Skip to Content

Coffee House

Why is David Lammy getting beaten up for telling the truth about tax credits?

21 July 2015

8:08 PM

21 July 2015

8:08 PM

Poor old David Lammy. At 11pm last night, the Labour mayoral hopeful tweeted that his mum had depended on tax credits so he supports them now. Twitter went wild, saying that they were only invented in 2003 so he must have been fibbing! Even Derek Draper got stuck in. And, oddly, the story has grown since then – in spite of being utter nonsense. Lammy wasn’t quick enough to rebut, and the non-story ends up being followed up in The Guardian.

After a child poverty campaign in 1970, tax credits were introduced (as a temporary measure) by Ted Heath in 1971. The aim, then as now, was to precision-bomb welfare upon certain families working a certain number of hours a week (it was 24 hours, back then). In 1970, this didn’t cost very much because there weren’t many single parents. That soon changed.

And with it came a surge in the number claiming tax credits – or Family Income Supplement, as it was then known. Margaret Thatcher renamed it “Family Credit” in 1988 and made it more generous. Which, unsurprisingly, led to greater take-up. Under Thatcher, the bill for tax credits surged by 44 per cent; under John Major it doubled again and overtook the cost of unemployment benefit.

So rather than not existing before 2003, tax credits were huge – and out of control – under the last Conservative government. It’s true that Gordon Brown then took them from £7bn to £30bn but he didn’t start the fire. It was always burning – just as David Lammy says. And let’s remember, tax credits were brought in as a temporary measure by a Conservative Prime Minister.

Derek Draper says that the name change is significant, so Lammy was fibbing because it wasn’t a ‘tax credit’. We at Coffee House disagree: when we graph up tax credits, we have always shown them going back to 1983. The name changes; the principle doesn’t. The Office for Budget Responsibility and the Institute for Fiscal Studies do the same.

So what to make of this Lammy to the slaughter? That Labour is in pretty deep trouble. To get beaten up when you fib is bad; to get beaten up when you tell the truth is worse. Can anyone from that party do anything right?

Show comments