Gordon Brown’s ceaseless tinkering with tax and benefits left Britain with a hideously complicated system of tax credits which few people outside the Treasury understood.
The Government’s decision to do away with most of these, and introduce a “universal benefit” instead, may be a step in the right direction.
But in the meantime, Ministers have decided to save money by fiddling with Mr Brown’s system – and it has come crashing down around them.
As it stands, working tax credits make sure many people who work part time for low salaries are better off sticking to their jobs instead of staying at home.
Ministers want to take tax credits away from some families. But they don’t appear to have done the maths.
The result of these changes will be that some parents will actually be punished for going out to work.
In many cases, these will be people who actually gain very little from working even with tax credits – compared to what they could receive by depending entirely on benefits – but choose to make the effort.
It’s also likely that they will be doing jobs which offer limited rewards in terms of opportunities to take responsibility or to be creative, given that such jobs tend also to be better paid.
In other words, they are people who, dare we say it, are doing the right thing by going out to work for little reward – and they are exactly the people that any government ought to be supporting.
The issue here is fairness. The Government does need to save money, but it cannot do so at the expense of the least wealthy, especially when these are also people making the effort to provide for themselves and their families.
There are also all sorts of damaging effects to the economy, and difficulties for employers, when it becomes more profitable to stay at home instead of working.
Fairness will be an issue in a range of decisions facing George Osborne, the Chancellor, on Budget day.
There is a debate taking place in Government over whether to axe the 50p tax rate for people earning more than £150,000.
In principle, society does not gain when people are punished for being successful – particularly when the tax is as much about proving a point as about raising revenue.
But in the current circumstances, everyone is having to make sacrifices. It would send out the wrong message if the major tax cut announced in the budget went not to hard-working families on modest and average incomes but to those at the top.
The 50p tax rate will have to go one day, but the top priority today must be to ensure ordinary, hard-working families know that work pays.
