Hostile article in the Telegraph shows the extent to which New Labour's Gordon Brown has been extending "tax credits" so that almost 1/3 of the UK population are on some sort of benefit.
Among the advantages to him of tax credits are 1) the burden of administration falls on the employer and the recipient 2) it avoids a poverty trap for people who need some benefits, so that they are also encouraged to be productive 3) it can massage the figures so he can choose not to call them benefits. The disadvantage from a more radical point of view is that they do not amount to a full citizens income: people living solely on benefits are still caught in a benefits trap. article below -- Chris Burford Brown puts millions of Britons on benefit By George Trefgarne (Filed: 19/04/2002) GORDON BROWN'S tax credits are turning Britain into a nation of benefit claimants, with nearly one in three adults soon to receive state handouts of one kind or another. Budget tax credits are likely to fuel a huge rise in social security claims He has almost tripled the number of families receiving benefits to nearly 6.5m, according to research from the Institute of Fiscal Studies. He had also nearly tripled the number of pensioners receiving special help. About 5m will be paid the new pensioners' tax credit, compared with 1.7m claiming income support, which it replaces. Preliminary estimates are that somewhere near 13m adults will soon receive benefits, including the new tax credits invented by Mr Brown. The total adult population is 47m. Another 11m claim the state pension. The explosion in numbers means Mr Brown is presiding over a massive increase in the social security budget. It will top £138 billion in three years time, or a quarter of government spending. Despite proclaiming that the National Health Service was the focus of his Budget, Mr Brown has also been generously uprating benefits and rebranding many of them as `tax credits', which are paid direct into salaries through the tax system. In 1997, the last year of the Conservative government, benefit spending was £80 billion. This year, social security spending is expected to be £109 billion, but Mr Brown has artificially held down the total by classing tax credits as "negative taxation". They are worth £4 billion, so the true amount of social security spending is £113 billion. Yesterday, Andrew Dinot, the Institute of Fiscal Studies director, highlighted the surge in benefits. "Mr Brown wants to classify tax credits as negative taxation. But we haven't," he said. NHS spending will be £53.5 billion this year and Mr Brown wants to increase it to £87.2 billion, only £9 billion more than the £25 billion increase in benefit spending over that period. His biggest new benefit is the child tax credit for 6m families. Even those on combined incomes of up to £66,000 a year will be eligible. They will receive £543.40 a year if they have children under one year old. There has also been a 26pc increase in child benefit to £15.75 a week for the first child and £10.55 for any subsequent ones. The child tax credit replaces the old working families tax credit, which was claimed by 1.3m people, and income support, claimed by 1.3m. The old family credit was only claimed by 450,000 people. Mr Brown has also invented a working tax credit, which will be paid to 400,000 people who used to receive no benefits of any kind. Mike Brewer, senior research economist at the Institute of Fiscal Studies, said: "It's very hard to get an exact number for the total of those on benefit as some people claim more than one. "What we can say is that the first two years of Mr Brown's chancellorship saw cyclical benefits, such as jobseekers' allowance, fall as the economy improved and we all got richer. But since then there has been an increase and it will now increase further." Tax credits are essentially means-tested benefits. "There will be forms to fill in," said Mr Brewer, "that is certainly true." The old working families tax credit requires a 16-page form to be filled in annually assessing the households' income. It therefore ends separate taxation for husbands and wives.
