It’s often worth following the opinions of those who don’t share yours. Listening to other points of view can be useful as sounding boards, and for testing your own principles. It’s for these reasons that I follow “CapX” on Facebook, a Right-leaning organisation. They can often cheerlead for the Conservative Party, so when they say something in opposition to the Tories, we should look up and listen. On tax credits, CapX are particularly astute: “It does look, from a distance, as though the Tory leadership misread what happened in May. It was a famous victory, certainly, but it produced a small majority and it was not delivered on a wave of enthusiasm”. For the sake of fairness and One Nation credentials, the Tories should think again.
A point that I and many of my fellow Lib Dems made over the course of the election was that the Tories would not spell out in any detail where their planned £12bn of welfare cuts would fall. It wouldn’t be possible to simply chip away at the edges and trim when committing yourself to such a large figure.Despite this, you can find many quotes from prominent Tories, including the Prime Minister himself, insisting pre-election that tax credits wouldn’t be cut. The policy wasn't in the 2015 manifesto. As CapX have alluded to, the 2015 victory for the Tories was certainly significant, but it was largely as a result of moderates sticking with the devil you know, as opposed to an economically unreliable Labour Party. There is no widespread appetite across the country for these tax credit changes, and the 2015 election win, whilst admittedly impressive, does not vindicate the policy.
The adverse effects cannot be understated. The threshold for Working Tax Credits will reduce from £6,420 to £3,850 a year by next April. The losers of this change are those on low and middle incomes. Despite what the Tories say, the National Living Wage and personal allowance increase won’t offset the losses. As well as the fairness deficit, this doesn’t make sense politically. The Tories were on to a winner. The National Living Wage isn’t high enough, and the personal allowance increase is a policy that was nicked from the Lib Dems (check the 2010 manifestos and the first 2010 TV debate if you don’t believe me), but these two platforms were ideal for the new “party of the workers” mantra. With an unelectable opposition tearing itself apart, the honeymoon period could have been extended. Instead, there is mounting political pressure on the Conservatives, and the One Nation mantle looks hollow.
Jeremy Corbyn’s left wing stances are obvious, but as it stands we have a strange set up where the Labour Party is calling for the tax credit changes to be delayed and reformed in the House of Lords, whilst it is the Lib Dems who have tabled the “fatal motion” designed to shelve the plans altogether. I of course would welcome any move by George Osborne to scrap the plans, but realistically it is not going to happen. Instead, the best we can hope for is a more gradual approach, perhaps with the threshold reduced more gradually, with faster increases in the personal allowance to compensate more effectively.
It is still very likely that the Tories will win in 2020. If they really are serious about being the party of workers, they should think again with their tax credit policy. They have an ineffectual and unelectable opposition in front of them; why throw them a lifeline?
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