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Means tests and tax credits

The tax credit is New Labour's big idea in welfare policy. It heralds an extension of means testing and a start to a merger of the tax and benefit system. It should also make work pay and reduce, if not abolish, child poverty. But is it too complex?

By Philip Collins   May 2003

Little more than a year after taking office in 1997, Frank Field became one of the first ministerial casualties of the New Labour government. The leading advocate of the “contributory” principle in welfare policy had gone. The conflict with his ostensible boss, Harriet Harman, began as an intellectual dispute but ended as a personal one. Social policy was thereafter made by Gordon Brown’s treasury, introducing the long-heralded device of the tax credit. “Targeting” became the orthodoxy of new-left social policy-advocates of contributory and universal benefits over the means test had been routed.

This victory is now so complete that it…

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