Tuesday, 5 October 2010

How Does This Make It Better???

The Tories policies, so far, appear to be characterised by a significant degree of amateurism, and little thought. When New Labour were first elected, they hit the ground running, with a series of big policy announcements, which, agree with them or not, had clearly been well researched, and were implemented efficiently. So far, the Liberal-Tory record has been the exact opposite, from the fiasco of the Building Schools For the Future announcements, to the announcement of withdrawing free school milk, to yesterdays, ill-thought out, announcements on Child Benefits, to today's rushed announcement of a Married Couple's Tax break, which seems to have been announced only to counter the massive opposition they have faced in their own ranks, and from the Tory press to yesterday's gaff.

As I wrote in my post, "Who Are The Middle Classes?", its not as if someone earning £44,000 a year is rich. In fact, many of them will be working class. They are a far cry from the true rich whose annual income is measured in multiples of ten, a hundred, and a thousand of that £44,000. A young widow, earning that £44,000, with three kids, would stand to lose a couple of thousand pounds from the cut in Child Benefit. She might be a train driver, or else, struggling to buy or rent a house, in London, might have had to take on a second job, in order to get above that figure and survive.

Meanwhile, next door, might be a couple, who have a large amount of disposable wealth from which they draw a sizeable unearned income, having built up a large Tax Free Pot of ISA's, and Tax Free Government Savings Certificates. They top up their Tax Free Income by working enough to each keep below the higher rate of tax. This couple, with considerably more income than the widow, will keep its £2,000 of Child Benefit!

Now the Tories have proposed introducing a Married Couple's Tax Allowance,but, rather than alleviating the unfairness, of their existing proposal, it will compound it. Being unmarried, the widow will not qualify for this additional Tax Allowance, but her better off neighbours will!!! It was suggested that the Allowance could be as much as £2,000, doubling the widow's disadvantage. It has also been suggested that, in order to overcome objections that the Child Benefit changes encourage women to go out to work, rather than stay at home to look after the children, the Tories were also looking at introducing the possibility of couple's transferring their Personal Tax Allowances. But, this would even more disadvantage the widow. With a basic personal allowance of £7,000, the widow would have no husband who could transfer his allowance to her, whereas all of her, better off, married, neighbours could maximise the use of their Tax Allowances to minimise their tax liability. For example, she might have another male neighbour with three children, who earns £53,000, but with his wife's £7,000 allowance, and the additional £2,000 Married Person's Allowance, he would drop below the top tax rate band, and would thereby qualify to continue receiving the £2,000 of Child Benefit!!!!

As one news reporter said today, some of the Tory activists are already in a panic. This was the first tough decision and the leadership have blinked, and looked for a quick get-out. In coming months, there will be far tougher decisions than this, and far more opposition coming from within the State, from those affected, and from Liberal and Tory MP's already seeing the effects it will be having on their job prospects. It is a sign of the weakness of the Coalition. They may have framed their rhetoric in Thatcherite terms, but these are not the same level of class warrior as Thatcher. We should take heart from that, and apply the pressure needed to break this Coalition apart as soon as possible.

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