Inequality and Tax credits

Today a government appointed think tank announced that inequality between the top ten per cent and the bottom ten per cent has widened. In fact it is now wider than at any time since WWII. I do not expect that this was the result the humiliated Hariette Harman was looking for. Even so, it is nothing to laugh about. But I do not want to dwell on the Labour parties pathetic excuses. I would just like to look at this from a recent historical perspective.

Back in the mid 1960's unemployment varied around 250,000 in a population of about 52 million. Two hundred and fifty thousand. I did not miss a nought off the end.

Today unemployment officially stands at ten times the level of the 1960's. That is about 2.5 million, but this is a heavily manipulated figure. There are about another 4 million (at least) syphoned off into higher education or training schemes. There are then maybe another 1 million who have simply given up looking for a job and live off either their savings or partner.

Of these 2.5 million "officially" unemployed about half are young people. Many have never had a job and are trapped into a benefits culture of idleness.

One of this current government's great claims is that it has (rather belatedly) pushed forward incentives for people to work. There are a plethora of tax credits/schemes and other means-tested incentives. Although these make employment slightly more attractive, the sheer technical effort required to fill in the forms, go through the interviews and then actually get a job is a major block to employment.

That really is the problem. The current government is obsessed with regulation and monitoring. There is a all pervading urge to document, control and oversee. If all criteria are met, then the government acts like the majestic Victorian benefactor. But only to those who jump through the hoops like performing dogs.

I have little time for the Liberals but one idea they expounded on recently, was the concept of raising the tax threshold to £10K. With this, at least some of the expensive bureaucratic nightmare of tax credits, claims and rebates can be consigned to history.

The way to getting people back into work and off the dole if to incentivise them. Get rid of the ugly and humiliating benefits. Most importantly, get rid of taxation on the poor.

The way forward is less government, less control,less benefits and much less tax on those on lower wages. This would be bad news for Harriette Harman and the other control freaks. But it would be good news for the poor.