Britain:
Family tax credits undermine wages

Britain's Labour Government has taken a leaf out of the policy book of 
Australia's Labor Governments with a policy which the government says will 
lift out of poverty the one third of all children in Britain who are now 
born into poverty.

It will, the Government claims, halt the polarisation of wealth in Britain. 
Launched by Chancellor Gordon Brown and PM Tony Blair, it is the Working 
Families Tax Credit (WFTC).

Like Bob Hawke's famous declaration that no Australian child would live in 
poverty by 1990, British Labour's scheme not only fails to alleviate 
poverty it is more likely to accentuate it.

It calls for an allowance, paid by the Inland Revenue (taxation department) 
directly into workers' wage packets. It guarantees every working 
family an income of at least L10,000 a year, or L200 a week. It will also 
provide a subsidy of L70 a week towards childcare expenses for working 
mothers.

By putting the money into wage packets the state is effectively subsidising 
bosses' wages bills. Employers can now pay as little as they like, for no 
matter how criminally low the wages they pay the state will top them up out 
of income tax revenues and the Value Added Tax which all workers pay on 
nearly everything they buy.

The subsidy is only paid to families with at least one adult working 
member. The WFTC will do nothing at all for children from families that do 
not have a full-time worker and are even more destitute.

Even with a L70 per week credit, there is no childcare available for 
someone whose only job prospect is working in a burger bar until 1am or so.

Pressure is being stepped up on those out of work to now accept any job 
whatsoever. "Work now pays; now go to work", says the Chancellor waving a 
big stick. "For the first time ever, work will always pay more than 
benefits."

Penalties will be stepped up. Under the new scheme those who refuse a 
particular job can lose six months' benefit.

The coercion to be applied means that workers are being forced to take any 
job on offer — to take short-term jobs where they are obliged to sign a 
piece of paper waiving their statutory rights to sick pay, holidays or 
protection under the new maximum hours regulations which they might 
otherwise refuse.

Britain's bosses can now be as awful as they like and still be assured of a 
constant supply of job applicants.

And just in case workers think they can struggle and get the wages paid by 
the boss increased, the supplement will be cut if a worker's wage 
increases. So no matter how hard and how successfully low paid workers 
struggle to lift their wages, their total wage packet will remain the same.

This will be a real disincentive to struggle for higher wages and will 
undermine support for trade unions — as it is no doubt intended. Rather 
than being a cure for poverty, it will become a poverty trap for many.

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