Tuesday columns for Newcastle Journal by George Hepburn

Month: May, 2015

Why IDS gave me the worst moment of a horrible week

These things hit you when you least expect them. My  low point of the last ten days was when I heard that Iain Duncan Smith had been reappointed to the Department of Work and Pensions.

Although most of the major players kept their seats in the new blue collar cabinet, there was reason to hope that a fresh broom might sweep into the DWP.

The other ideologues appointed in 2010 – Andrew Lansley and Michael Gove –  had long since departed the stage. John Whittingdale will need to be watched  if he tries to tear up the BBC Charter and Michael Gove should be locked up if he tries to tear up the Human Rights Act.

There is much evidence here for answering the stock A level question of whether the best minister is the man with a mission or the one with an open mind.

Underperforming or embarrassing Cabinet members like Eric Pickles and Grant Shaps lost their seats at the table but Duncan Smith sat tight.

His roll out of the possibly worthy idea of universal credit has been an unmitigated disaster. The scheme is over budget, way behind time and inhuman. The pilot schemes have shown that many benefit claimants have neither the access nor or the skills to claim on line. Their circumstances are too individual and complicated for a computer programme.

So my heart sank at the news that Iain Duncan Smith was to stay on, at his own request, to complete his welfare reforms. The chance to take a fresh look at a lumbering proposal had been missed.

Iain Duncan Smith could do worse than to put a copy of ‘Our Lives: Changing Attitudes to Poverty  2015’ in his red box to read at  the weekend. It tells the stories of twenty people in different parts of the country living in poverty. One of the authors is Sally Young, Director of Newcastle CVS, who organised the launch of the report in the West End of Newcastle a few weeks ago.

The case studies include Maria who lost £50 a week in benefits after being assessed as ‘fit to work’ despite not having been able to hold down a job because of epilepsy and mental health problems for over 20 years. It took nearly two years, much anguish and several hearings, before this decision was overturned.

They include William whose benefits were withdrawn for three months because he did not complete enough job searches. People like William are expected to apply for jobs whether or not they have any realistic chance of getting them.

They include Laura, a care worker on a zero hours contract, who has to fit ever longer hours around caring for her children.  Her husband has a full time job but Laura says ” We are working longer hours but finding it harder and harder to keep our heads above the water.”

Our Lives harks back to a similar ground breaking report written seventy years ago and the authors conclude that “the tendency to judge people in poverty and blame them for the problems they face seem as strong now as it was in the 1940s”

It reminds me of the Victorian  distinction between the ‘deserving’ and the ‘undeserving’ poor.  If life was made unpleasant enough in the workhouse, the ‘undeserving’ would be pushed into getting themselves together.

Reducing the amount any one family can claim in benefits, has got more people back to work according to the DWP figures. So now Iain Duncan Smith will reduce the benefit cap even further.

Don’t be taken in by the idea that people from humble beginnings, like Sajid Javid, can achieve great things just with the magic stardust of aspiration.  Barack Obama nailed that fallacy: the  poor are expected to pull themselves up by their bootlaces, even though they do not have the boots. Malik actually came into Downing Street from the boardroom of Deutsche Bank not from the back streets of Rochdale.

The new blue is all about “aspiring working people” which implies that if you are out of work, you do not have aspirations. Don’t believe it!

Now Iain Duncan Smith is charged with finding a draconian  £12bn of cuts in the working age welfare budget. This is four times the cuts achieved in the last parliament. One of the great unknowns is where the cuts will come from.

As the Chancellor prepares an emergency budget in July for what he describes as ‘ working people’, will he give any thought for those who cannot work or  cannot find a job or who struggle on low and insecure wages?

 Give us a job

The April fool’s joke in our house was that Waitrose has bought up the garden centre just round the corner to open a new supermarket. This followed extensive analysis of where their best customers live.  Mrs Hepburn’s face lit up.

We are lucky enough to be the kind of John Lewis and Waitrose family that the Labour party pundits want to attract. But for me, at least, the last manifesto was not radical enough. Where were the alternatives to austerity, the challenges to big business or the reappraisal of nuclear weapons?

The blasts of criticism from New Labour grandees in the days immediately after Ed Miliband’s defeat were insensitive. Playing in the centre of the park, risks losing the wingers to UKIP or the Greens and parting company with traditional Labour supporters.

It is a desperate conundrum. There is also the question of how to win back those forty seats in Scotland without which Labour may not get back into power in my lifetime.

A democracy needs a strong and coherent opposition. As someone reared in the Labour tribe, it hurts me deeply. As someone who has only slightly less experience at Westminster than the admirable Keir Starmer, I am considering filling in application forms for the all the current vacancies for party leaders. I may not get the job but it would have improved my standing with the  DWP.

