The rising aspirations of Labour’s core voters have been shaped by 10 years of progressive social policy.
But fiscal policy has sometimes been the tripping stone for people whose aspirations require an empowering, not an interfering, state. A homeowning, car-owning, working electorate with toddlers at nursery school, teenagers at university, anticipating a planned retirement is a different proposition from 1997.
Some of the debate focuses around targeting versus universalism, ending poverty or encouraging enterprise, and recognising the antipathy people feel about having their personal finances micro-managed by the state.
The 10p tax rate abolition hit all the wrong buttons. It played off the working poor against those on benefits, the childless against families and compounded the discrimination already felt by young single workers. But there are other critical points where our tax and benefit system hits at what should be our core vote.
One is the point at which people come out of any support from tax credits, either because of rising incomes or changing family circumstances. A constituent of mine who had finally succeeded in becoming a primary school teacher was sent a schedule to repay tax credits overpayments that lasted until 2036.
Another is the transition out of work and into retirement, when people on lower incomes, especially women with limited pension rights, struggle with the complexity of pension credits.
And, increasingly, with pressure on interest rates, there is a growing awareness of the inequality in levels of support for house buyers, especially first-time buyers, compared with those in rented property.
So there are a few measures that can help to restore the perception of people in Middle England that the tax system works in their interests and not against them:
* A simpler form of child support, such as the proposals put forward by David Blunkett and others for a big increase in universal child benefit, with taxation of it for those on higher-rate income tax.
* A radical overhaul of the tax credit system to provide simpler, more flat-rate bands of support based on some clear and simple criteria. It cannot be acceptable for people to have to report every change in their family circumstances to the state. There is also a need for people to be able to talk to someone face to face about the service.
* More help for first-time homebuyers, and support for mortgage repayments for homeowners who get into financial difficulties, possibly through some form of shared equity. This would be risky, and carry a moral hazard. However, it has to be wrong that a tenant who loses their job can get housing benefit, but a homeowner has to wait for nine months to get support unless they have taken out insurance. If the present level of mortgage arrears tips over into repossessions, there will be substantial practical as well as political difficulties in managing an increase in homeless families.
* Tax cuts on the most sensitive goods and services, including fuel. Much of society has been prosperous on the back of ready access to cheap credit and a buoyant jobs market. Changing circumstances are going to limit spending power, and this time the government may have to consider borrowing to deal with the pinch points.
Middle income, Middle England has moved on since 1997, and needs to know that we have moved too. The tax system provides the most powerful means of convincing this new electorate that we’re on their side.
i have been an avid labour supporter since a child following my mum but now as a struggling working single mum i must say i amswinging to tory with angers me as i thought labour were for working class well obviously not now i am in more debt than ever i amunder threat of loosing my home my minimum wage and tax credits just cover my bills with no luxuries of school shoes or clothing my daughter needs while i watch my town be flooded with other countries people but hey they better off than me they get funding and grants for whatever luxury they want crime is horrific what is the point of living any longer this is a question i ask my self every day i cannot work any more than i do but im loosing everything why i have always voted for labour a party i thought was here for me well now i dont know who they they for except mr brown himself y should he worry about petrol prices like us and food prices he does not struggle with minimum wage he does not even pay for his petrol do something labour before u loose this country if u have not already
Sally Keeble for Prime Minister I say!
She has hit the nail on the head here. The economy and society have changed since 1997. It’s all very well for progressives to talk about poverty, but we need to think about the consequences this has bringing to the middle class. Poverty cannot be eliminated by taxing the middle class to the hilt, because doing it this way undercuts the incentives for people to take on more demanding and higher skilled jobs.
All progressives should remember that for each additional handout provided to those on the lowest incomes, an indirect increase on the tax burden of middle class people also takes place. This is because the gap between the two groups falls, making the middle class worse off for taking on a higher paid job.
And there is the simplification argument that the above article does much to address. We’ve reached the stage now where the money provided through the Child Tax Credit could be channeled through Child Benefit with very little additional cost. More than 80 per cent of families receive the Child Tax Credit. The article has suggested the taxing of Child Benefit to reduce the cost, this is definitely a sensible step. I would definitely say that investment in Child Benefit is a better way of reducing poverty than the Child Tax Credit (which now has a 39% taper withdrawal rate).
Ms Keeble has demonstrated strongly her understanding of middle class woes. She is well-respected by the more moderate elements of the press. She is what New Labour should represent, but doesn’t in my opinion.
I believe she would make a good centrist candidate and should definitely consider standing in the contest if the position of leader (or Prime Minister) becomes vacant.