Brown premiership bombshell - fuse ignited

You may have already heard this week's BBC Radio 4 Any Questions programme broadcast last night with Frank Field MP on the panel. I am just catching up. A chill went down my spine in his analysis of the predicament facing Labour MPs. In a nutshell, he is forecasting that unless the Prime Minister comes forward with a simple straightforward compensation package for the 10p tax band abolition, the 2008 Finance Bill provisions to abolish the 10p tax band will be defeated in the House of Commons. Listen for yourself here's the link to Any Questions page for the listen again facility. It starts about 10 minutes into the programme. Is he right?

Comments

[Robert]

I must be missing something Labour has said they will compensate people, Frank field warns Brown, Labour says yes yes, we will compensate. OK people will get compensation, but all this running back and for Will he, wont he, is making people take no notice of the other problems, it's like Frank Field and Brown have come together look Frank you attack me, I'll answer , play on this for a couple of weeks nobody will notice the rest of the problems we have.

Worrying.

[Mike]

Could Frank Field,who is often touted as possible Tory defector (he seems to be doing their work for them whilst remaining on the Labour benches, bit like his friend hooey Hoey) please just shut up or ship out?

[Robert]

To true Labour should get rid of both, then they can stand as independants and labour lose another two seats, because it seems the local people like Hoey and Field, but hell these days people who are liked by the people tend to be ignored by Labour.

Remeber they deselected a Labour MP in Wales because Blair did not like him, put into place one of his Blair Babes, and lost the seat for the last two elections, and lost it again at the council elections.

[Mike Homfray]

I don't always agree with Frank Field. But on social security issues, he is generally right.

For a start, tax thresholds for the lowest paid are far too high and act as a disincentive to work

Second, tax credits are a mistake. Full stop. They are cumbersome, poorly claimed, and again have lots of built in disincentives. They also assume that only people with children are low paid.

There is a simple solution and that is to raise the tax threshold for the low paid which can incorporate all who lost out who work. A lump sum can be given to pensioners. But a wishy washy compromise is not on, at all.

[Peter Kenyon]

Dear Mike

I'm very sympathetic to your standpoint. But in the context of globalisation, while the bulk of wealth creation is being left in private hands, there is an over-riding issue of financial confidence.

Labour's reputation for sound economic management had been radically altered by the Brown approach.

His capacity for not frightening the capitalist horses while distributing by stealth was remarkable, and which I applauded, until his 10p tax rate blunder.

I had assumed that tax credits were a necessary encumberance while we had a Prime Minister resolutely opposed to reintroducing a higher tax band. Now with Brown as PM I'm not so sure his predecessor was the problem.

He himself has talked about the 10p band being temporary, something which the public record would suggest is post hoc rationalising. Perhaps the same spin could be applied to tax credits as we (Labour Party members) vote overwhelmingly in the last PiP policy review for a higher tax band to recoup the monies redistributed to the low-paid, as you suggest by substantially increasing tax thresholds.

This needs to linked very closely with a major push for the 'living wage' goal to replace the national minimum wage as Labour's 'fairness' objective in the next Parliament.

Remaining Labour-controlled councils could assist by taking up the challenge set down by former London Mayor Ken Livingstone who adopted a London-living wage and had the resources in place to keep tracking it.

[David Floyd]

I think if MPs vote down the finance bill, it's the equivalent of telling Brown he's finished.

It could happen, though.

[Peter Kenyon]

Dear David

Did you hear Frank Field on AQ? That was my understanding of what he said.

[Rwendland]

Dear Mike

I wonder if you've looked in detail at the effects on low income families of your suggestion that "tax credits are a mistake" and your "simple solution and that is to raise the tax threshold for the low paid".

Can I illustrate the effect on a 2 adult + 2 child family, where 1 adult works 38 hours at about NMW?

I'll compare it with a no tax credits regime with first £10,000 income tax and NI 0%, 20% tax thereafter:

scheme: pay - tax - NI + CB + WTC + CTC = weekly-money

2007/8: 210.00 - 18.95 - 12.10 + 30.20 + 38.41 + 81.13 = 328.69

10k-taxfree: 210.00 - 3.54 - 1.94 + 30.20 + 0 + 0 = 234.72

So replacing tax credits with a large tax-free allowance reduces this family's money from £328/week to £234/week.

The plain facts are that parents in NMW jobs do not get enough money to support children in a modern-day non-poverty environment that limits social-exclusion. The NMW would have to go up a lot to avoid this situation without something like tax-credits. I'd like to see NMW go up a lot, but that route runs into the dual problems of pricing jobs out of existance and encouraging more EU immigration. Really large NMW increases has to be pan-EU to avoid large population movement within the EU.

(Example loosely based on table 1.6b of the 2007 Tax Benefit Model Tables. Unfortunately DWP have not produced 2008 edition yet, but tax credits for this family increase a lot in 2008 as part of Brown's anti child poverty drive.)

[David Floyd]

Haven't listened to AQ yet. I imagine Field would be happy to bring down Brown, though.

I suppose MPs will have to decided whether they've got more chance of holding on to their seats with Brown or with him being booted out and the Party in a state of chaos.

I can understand the logic that, if he's not going to make to the general election, it's better if he goes sooner rather than later.