Douglas Carswell

Where does UKIP stand on tax credit reform?

I'm supporting Frank Field's proposals on tax credit reform. Why?

Firstly, because Frank's proposals mean that we still get the changes to the tax credit system that we need.

Tax credits were introduced as a way of topping up the income of those on low pay. But it has ended up as an excuse for employers to pay people low wages – in the knowledge public money will be used to top it up. What started as a way of trying to help those on low incomes has become a system of corporate welfare. Big business gets the taxpayer to subsidise their payroll.

I suspect one of the reasons Frank has come up with a sensible middle way suggestion on the issue of tax credit reform is precisely because Frank knows that you cannot talk about controlling immigration and not, at the same time, also look at the issue of in work benefits.

If there is one issue UKIP has campaigned on consistently it is immigration. UKIP cannot ignore the impact that tax credits have had on drawing labour in from outside the UK. To reduce immigration, yes we need an Australian-type points-based system. Yes, we need to properly control our borders. But we also need to accept the need to reform the in-work benefits system that currently acts as a subsidy for labour migration.

George Osborne does not emerge from these tax credit reforms with his reputation enhanced. Just like over Child Benefits in 2013, the Chancellor has introduced a change without thinking through its consequences.

On that occasion, Mr Osborne woke up to the fact that his measures would mean a cliff edge for some people, and allowed what is known as a taper, so that the measure would take effect more gently.

With his tax measures due to kick in in one swoop next year, something similar is now needed to phase in the changes – preferably as the Living Wage rises and the labour market generates higher wages.

As happened with Child Benefits, the House of Commons now needs to step in and correct the minister's mistake. But at the same time ensure that welfare reform goes ahead.

"Why not just oppose the government?" I was recently asked by a journalist. "You could embarrass them and hit them hard."

This is about doing the right thing, not scoring points. It is fundamentally wrong that we subsidise low wages and thereby keep wages low.

It's also bad politics. There was once a third party in this country that tried to be all things to all people. They were called the Liberal Democrats, and they showed what happens you ditch any pretence at principle and do whatever you think makes you look good. You end up looking like Nick Clegg.

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