Douglas Carswell

Credible Opposition v. Corbynomics

On Tuesday, I voted for fiscal responsibility, supporting a proposal to reduce tax credits.

Inevitably this prompted howls of protest on Twitter. "How heartless!" one insisted. "You're letting people down" declared another.

Really? What is compassionate and virtuous about a system that permanently keeps working people in low pay?

Tax credits were introduced by Gordon Brown to reduce poverty. Far from lifting people out of poverty it has ended up keeping many people there. If big business knows that the taxpayer is going to top up low wages, they have every incentive to keep on paying low wages.

It is odd that the party Keir Hardie founded cannot see that. Tax credits on the current scale are part of the corporatist economy that is holding people back. What the Left wants us to believe is a subsidy for big corporate payrolls ends up helping working people.

At the same time, if tax credits are too high, they incentivise companies to rely on cheap labour, and disincentivise them from capital investment to increase their productivity, which would ultimately enable wages to rise. As the Telegraph's Jeremy Warner has written, 'there is little incentive for employers to improve their productivity, and therefore their wage levels, when labour is subsidised to the degree it now is from general taxation.' Hence the worrying stagnation in the productivity of our economy.

Jeremy Corbyn and the comrades support a welfare wonderland that would not merely make us a basket case like Greece. They support measures that would actually pay to prevent us getting more productive and competitive.

UKIP will always support fiscal responsibility and fair taxation. The Government's reforms to the tax credits system are a step in the right direction. There is plenty that this government is doing that needs opposing. Labour's support for Venezuela-economics precludes them from doing that job. UKIP will – with a sensible approach to economics.

Welfare reform is economically essential – and, thanks to the good sense of the voter, widely popular.

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