Great
news! The Conservatives should be genuinely proud of this one. It’s a shame
that they stole it from the Liberal Democrats, but it’s good to recognize good
ideas even when you didn’t think of them. It isn’t unalloyed brilliance,
though.
Firstly, this only affects people who were earning more
than £10,600 a year (which was the previous personal allowance). People who
can’t find a job aren’t helped, and people earning a lot are helped (up to
£100,000, when people begin to lose the personal allowance). Helping the rich
and not the most poor isn’t ideal, but it’s undeniable that there are a lot of
quite poor people who will be much better off because of this.
Raising the minimum wage to a living wage would also make
people better off and put the costs in the right place: with employers who
would otherwise be getting a state subsidy for low wages, which is effectively
what lower taxes or tax credits are. I suppose things can’t be perfect.
I would also prefer a universal income to a personal allowance.
A universal income could replace pensions and jobseekers’ allowances as well as
the personal allowance, making things much simpler, efficient and fairer. But
that idea, despite its clear merits, is not going to happen any time soon.
Until it does, the Conservatives are right to raise the personal allowance a
bit more. They have repeated this point at 7 and 24.
The current cost of the personal allowance to government
is about £78 bn per year. I don’t know how valuable increasing it will be, but
a straight proportional increase would be an additional £13 bn or so per year. Despite all this, I still think this is a good policy.
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