principle of the reform, I agree with George Osborne: employers should pay their workers a living wage that they can, as the name suggests, actually live on. I also agree with him that the government shouldn’t have to make up the shortfall in wages because employers do not pay their employees properly; socialism is about redistributing wealth – not recycling money through the tax system.

To have seen a Tory chancellor legislate for a living wage and the end of the need for tax credits is something that I, for one, would have been delighted with; as a life-long Labour supporter, I remember the Conservatives actually being opposed to a minimum wage in the first place. Therefore, to see them using the rhetoric of raising the incomes of the lowest-paid is social progress and a nod to the achievements of previous Labour governments. It is an example of the shifting of the centre ground leftwards.

Sadly, it looks as if it is actually just rhetoric, and nothing more. Whilst espousing the the mantra of being on the side of workers, the current government actually wanted to cut the incomes of the lowest-paid in our society. Their changes to tax credits would have actually left some people £25 a week worse off. This is absolutely unacceptable.

No one in work should ever be made poorer because of the actions of the government. Indeed, at last week’s Prime Minster’s Questions, the Prime Minister was asked six times by Jeremy Corbyn to guarantee that the recipients of tax credits would not be made worse off by the reforms.

Mr Cameron failed six times to answer the question. To me, there is a core principle at stake here: you don’t punish low-paid workers who are striving to provide for themselves and their families. Although I disagree with Mr Osborne on many things, I didn’t think that he really wanted to cut the incomes of the people who, to use his words ‘work hard and do the right thing.’ Sadly, it seems, I was wrong.

How did the chancellor end up in this position of thinking that it is ok to cut people’s incomes? Is it because he thought that £25 was not a lot to lose each week? It may not be to him and his advisers, but it is to so many hardworking people in Grays Riverside, Thurrock, and the rest of our country. Unfortunately for the government, it looks like Robin Hood in reverse, even if it wasn’t intended that way.

The second reason for my bewilderment is that it was the House of Lords that had to put the brakes on this and force the government to think again. As someone who wants to see a radical reform of the upper house, it didn’t give me any satisfaction to see the House of Commons come up short against the red benches. For the government to complain that the Lords acted unconstitutionally, is actually trying to deflect away from the deficiencies of their own position. If the government wanted to ensure that the Lords couldn’t have stopped them, they could have (a) included the tax credit reform in their 2015 manifesto (b) included the measure in a money bill. They did neither. The question is: why?

In my opinion, they didn’t include it in their manifesto because cutting the incomes of the poorest workers is not a vote winner. In my opinion, they didn’t include it in a money bill as, in addition to the opposition, many Conservative MPs were and still remain concerned about the effects of these proposals on so many hardworking people; there may have been a rebellion from concerned backbenchers and, in some cases, frontbenchers.

By including these measures in a ‘statutory instrument,’ I feel that the government hoped to smother debate and hide the true effects of them. Had these changes gone through, local councillors, like myself, would have had surgeries full with residents affected by them. As the newly elected Tory MP, Heidi Allen, said in her maiden speech: "choosing whether to eat or heat is not a luxury."

It is unforgivable that the chancellor, through the measures he championed, would have forced many people who I represent to make this choice. I never thought I’d say ever, ever say this: the people of Grays Riverside and, indeed, the whole of Thurrock, are grateful to the House of Lords for forcing the government to pause and think again.

The breathing space provided by concerned peers means that Mr Osborne now has an opportunity. If he manages to secure a living wage which ends the need for tax credits, then he will secure a legacy for himself. If, as I fear, he remains blasé about the catastrophic effects of cutting the incomes of some workers by up to £25 per week, he will still secure a legacy for himself, but not one that he or anyone else would want.

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