Letter to my MP, trying not to be just angry

I share the concern voiced in many quarters that proposed reductions in tax credits are unfair and will have serious negative effects on a large number of working people.  When even the Sun raises its voice in opposition the government surely cannot ignore the many objections raised.

When Gordon Brown introduced tax credits it was against a background of punishingly low wages.  (I knew a security guard who worked a 72-hour continuously on-duty weekend shift to be not a very rich man at all.)  And, so that employers did not simply leave it to the government to pay their workforce, the minimum wage came in alongside.

Over the years since then the appalling administration of tax credits has improved, and real time information has made it far more workable, but the amount paid out under this heading has increased significantly, as ministers of your government never tire of reminding us.  Partly it was government policy to increase coverage, but much of the difference may be due to changes in the way the British economy works, with employers increasingly relying on the state to keep their workers alive despite the original intentions.

I therefore agree that a rebalancing is desirable, with employers becoming responsible for a greater proportion of wages paid.  Apart from anything else it would bring a greater degree of honesty to the world of employment.

The chancellor's declared intention to raise the minimum wage significantly over the next five years is therefore welcome, though his decision to restrict this rate to workers of 25 and above is unreasonable.  Such a series of pay rises could sensibly be matched by reductions in tax credits, so that workers in a particular low-paid position in 2020 would be in effectively the same position as those in 2015, but with employers taking a greater responsibility for their earnings.

The chancellor's decision to label this increased minimum wage a "national living wage" is unfortunate and misleading since, as you will know, the Living Wage Foundation's 2015 pay rate is much higher than the proposed "national living wage" for April 2016 and their 2015 London rate is already around the level that Mr Osborne has indicated for his country-wide hourly rate in 2020.

Most disturbing, however, is that the plan is not to withdraw tax credit payments in parallel with this healthy upward nudge in minimum pay rates.  Instead, the entire reduction is to be done in one go, and in year 1.  Many people, including obviously select committee chairs, the Institute for Fiscal Studies and the Resolution Foundation (now headed by Lord Willetts, who knows the insides of a Conservative-led government) have pointed out the significant reductions in income that these cuts represent for millions of working people at the lower end of the earning range.  

How these developments will fit in with other government policies will be interesting to observe.  The ongoing (under-25) minimum wage, for example, is now the basis for a continuously rising income tax personal allowance.  Also, with public sector pay intended to be held to minimal increases over coming years what effect will the "national living wage" have on those at the bottom of government-controlled pay scales?

The Living Wage Foundation is expected to announce its updated Living Wage within the next few weeks, with further announcements in subsequent years.  Since the calculation takes account of tax credits, it can be expected to jump significantly above the current figures.  I have seen several ministers over the last year or so, proudly announcing that their department pays no member of staff less than the current Living Wage.  Will we be seeing a succession of ministers proclaiming their determination to continue to keep up with the real Living Wage, or will things go quiet?

I hope that you will consider my letter and, no doubt, many others and use your good offices to help convince the chancellor that it is not too late to revise his policy so as to avoid the widespread suffering which at present seems unavoidable.