Id vote for the party that put up income tax

A plain brown envelope dropped through my letterbox last week. This is my first year of completing a self assessment tax form.

William Pitt the Younger introduced income tax in 1799 as a last ditch attempt to pay for the crippling costs of the Napoleonic Wars. He had already introduced taxes on land, servants and dogs.

It was a temporary wartime measure set at two shillings in the pound for the better off; with a sliding scale for those on low income and exemptions for the very poor.  It was a very sensible attempt by a Tory Prime Minister to get at the rich.

The French were expected to invade any day. With maybe an element of self interest, City bankers made a substantial voluntary contribution to fight the war and their donations were matched by members of the royal family.

Perhaps the Gods did not like the idea of income tax as it was a year of great privations.  In her fascinating study of everyday life during the wars, ‘In These Times’, Jenny Uglow recounts that there was still snow on the fields in May, floods in July and that in the Autumn the crops failed.

The following winter, the oats were left uncut in Northumberland; a soup kitchen was set up at St Nicholas workhouse in Durham and there were riots over the cost of corn in Sunderland. Almost certainly the football club was fighting relegation.

Taxpayers in Pitt’s day were as intimidated by their brown envelopes as I was last week. They sought help from vicars and bankers to fill them in.  Some did not bother to complete the forms at all. Tax evasion has always been rife and perhaps not sufficiently castigated for what it was: a fiddle and a crime.

The unpopular tax was dropped after the war but reintroduced by a Conservative Prime Minister, Robert Peel, in 1842 and reduced to more manageable levels by another Conservative Prime Minister, Margaret Thatcher, in the 1980s. Her predecessor, James Callaghan, had left office with the standard rate set at 33% and the higher rate at 83%.

Last week, yet another Conservative Prime Minister declared that, if he is re elected, he will legislate to prevent any increase in the current 20% rate for the life of the next parliament. Mere promises are not good enough any more.  Indeed, the Conservative Party hopes to reduce tax rates and hence the role of the state, still further. Along with those on welfare benefits, servants and dogs should be worried.

Income tax remains the single most important source of revenue – in 2014 about it constituted one quarter of total receipts. National insurance and VAT are poor seconds.  It is also, to my mind, the most straightforward and fairest way to raise taxes.

I have never believed that high rates of tax act as a disincentive for the very rich to create so called wealth. Neither are they likely to depart these shores.  Tax cuts during a recession are unlikely to boost the economy and increase government revenue in the long term.  But politicians believe tax cuts are popular with the voters and no major political party dares increase them.

I have sat through three election hustings in the last two weeks. The one question that stood out for me was from a woman in Prudhoe with a chronic illness who required regular medication. She asked whether she might look forward to the return of free prescriptions.

The Green candidate offered some vague hope and the Labour man referred affectionately to the memory of Nye Bevan but the overall tone, set with admirable honesty by the Conservative candidate and endorsed by all the other parties, was scathing.

In the current economic climate and for the foreseeable future, free prescriptions are out of the question, she was told in no uncertain terms. ( Prescriptions are free for anyone on benefits, children,  pregnant women and the over sixties but not for the working poor.)

Allow me a digression: sometimes a leap of imagination is worth more than gold.  A questioner in Hexham said that cash alone could not save the NHS and that a radical rethink of how we provide health services is needed. She said afterwards that only the Liberal Democrat came anywhere near understanding what she was on about.

It is depressing to see the extent to which all the major parties, apart from our friends in Scotland, accept that we face more years of austerity. It takes an American Nobel prize winning economist to point out that all the other European countries have now abandoned austerity measures.

Writing in the Guardian last week, Paul Krugman argues that “ the austerian ideology that dominated elite discourse five years ago has collapsed, to the point where hardly anyone still believes it. Hardly anyone, that is, except the coalition that still rules Britain – and most of the British media.”

Krugman should sadly include the Labour Party too which would cut more kindly but which, until last week’s Question Time, wrongly accepted the blame for the mess we are in.

We do have a choice. We could stop cutting expenditure and we could increase government revenue to help  the woman paying prescription charges.

The Institute of Fiscal Studies says that the tax raising measures in all the party manifestos fall far short of funding their proposals. It points out that tax thresholds have not kept pace with inflation which means we are paying proportionately less tax than five years ago. It doubts whether perusing tax dodgers will produce anything like the vague and vast sums claimed.

If we want decent public services in our schools and hospitals we have to pay for them. If we believe in reducing inequality, it has to come out of our pockets. I would vote for a party that increased the basic rate of tax to 25% and the higher rate to 50% – which would still be less than in Callaghan’s day.  Would you vote for that too?