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Tax credit cuts latest
Insightful analysis by Declan Gaffney Has the cost of tax credits really ballooned?
The numbers here are rubbish, as we’ll see, but the problem with the argument is less to do with the numbers than the logic. Public expenditure programmes can grow for any number of reasons, good or bad. Simply stating that expenditure is higher now than in the past is not even the beginning of a rationale for policy change: if it were, we would be discussing cuts to the state pension (up £35bn since 1999/2000, when tax credits were first introduced) and the NHS (up £65bn). When politicians cite expenditure growth as a rationale for cuts, the obvious question is: what led to the rise in spending? In the current debate, that question rarely seems to be raised.
So there is no mystery about the rise in tax credit expenditure: it was driven by overt distributional choices by Labour governments (the main factor) coupled with falls in real wages since 2007/8. The government’s approach mirrors the factors driving growth. The introduction of the National Living Wage can be seen as tackling the wage issue. But as the IFS have argued, it cannot, as a matter of simple arithmetic, completely offset the cuts to tax credits. Thus, ultimately, the government is making distributional choices, which run in the opposite direction to those made by Labour. It is those distributional choices, rather than trends in spending or lazy allegations about subsidising low pay, which should be at the centre of debate.
Guardian report based on minister’s interview with Today this morning, in which he also said that tax credit cuts were mitigated by cheap petrol amongst other delights….
George Osborne will soften the impact of his planned tax credits cuts if peers step back from a confrontation with the government and instead back a “regret motion”, the Cabinet Office minister, Matt Hancock, has indicated.
In the strongest signal from the chancellor’s camp that he will respond to growing unease among ministers to the cuts, his former chief of staff said Osborne was “very much in listening mode”.
As the government fights to persuade the House of Lords not to throw out the tax cuts altogether, Hancock suggested the chancellor would not act if peers voted for any other option on Monday afternoon.
Speaking on the BBC Radio 4 Today programme, Hancock said: “George is very much in listening mode. The peers this afternoon have the opportunity, through a motion put down by the bishop of Portsmouth, to express regret at this measure without breaking these constitutional conventions, long standing.”
Tax credits: ‘Osborne may soften cuts impact if Lords express regret’
Tax credit cuts in the Lords today from 2.30
http://www.publications.parliament.uk/pa/ld201516/minutes/151026/ldordpap.htm
See also http://www.parliament.uk/business/news/2015/october/lords-tax-credits-si/
Meanwhile ....
George Osborne accused of bullying peers over opposition to tax credit cuts
67 per cent of working tax credit recipients will be made worse off by Osborne’s reforms
Government faces showdown in House of Lords over tax credit cuts
There’s also an urgent tax credits evidence session being held today by the Work and Pensions Select Committee with the IFS & Resolution Foundation
Here’s the CPAG briefing on the cuts for the Lords’ debate today -
http://www.cpag.org.uk/content/lords-briefing-tax-credit-statutory-instrument
I would like to know what the Conservative MPs who oppose the cut think about the level of financial support offered by universal credit. My personal opinion is that Osborne has released that some level of gradual buffering is needed to lead people in to UC.
Wouldn’t usually post something from the S*n but they have run a story based on our briefing today.
White van man will be £2,200 worse off because of George Osborne
This is worth a read.
Tory secrecy on tax credits has come back to haunt them
If the government had been decent enough to put these cuts through as a bill, they wouldn’t be in this mess. And they would also have the ability to introduce amendments addressing the concerns of their critics on the government and opposition benches. But they didn’t. They tried to sneak it in. And now it has come back to bite them.
House of Lords votes against Baroness Manzoor’s fatal motion on tax credit cuts regulations by 310 to 99.
House of Lords votes in favour of delaying consideration of tax credit cuts regulations until government responds to IFS impact analysis by 307 to 277.
[ Edited: 26 Oct 2015 at 07:56 pm by Ros ]House of Lords votes in favour delaying consideration of tax credit cuts regulations until government provides full transitional protection for current claimants by 289 to 272.
That alone is worth the subscription to CPAG as an individual rights member!
Thanks Andy :-)
I liked this quote from yesterday’s Work and Pensions Select Committee hearing, where Torsten Bell, the Resolution Foundation’s new director gave evidence:
When asked about the best way to mitigate the reforms, Bell said: “Tax cuts and the living wage cannot compensate for these tax credit changes. They are not an option. The answer to tax credits is tax credits.”
Tax credit system: experts urge Conservatives to phase in planned reform
I thought that I might try to model, speculatively, some of the effects of the possible ‘softening’ that will be announced in the Autumn Statement.
Any (serious) thoughts on what might be the outcome?
options
1. The full change applies to new claimants only
2. Existing claimants receive a reducing degree of Transitional protection, say
100% in year 1
75% in year 2
50% in year 3
3. Start the migration of Tax credit claimants to UC in April 16