Thursday, April 03, 2008


Were They Counting On Their Fingers?

What do the following highly numerate and on-the-ball people have in common?

All of them have suddenly worked out that Gordon Brown’s final Budget as (named) Chancellor clobbered the poor to pay for middle-rate tax cuts. This was impossible to know until this week – unless you were Ming Campbell, Vince Cable or several Lib Dem bloggers, a whole 379 days ago. On the day of last year’s Budget, rather than a couple of weeks after this year’s Budget, we spotted that Mr Brown had funded his “tax cut” by raising taxes on the poorest two million so they have to pay more.

Prepare yourself: next week, I expect these Tory, Labour and other mathematical prodigies to take up cudgels on behalf of their middle-income constituents, who suddenly find that because their generous-sounding 2p tax cut is funded by doubling their lowest tax band, it’s – gasp – actually a much smaller tax cut than they’d been led to expect.

Our leading political and economic thinkers are evidently suckers for special offers, but not so hot on reading the small print. They’re probably not used to going into a supermarket or a bank without their mums to give them advice, and I bet their online activities involve ordering a lot of bargain ‘V1agra’ (may contain worming pills).

Still, at least they’re just very, very slow rather than as plain deceitful as Junior Minister For Setting Her Undergarments Alight Jane Kennedy, who said it was a way to redirect help to low-earning families. Riiiigghht.

So, doubling income tax rates on the lowest-paid – quite literally doubling, from 10p to 20p in the pound – is actually to ‘help’ them? Perhaps by encouraging them to work harder?

So, shuffling tax rates around so that you have little in the way of changes if you earn over about £18,500 a year but you lose money steeply if you earn under that is Mr Brown’s idea of assistance to low earners?

But, Labour argues, everyone will be better off because of tax credits.

OK, so let’s that that argument a little further.

Getting your own wages is fairly straightforward. But getting tax credits mean you have to fill out all the right forms in order to persuade the Labour Government that it should grant you some of its great bounty through its immense goodness. There are several problems with that argument. It means that, instead of straightforwardly keeping their own money, people must jump through the bureaucratic hoops of a system proven to be riddled with errors and delays – and that Mr Brown would rather pay the extra costs of bureaucracy and intrude into everyone’s lives to decide by his arcane whim what money they ‘deserve’, rather than let them simply keep the money they earn, because he wants to be in control, boss around everyone’s lives, and make his serfs grateful for the pittance he deigns to dole out to them.

Mr Brown has two aims for this tax policy. One is to get a good headline for the middle-income earners he’s terrified are drifting to the Tories; well, that’s been and gone. The other is the Victorian notion that the ‘feckless, undeserving poor’ need to be bossed around ‘for their own good’ and that the Labour Government knows better than they do how to run their lives. So tax credits are designed to get money to ‘deserving’ cases and deny it to others.

And we know that tax credits can’t fill all the shortfall; there simply isn’t the money to do it. As the 2p cut to the standard rate is paid for by doubling the income tax rate for the lowest-paid, that leaves no extra money for tax credits, does it? That’s spending the money twice. I thought it was George Osborne who financed all his commitments by magic money from the pixie tree?

AND THAT’S NOT ALL (as the Labour Government’s going for the language of misleading special offers)!

Labour MPs, as quoted by William Hague – and when you hear that combination, you know that economic literacy isn’t going to be the main event here, even allowing them a whole year to try and work out the hard sums – have been worrying that five million lower-paid families would be worse off after Budget changes to income tax. It’s that worry that Jane Kennedy’s platitudes about the how-do-you-calculate-it, how-do-you-afford-it, how-do-you-justify-bossing-people-about tax credits have been trying to soothe. However, it’s not just lower-paid families that you have to worry about; unless I’ve blinked and moralising Victorian bully Mr Brown has repealed the child labour laws, it’s tends not to be ‘families’ that work as a unit, but individuals.

If you’re a hard-working single person earning under £18,500 a year, there’s not a shred of comfort even if – and it’s a big if – the Labour Government’s sums really do add up. So if you’re younger, or don’t have a family, or can’t have a family, or are anyone who’s perhaps hoping to have kids or get a house in the future and are worrying that under Mr Brown’s brilliant economic stewardship you may not be able to get a mortgage… Bad news. Now you’re having more money taken from you to give to people with more money than you.

Anyone still think Labour is the party that sticks up for low earners?

Update: more on those extremely quick-on-the-uptake Labour MPs on Lib Dem Voice.

Featured on Liberal Democrat Voice

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As someone who is likely to suffer hugely under this development, teetering on a financial knife edge as I am, I noticed this a while ago.

May have to attempt applying for tax credits again...

Good luck with it - I hope you aren't caught in the next round of tax credit cock-ups.

In other news, on Any Questions just now Rhodri Morgan has lied outrageously. Evan Harris criticised the Labour Party because the gap between rich and poor has widened since they came to office... Mr Morgan claimed that was untrue, and just a "Lib Dem charge".

That, Mr Morgan, was a flat-out, shameless, self-serving lie. Unless you're so stupid you don't actually know the economic facts before you say any old thing that comes into your empty head?
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