Since I’ve been blogging light in recent weeks, I’ve not commented on the ongoing mess that Labour have got themselves into over the scrapping of the 10p rate of income tax. There isn’t much I can add that hasn’t been said a thousand times before. It is of course ludicrous that the Labour backbenchers have suddenly woken from their slumber on this issue, a year after we warned them what the implications of this reform would be. That the BBC have given the rebels such an easy ride for their johnny-come-lately rebellion is just par for the course.
But they do appear to have been bought off remarkably easily. The main measures for helping those hurt by scrapping the 10p rate seem like a total crock.
Let’s start with the retrospective raising of the winter fuel allowance. This is going to apply to all pensioners between 60 and 64, including my partner’s mother who is already roughly Â£50 a
week month* better off due to her enjoying the full impact of cutting the basic rate from 22p to 20p. This is just throwing money around at random in the hope that some of it will stick.
And then there is the pledge to raise the national minimum wage for younger workers. First of all, this will only help those earning the absolute minimum wage for 18-21s. Someone working full time on the London “living wage” (Â£7.20 an hour) will still be whacked by the tax rise and yet only earns Â£13,000 a year. Secondly, it should be pointed out that any such an increase will mean that at least some of the cost of raising the winter fuel allowance is going to be paid out of increased tax revenue generated from young earners. The very lowest earners are going to be subsidising a benefits rise that will help many of the wealthiest (and yes, I do accept that the winter fuel allowance helps poor people as well, but still).
I’m all for raising the NMW for young people so it is comparable to the NMW for older workers, but this rise is happening for all the wrong reasons: getting the government out of a fix rather than doing what is right in the first place.
Surely it is unacceptable to have people on minimum wage paying income tax anyway? It is just a deadweight cost to the economy. The government should be working to narrow the gap between personal allowance and the NMW, not widen it. What possible economic reason is there to make employment even more expensive and wages even more inflationary?
But my greatest fear is that if the Labour rebels really are so easily bought off, they will capitulate over 42 days quite easily as well. They really are a useless shower. Give them a totemic act of class warfare like fox hunting to get self-righteous about and they will push the government to the limit. But helping poor people? Defending civil liberties and the rule of law? What is the bloody point of them?
* Oops! Good job I corrected that before anyone else spotted it.