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In defence of tax credits: We must be the clear anti-poverty party

October 10, 2017 12:37 PM
By Iain Porter in Liberal Democrat Voice

PolicyI was horrified at the proposal, contained in George Kendall's recent article that we cut tax credits to fund lifelong learning accounts. (I assume George was also referring to Universal Credit, the successor to tax credits, and I speak of them here interchangeably.)

Like George, I've canvassed on council estates. I, however, recount emotional conversations with families for whom tax credits are the saviour that stands between them and impoverishment.

I remember the anguish in a mother's voice, juggling her hospital job with caring for her two young sons, as she talked of how the Tory's tax credit cuts could push her over the edge. How would she pay the heating bill? Would she have to take on more debt to buy her son's new school shoes?

With us leading the battle against Osborne's tax credit cuts at the time, it was a vote for us on the doorstep that day, and a voter I was proud we were fighting for.

Poverty during childhood causes long-term damage seen in poorer educational, health and employment outcomes. Families cannot invest properly in their children's futures if they live in constant fear of eviction or are forced to use food banks.

But families with children are particularly badly hit by Universal Credit cuts, like the Tory's broader welfare cuts since 2015. A useful 'poverty calculator' by The Children's Society demonstrates just how much benefit levels have fallen short of the poverty line.

The Institute for Fiscal Studies projects that around a million more children will be in poverty by the end of this decade, with almost half this increase attributable to direct tax and benefit changes since 2015. That's a 25% increase in child poverty, a large part of which is down to Universal Credit cuts. Failing to reverse these cuts, or cutting them further, would be disastrous for a party whose leader has just staked our claim to be the party to tackle inequality.

With two thirds of children in poverty living in a working family, people need jobs that pay higher wages. Better training for all is part of the long-term solution, so I support Vince Cable's proposal to look at lifelong learning accounts. It's an idea being given due consideration by the 21st century economy policy working group.

But George Kendall's proposal to pay for this is both counterproductive and regressive: Counterproductive because tax credits help remove barriers for working people to earn more; regressive because it is effectively a hypothecated tax on the poor, taking hundreds or thousands of pounds directly from low income families (most of whom are in work).

The fact is that accepting the Tory assault on Universal Credit since 2015, or cutting it more, will push millions of children deeper into poverty. That's why just last year, having reviewed a substantial amount of expert evidence, our party's social security policy working group actually proposed increasing the child element of Universal Credit in addition to reversing the Tory cuts. Conference passed the motion emphatically.

Vince Cable's call to lead on the issue of reducing inequality means we should be the clear anti-poverty party. We must stay true to the very first sentence of our constitution and exist to build a society in which "no one shall be enslaved by poverty, ignorance or conformity". Investing in education and training for all should be a fundamental part of this. Cutting the welfare safety net for the poorest children certainly should not.

* Iain Porter is a Lib Dem member who currently sits on the party's 21st Century Economy policy working group