Home » News/Views » Credits for capitalists

Credits for capitalists

Should British workers demand the right to working tax credits? The government’s push to reduce them is being greeted with howls of outrage from many. The press is full of examples of people who risk impoverishment when the credits are cut back, which, of course, will be the result in the immediate term.

But the basic problem is that workers are failing to fight for better wages – so tax credits have been allowed to become a lifeline for far too many workers. The employers have been happy, of course, since the tax credit system acts as a giant handout for them.

The current system of tax credits was started by Labour Chancellor Gordon Brown in 1999. Brown launched it with slogans such as “Tackling poverty and extending opportunity” – an admission that many were working for poverty wages, and a deliberate discouragement to wages struggles. Now, the system of credits, including child tax credit (the latter payable to both the working and non-working) has become fiendishly complicated. Around seven million workers are eligible, with around five million actually claiming – a huge number. The cost to other workers is currently around £30 billion.

What isn’t discussed is just what a pernicious con this “benefit” really is. Bear in mind that you have to be working over 16 hours a week to be eligible. So a worker goes to work, but the pay is so low that they can’t live on it or raise a family. So instead of fighting in a trade union together with their fellow workers to force the employer to raise wages to a level which will be enough to live on, the worker claims a top-up in the form of working tax credit. This top-up is provided by other workers through taxation.

'What isn’t discussed is just what a pernicious con this “benefit” really is...'

So one set of workers pays another set of workers to make it possible for them to work for a wage which is so low they can’t survive on it. What a brilliant wheeze for the employers! They don’t have to pay a decent wage, because workers will subsidise them not to. And what’s more, the workers whose pockets are being picked are campaigning for the continuation of this daylight robbery.

Add to this the system of housing benefit – in 2013-14 this cost around £23.8 billion, money that went straight into the pockets of landlords.

When the Thatcher government legislated to abandon rent controls and other regulation of the private rental sector in 1989, concern was expressed in parliament that housing benefit costs would rocket as, inevitably, rents went up. The housing minister Sir George Young responded “Housing benefit will underpin market rents…If people cannot afford to pay that market rent, housing benefit will take the strain.” So that’s ok then!

Recently a London landlord, Andrew Panayi, was ordered to pay back £70,000 after he was found guilty of renting out a storage basement as self-contained living accommodation. He had been charging £975 a month in rent.

How could Panayi charge so much for a lightless hole in the ground? A combination of no rent controls and housing benefit, of course. So workers are pouring money into landlords’ pockets to enable them to charge what would otherwise be unaffordable rents. Panayi rents out 180 properties. His company Ploughcane had net assets of £17 million in 2013, and made an operating profit of £2.3 million. A landlord’s dream

Workers must learn again the lessons we have conveniently forgotten. For those who can’t work because of illness or disability, society must support a decent and dignified life. But for others, it’s been too easy to avoid fighting for wages by claiming for tax credits and housing benefit paid for by other workers. Fight for the right to work, and for the dignity of a decent wage!