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So who pays?

Gavin Kelly

This post first appeared on Gavin's New Statesman blog.

Just in case you were under any doubt about where the burden of today's widely expected cuts to tax credits will fall, the chart below should make it clear. Over 75 per cent of the pain of today's changes to tax credits is felt by the bottom half of the income distribution. The vast majority of these from families with children.

The decision to scrap the planned increases in Child Tax Credit (hitherto the coalition's one emblem of its commitment to tackle child poverty), together with other cuts to Working Tax Credit, will mean more than £1.2bn of cuts in 2012.

The onslaught against working families continues

Gavin Kelly

This post first appeared on Gavin's New Statesman blog.

If today’s report proves correct then tomorrow Nick Clegg will announce a further blow for low-to-middle income families in order to pay for a new programme for the young unemployed.

Let’s start with the better, latter, half of that sentence. The new programme will, according to insiders, walk and talk like Labour's 'Future Jobs Fund' which offered incentives to employers to take on 18-24 year olds who had been out of work for more than 6 months.

Obama: Mr 99%?

Gavin Kelly

This post originally appeared on Gavin's New Statesman blog

Just a bunch of 'kids and kooks' or the early and messy stirrings of a deeper shift in US politics? That's the question pre-occupying US politicians and assorted commentators from left to right as the one month old occupation of Wall Street spreads to a growing number of cities.

They call themselves the '99%' - representing they say everyone apart from the super-rich and powerful. On the left the nacsent movement has been lionised by Naomi Klein as 'the most important thing in the world' with self-conscious comparisons made to the recent uprisings in Tunisa and Egypt as well as the 'indignados' in Madrid and those on the streets in Athens. In contrast, high-brow centre-right commentators view it as inchoate, unimaginative, and amateurish: all slogan, no proposal. Grow up, put on a suit and do some hard policy work is their message.

Getting the measure of a better capitalism

Gavin Kelly

This post originally appeared on Gavin's New Statesman blog

Today the Institute for Fiscal Studies has launched an Exocet at the Coalition's claims to be a one-nation government taking a lead on poverty reduction. Nearly all measures of poverty are set to rise over the next five to ten years and the Coalition's policies are part of the cause.

But underneath the headlines the IFS analysis serves a less likely purpose. It provides timely grounds for questioning some of the key measures we use to judge progress in our society. In particular, it raises difficult questions about our reliance on a formula that says 'GDP growth plus poverty reduction' is enough.

The only way is up? The minimum wage and Britain’s low paid workers

Gavin Kelly

This post originally appeared on Gavin's New Statesman blog

Tomorrow sees a 15p pence per hour pay rise for Britain’s lowest paid workers. Of course, every penny helps, but don’t expect to hear much gratitude. With RPI inflation running at 5.2%, this year’s VAT increase still being absorbed, tax credits being stripped back and any number of other pressures on the cost of living, this year’s increase won’t allow Britain’s low paid to stand still never mind move forward. The best that can be said is they will be getting poorer (given inflation) at about the same rate as those on average pay.

Taxing times for the coalition (contd...)

Gavin Kelly

This post originally appeared on the New Statesman blog

Just in case there was any risk of the coalition row on tax policy cooling down for a day or two, along comes a new report today, Tax and the Coalition, to fan the flames.

We do, of course, need to bear in mind that in this choppy pre-party conference period, there is bound to be a rash of publications appealing to the party faithful and burnishing the author's credentials in their eyes. Nonetheless, Lord Newby -- author of the report -- is a well connected Liberal Democrat peer and tax-expert, known to be close to Vince Cable. His report pulls no punches. The 50p rate must be preserved until fiscal consolidation is achieved; the Laffer-curve economics of those on the right calling for its abolition is dismissed; and a raft of tax raising measures are proposed that would hit the seriously affluent including a mansion tax on properties over £2m (served up with a swipe against Eric Pickles), an increase in capital gains tax, a land value tax, and further anti-avoidance initiatives.

America's skills crisis carries lessons for Britain

James Plunkett

This post originally appeared on the New Statesman blog

Yesterday's FT contained one of those ominous stories that only grow in significance over time - the findings of a survey by Nielsen that reveals a huge, looming skills shortage in the US as the baby boomer generation retires.

In the next five years, America's top 100 industrial companies face an average training bill of $100m to fill the gap between these older, retiring workers and the younger, less educated cohort coming through to replace them. It's payday - in a very real sense - for an economy that has long been under-investing in its people. And it's a warning sign to economies like the UK that, when it comes to investing in skills, you can't afford to take your eye off the ball.

Dilnot survives the Russian front... for now

Gavin Kelly

This post originally appeared on Gavin’s New Statesman blog

Social care is a minefield for politicians - and the Dilnot report offers no easy option for the government or the opposition.

"One of the three Russian fronts of Whitehall". That's how a very senior Whitehall mandarin described social care to me over a decade ago. Alongside housing benefit and local government finance, social care has long been seen as one of Westminster's most difficult policy challenges.

For another interesting blog on Dilnot read Matthew Taylor