Delay in tax credit changes the sensible next step

There are numerous aspects to the tax credits debate which should probably be dealt with distinctly. Let us try to do so in three main areas.

Firstly, are the Conservatives right in principle to change the system so that the burden on subsidising low pay falls on the business not the taxpayer? In my view, yes, very much so. Pay should be at a significant enough level that anyone in work is better off than anyone opting not to work, and anyone working full time is better off than anyone working part time – with certain exceptions (albeit perhaps one around parenthood).

Secondly, are the Conservatives right to do this as part of their plan to cut the welfare bill and close the deficit? There, I don’t think they are. Welfsre should always be distinct from budgetary deficit-reducing. They should be doing this because it is the right thing to do, not because they want a quick fix to their somewhat adventurous claim that they can close the deficit in a single term.

Thirdly, has the Lords a right to intervene? There I really do see both sides, but also I see that both sides are hypocritical. Conservatives are suddenly finding the Lords being unelected to be troublesome; and others are suddenly finding it more in touch with the people than those the people elected. Both sides, in other words, need to think again.

The constitutional issue is peripheral to the direct impact on changes to tax credits, which I support but which are being moved through too quickly. A three-year delay at least in implementation would mean wages had risen to even up the loss in most cases, still close the deficit on the welfare side, and would give people time to plan. That is something which is politically deliverable surely. It is the right response now.


3 thoughts on “Delay in tax credit changes the sensible next step

  1. Other paul says:

    Generally agree, but I can’t see how cutting tax credits forces the private sectors hand into increasing wages… does this not drive people into (voluntary) unemployment? Surely this is the opposite way we should be heading?

  2. other paul says:

    That’s 5 years away Ian, I’m not sure how this is adequate justification for this, wouldn’t this make more sense if it was introduced at the same time?.

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