One of the rows that the Tories are starting their conference with is over tax credits. A growing number of MPs, including Boris Johnson, have expressed concern about the changes, which lower the threshold for withdrawing tax credits from £6,420 to £3,850 and speed up the rate of withdrawal as pay rises. But today on the Andrew Marr Show, David Cameron made clear that there wouldn’t be a review of these cuts. He was asked if George Osborne might change the plans in the Autumn Statement:
‘No. We think the changes we put forward are right and they come with higher pay and lower taxes.’
They do come with higher pay and lower taxes, but as the Institute for Fiscal Studies made clear right after the summer Budget, these do not compensate for the cuts to tax credits. And those who support the principle of reforming the benefits system so that tax credits do not subsidise poverty pay, like Frank Field, are annoyed that the government has chosen to make the changes not just for new claimants but for existing ones too.
Francis Maude found himself faced with a barrage of hostile questions about this on Pienaar’s Politics, including from the Sun’s political editor Tom Newton Dunn, whose paper is campaigning against the Tories on this issue. He accepted there was no way of ‘doing this with no rough edges, no pain at all’, but that this was about ‘doing something quite big and brave and principled to help to Britain into a better economy, a more productive economy’. He also said ‘we don’t have to take everything’ that Frank Field advises, but didn’t answer the question of why the party has decided to include stock as well as flow, to use the technical terms. The answer, of course, is that just cutting the benefits for flow would not save nearly enough money. But the problem is that the Tories are taking money away from their favourite #hardworkingpeople.
The revolt is growing, but I suspect that it won’t reach its peak until letters are sent out to claimants explaining how much money they are going to lose. Those letters start going out in December, at which point MPs may start to be unsettled by the number of people coming to their surgeries in a panic.
The Conservatives are pushing ahead with this because they feel they have the time and political capital to make the cut now and still be forgiven by voters in 2020. But the question is whether they are basing this assumption on previous cuts, such as those to child benefit that caused a row in 2010, which didn’t hit people in a way that they’d really be smarting still in 2015. The child benefit cuts hit those on higher incomes, whereas these tax credit cuts hit Sun readers, people for whom even small changes in their financial situation can be devastating. Will they still be furious with the Conservatives in 2020? The answer to that question will have a lot to do with whether Cameron and Osborne do end up making changes to their current plan.
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