Rishi Claims Increased Welfare Spending is “Tax Cut”

An astounding front page from the Daily Express this morning – even more astounding than some of the out-there claims about the SAS killing Diana. They claim the Chancellor, who oversees the highest tax burden since the Second World War and introduced the record Tory tax rises on working people, is a “low tax Tory”. It gets worse…

In the interview the Chancellor makes an incredible claim:

“Mr Sunak said the cut in the “taper” levy on earnings from 63% to 55% and £500 increase in the Work Allowance showed he is a low-tax Tory… I think actions speak louder than words. And that’s why this announcement is important.”

These are in fact both increases in welfare payments to the recipients, not tax cuts. That is simply not true and Guido is tempted to put a complaint into IPSO about the headline on the basis of accuracy. Other taxpayers will have to pay for the increase in universal credit payments and the increase in the Work Allowance. Regardless of your views on the merits of the changes, they can in no way be described as “tax cuts”. Matthew Lesh of the Adam Smith Institute explains:

“I’m surprised the Chancellor doesn’t seem to know the difference between a tax cut and an increase in welfare payments, even if it is justifiable to let lower earners keep more money. The central issue is the hypocrisy. The Chancellor cannot go around claiming to be a low tax Tory while increasing taxes to a 70 year high and ratcheting up state spending. Actions do speak louder than words, and quite clearly, Rishi’s actions are not low tax. If he wants any chance of winning back the hearts and minds of Tory members and the country, he’ll have to get actually tax cutting.”

Rishi’s net approval ratings with the Tory rank and file according to ConservativeHome have seen him fall from first place to ninth place, with Liz Truss well in the lead. If Rishi wants to keep his leadership hopes alive, he is going to have to really cut some actual taxes… 

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Labour MP Compares Sunak’s Low Growth, High Tax Economy to Ted Heath

It was a Labour MP who provided the stand-out moment from Rishi’s Treasury select committee appearance yesterday. Siobhain McDonagh demanded Rishi name a proper tax cut he’d made:

“…it’s not a tax cut, that’s a benefit change. It’s not a tax cut. It’s a change in the taper rate to Universal Credit…you’re just desperate to find a tax cut. We’re sitting in the Margaret Thatcher room, and you hope to emulate her, but the British Prime Minister and British Tory government that you are most emulating at the moment is Ted Heath’s: low growth, and therefore high tax. Is that not the case.”

Rishi responded by saying the UK is forecast to grow at an historically high level next year, which is true, although it’s then to decline back below 2% from 2023. It shouldn’t take a Labour MP to be pointing this stuff out.

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Starmer Squirms Over How Labour Would Fund Universal Credit Uplift

With the Labour Party announcing at its conference that it would maintain the £20 Universal Credit uplift before replacing it entirely with a new benefits system, Starmer is now facing the inevitable task of explaining where he plans to find the £6 billion needed to fund it. Pushed this morning by BBC Breakfast’s Charlie Stayt to explain “who is it to pay for all thisStarmer claimed:

“We’ve had billions of pounds wasted on crony contracts […] millions of billions of pounds wasted on contracts that have never ever delivered […] We’ve got stamp duty relief for second-home owners and the Prime Minister is going ahead with building a vanity yacht which nobody needs […] What I’m saying, and I’m surprised anybody quarrels with the idea, that we need to cut this waste of billions of pounds.”

Stayt finally teased out something of an answer towards the end of the interview, with Starmer conceding:

“When it comes to taxation, the big divide between us and the Government is the Government wants to tax working people through National Insurance, we say it should be those with broader shoulders.”

If Starmer wants Labour to be the party of lower taxes on workers, he’s going to have to learn to resist every spending demand to make that add up. Whilst Labour voted against an income tax threshold freeze earlier this year, which would stop taxes on working people rising, it would make funding the cost of that £6 billion uplift harder…

UPDATE: John Rentoul points out that Jonathan Reynolds, Shadow DWP Secretary, has already claimed Labour would not restore the cut to Universal Credit. Reynolds must’ve been surprised to hear his own party leader say “it would stay, we wouldn’t make the cut, we would then replace it with something better” on television this morning. Does the Labour front bench even know its own policies?

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Shadow Cabinet Universally Confused About Universal Credit Policy

Ahead of this afternoon’s Commons showdown over Universal Credit, Guido’s been trying to pin down exactly what is Labour’s general welfare policy? Sir Keir is simultaneously calling for the system to be scrapped entirely, yet will be using today’s Opposition Day Debate to demand billions more be injected into a system he sees as not fit for purpose. Can the rest of the Shadow Cabinet clarify Labour’s policy platform?

Jonathan Reynolds, Shadow Work and Pensions: Suggests Labour won’t really abolish Universal Credit in full, it will be more a rebranding attempt of the current system:

“‘We use the language of full replacement, because we are clearly opposed to some of the features of it, like the two-child limit and the benefit cap, and we feel the brand is too tarnished”

He does support the principles behind the system though: “there are merits in combining particularly out-of-work support and in-work support and housing benefit at the same time”. Reynolds even heaped praise on the system last year, saying it was ready to support people at the beginning of the crisis…

Anneliese Dodds, Shadow Chancellor: A press release from Dodds a fortnight ago describes the current Universal Credit provision – including the £20 a week Covid bonus – as supporting “those on low incomes and out of work”.

Lisa Nandy, Shadow Foreign Secretary: Told the Today Programme a year ago that the “principle” of Universal Credit is “the right one, to simplify the system so that those who rely on it can actually understand it”.

Jim McMahon, Shadow Transport: Tweeted that the “principle” of Universal Credit is “right”.

Luke Pollard, Shadow Environment: Previously called for Universal Credit to be paused and reformed, then flipped to calling for it to be scrapped in 2019, now flip-flopped again to calling for it to be reformed. Pollard doesn’t seem to have a clue what is his party’s policy. To be fair, who can blame him?

It’s not just the Shadow Cabinet that’s confused: Andy Burnham is on record saying simplifying the old welfare system was a sound argument, and former Shadow Work and Pension Secretary (now West Midlands Mayoral candidate) Liam Byrne called it a “good idea”. Guido reckons Jonathan Reynolds’ comment – that Labour policy is more about a rebrand than really scrapping Universal Credit – is closest to the truth, though his language is in truth more about appeasing the hard left of the party than a policy change in the interests of the voters…

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Labour Spreads BBC’s Incorrect Universal Credit Story

Thousands of people were sent into panic last month after the BBC reported ‘up to 100,000’ in-work Universal Credit claimants would get no benefits over Christmas. The claim was first made by Paul Lewis on Radio 4’s Money Box programme, repeated by BBC Breakfast, the BBC News website and across its TV and radio output. It was also repeated by Labour, including by Shadow Work and Pensions Secretary Debbie Abrahams…

Now, Paul Lewis has admitted the story was wrong, conceding that not only were his figures incorrect but that he ignored journalist colleagues who pointed out his mistake. Lewis said:

“In fact, it’s not as many as that number, so I have to plead guilty to that… I don’t know why I assumed that because I have to say colleagues on the Money Box team told me that wasn’t right… “

Are Labour and Debbie Abrahams going to make any effort to correct themselves too?

UPDATE: IDS tells the Beeb to offer a proper correction:

“Welcome as such an apology is, this apology is a small and inadequate correction. After all, having given the department no proper opportunity to rebut the false item, the item then ran on all their news headlines without correction. This should have been broadcast on the news headlines too. Finally, it is clear from the tone of the apology dialogue that they think this is funny, it’s not, for many people would have been needlessly concerned about it.”

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