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Tax credits: the success and failure

The story of Gordon Brown's tax credits policy is a mixed one. Billions have been directed to the low-paid, helping to take the edge off rising inequality. But the failure of the policy's architects to consider its real-world application has impeded successful delivery

By William Davies   June 2007

The history of a single New Labour policy innovation—tax credits—contains almost the full spectrum of the party’s success and failure in domestic policy over the past ten years. On the one hand, in the policy’s eight-year span it has directed over £75bn into the pockets of lower-paid workers (and some non-workers), helping make work pay for those towards the bottom of the pile and preventing inequality from rising far more sharply. It has become one of the anchors of Labour’s new “Anglo-social model,” which aims to combine relatively free markets, including labour markets, with improved social protection. On the other…

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