Are we all in this together?
The Prime Minister is fond of saying that “we are all in this together”. By which he means that in these difficult economic times everyone must share the burden. But it is becoming ever more clear that this is not what is happening.
A few weeks ago, for example, we had the Budget. One of the main things in the Budget was a reduction in the tax rate for top earners from 50% to 45%. In other words if you are fortunate enough to earn £150,000 or more, you will have had a reduction in the tax you pay. In Wales there are only 4,000 in this fortunate category and in Caerphilly, I suspect that there are no more than half a dozen.
In contrast, by 2015 nearly 300,000 people will lose almost £100 a week due to cuts in the Contributory Employment and Support Allowance (ESA). At the end of April, the Government introduced changes which are already having a huge impact on many people in the Caerphilly area.
From the end of April, the Government has limited the Contributory Allowance to just 365 days. After one year an individual will lose their ESA if their partner works more than 24 hours a week, even when they continue to be assessed as being too ill to work. The Government is introducing this as part of a “rolling programme”, so that not everyone is being hit at the same time, but hit they will be.
This is, in my view, totally unfair. It marks the end of the welfare state principle based on William Beveridge’s idea that social security was “first and foremost a plan of insurance – of giving and return for contributions up to subsistence levels”. It is the end of the “something for something” welfare state.
Already I have had a number of constituents coming to my advice surgery incensed that their benefit has been cut even though they are clearly unfit to work.
They are right to be angry. Nothing demonstrates to me better that this Government is the government of the few and not the many.
Wayne David
Labour MP for Caerphilly
An important point that is not mentioned by Wayne David is that very few, if any, of the people on large incomes paid the 50% tax on their taxable incomes. They are wealthy enough, and generally wily enough, to avoid tax, something that a humble employee is unable to do.
This is where the chancellor got his sums wrong. He reduced the tax from 50% on the basis that it was not bringing in much revenue. That bit is true. He then based his projection on the expectation that the well off, whilst not willing to pay 50%, would happily send the government a cheque to the value of 45% of their income. Well, pigs might fly!
If Labour wants to help the low paid then they should introduce a policy of scrapping National Insurance. This is the tax that, along with VAT, really hits the low paid. It is also a disincentive for businesses to take on people, it is cheaper to use overtime. Such a policy would benefit the workers and business. It would also save a huge amount of administration. Sadly I do not think the Labour Party is radical enough to think along these lines. Gordon Brown was very keen to reduce income tax, to get himself good press, whilst making up the loss of government income by raising NI. I have a pay docket in front of me from a low paid worker in Caerffili. Tax is £2.35, for this pay, whilst National Insurance is £6! That is the reality of this “stealth tax”.