No exit from poverty trap
From Conrad Vink
Sir: While I expected to disagree with Allister Heath’s assessment of New Labour’s economic record (‘Why we can’t afford a third term’, 30 April), I took particular exception to his little rant against tax credits. He is right in saying that some credits are removed at a rate of 60p to 70p per pound of extra earnings, but as I am sure he knows full well, any reduction in this rate would rapidly bring large numbers of people (some of them relatively well-off) into the tax credit system. Indeed, he goes on to complain about this very effect just two paragraphs later. Which is it to be, Mr Heath?
The real problem is the poverty trap, to which there is no complete solution. Tax credits represent a good compromise between allowing the poor to starve and providing a minimum income and nothing more, which really would rob them of ‘any incentive to improve their lives’ by seriously distorting the labour market at low incomes. This is a difficult problem, but through ‘copious use of selective ... figures’ Heath disguises the facts and clouds the mind for his own political ends.
Conrad Vink York
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