A bungled reform: The Chancellor’s reform of tax credits will have few equals for incompetence – if it gets through Parliament, that is

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The Independent Online

As a textbook case of how not to implement a major reform, the change to tax credits has few contemporary equals. It isn’t the sort of omnishambles that we have witnessed so entertainingly from George Osborne in the past – where the fate of the nation seemed to hinge on the ambient temperature of a Greggs steak slice – but it is still astonishingly clumsy work from a Government that usually plays its politics skilfully. 

Just in time for Christmas, HMRC will be sending its familiar buff envelopes out to millions of families detailing precisely how much they will be losing. There will not be room in the notice – and nor should there be – to include the usual ministerial spin about how it is all going to be made up by the as-yet-unimplemented “national living wage”, or how Britain must become a “high-wage, low-benefit” society. No. HMRC will be forced to do some straight talking to the working poor about the real cut to their spending power.

These missteps were compounded by the awkward comments of the Health Secretary, Jeremy Hunt, in Manchester, who claimed he supports cuts to tax credits because they could help the country “work hard in a way that Asian economies are prepared to work hard”, adding that this would involve “creating a culture where work is at the heart of our success”. A very mixed message for the working beneficiaries of the benefit now to be overhauled.

Then there’s the muddle over figures. Pressed by Mishal Husain on the Today programme on the question of whether any families will be worse off, the Chancellor eventually conceded that nine out of 10 families would be better off – which leaves the question of that one in 10, assuming the Chancellor is right in any case.  

True, tax credits are a very complicated issue. Estimates about how much “average” families, whatever they are, will benefit from the changes are chucked around like the ball at a rugby match. The public has little interest in such abstractions, and will soon have the definitive answer from HMRC anyway. Still, if we do want to know the truth, we have a choice: Mr Osborne; or the many independent and respected bodies, including the Institute for Fiscal Studies and the Resolution Foundation, who insist that some families will indeed be worse off, all things considered. According to the Joseph Rowntree Foundation, lone parents on low incomes – even those who work full time – fare worst under Mr Osborne.

So much for the policy. When it comes to the raw politics of tax credits, things are even worse. Every other party in the House of Commons is against these reforms: the Government faces stubborn, solid opposition there. 

If the Conservatives had a majority of a hundred or so, it might look upon such arithmetic with equanimity. Yet the Government has a working majority of 16; it would only take a few rebels and mishaps to see the measure lost. If Boris Johnson leads the opposition to this reform, then the humiliation for Mr Osborne and David Cameron will be complete.

So even if this is the “right thing to do”, it seems quixotic to blunder into a wholly avoidable political defeat – especially when compromise is possible. As with Iain Duncan Smith’s universal credit scheme, all that is required is a guarantee that no existing claimant will be worse off. If what ministers say is right, they need not worry about creating such a floor.

What was intended, one presumes, to be a parliamentary elephant trap for the Labour Party – to stick it again with the label of the “party of benefits scroungers” – has been badly bungled. Mr Osborne’s reputation for arrogance is one thing, and not necessarily a bar to his future prospects; incompetence, however, is quite another matter.

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