Cathy Newman checks it out
If truth is the first casualty of war, then you’d expect plenty of spin, evasiveness and downright lies in tonight’s chancellors’ debate – the opening salvo in the election battle ahead.
The three men, who for reasons best known to themselves want to clean up the worst economic mess since the great depression, had plenty to talk about. And that means here at FactCheck HQ there’s plenty to scrutinise.
Will the cuts be deeper than in Margaret Thatcher’s day? Do the 20 biggest economies agree with Alistair Darling’s deficit reduction plan? Has Labour ruled out a death tax?
Will the government’s tax rises hit those earning over £150,000 most? Is the wealth gap worse than when the Conservatives left office? And would you have to earn £30k or £50k to lose child tax credits under the Tories?
The team will unearth the answers to all these questions tonight and tomorrow. All the quotes are from the Channel 4 debate, “Ask the Chancellors”, 29 March 2010.
“The income gap is now as bad or worse than it was when the Tories left office – and the wealth gap is even worse.”
Vince Cable, Lib Dem Treasury spokesperson
The gap between the highest and the lowest earners has widened slightly since 1997 (despite decreasing slightly in Labour’s second term in office). This owes most to the very richest, becoming a lot richer.
In a bit more detail: if we ignore the richest 10 per cent and the poorest 10 per cent of the population, people average out at around 2 per cent richer (in real terms) than they were when Labour came to power.
But the top 10 per cent have seen their incomes increase more quickly, and the top couple of per cent even more rapidly, than the rest of their fellow top earners.
In contrast, the bottom slice of the population has seen their incomes increase by the least.
The poorest 10 per cent are still richer – in today’s prices – than they were in 1997. But things have slipped in the last few years, so they have less cash to play with than they did at the last general election.
If we drill right down to the bottom couple of per cent of people with the lowest incomes, it looks as though they have – uniquely – got worse since Labour came to power. But a note of caution – the Institute of Fiscal Studies has noted that some of these apparently low earners are also big spenders – suggesting the data might not quite be all it seems.
If we’re comparing things to the Tories, mind, it’s worth noting that this increase under Labour is dwarfed by the increase in inequality that took place under Thatcher. And Labour’s tax and benefit reforms have – though not enough for Vince Cable – had the effect of taking from the rich, and rewarding the poor, right across the earning spectrum.
Income is the amount you earn every year; wealth is the total you own (think houses, pensions, assets as well as cash in the bank). We’re not sure how much worse wealth inequality is than income inequality, but according to this 2007 ONS table, the wealthiest 1 per cent of the population owned 20 per cent of the wealth in 1996, and 21 per cent in 2003.
On the surface it appears that Vince Cable is right but we’ll let you know if we find out more tomorrow.
George Osborne: “You can just answer a very simple question on the death tax. Is that an option that a Labour Government, if elected in 4 or 5 weeks time, will keep on the table?”
Alistair Darling: “No its not…[moments later] I said it was one of the options being looking at. It so happens there’ll be announcement about what we propose in longterm care for the elderly pretty shortly.”
George Osborne, Shadow Chancellor, & Alistair Darling, Chancellor
Now FactCheck has looked at the Labour option for a so-called “death tax” – a means tested compulsory contribution towards your social care costs paid at point of death.
When we investigated, about 6 weeks ago, we found that the compulsory insurance option was still firmly on the table. In tonight’s debate, Alistair Darling seemed somewhat confused, first of all denying that it was still an option and then, just moments later, back tracking to say it was still being considered.
FactCheck understands we won’t have long to wait to find out the truth as there’s an announcement from Department of Health tomorrow. It appears the government may now be looking at a percentage levy rather than a flat rate tax.
Alistair Darling told George Osborne that his policy of “taking child tax credits away from households where their income doesn’t exceed just over £30,000, that is doing nothing to help.”
George Osborne: “We don’t believe you should pay tax credits to people earning over £50,000 and would taper them away from people on £40,000, not 30 as he says.”
Alistair Darling, Chancellor, & George Osborne, Shadow Chancellor
We have covered this debate before . The Conservatives were using figures from the Institute for Fiscal Studies, while Labour were using figures from the Treasury.
We concluded then that the Conservatives’ figures were unreliable, and the IFS themselves have said that in order to raise the £400 million the Conservatives expect to save, the Conservatives would indeed have to lower the threshold to £31,000.
Essentially, the claim the Chancellor made stems from that IFS statement – that if the Conservatives want to make the savings they claim they can from the policy, they would not be able to restrict the removal of child tax credits to households on higher incomes – they would have to start the cuts just above £30,000.
However, even if the Conservatives have got their figures wrong in terms of costing the policy, it doesn’t logically follow that they would carry on down the chain until the removal of credits hit households on £31,000 (or £30,000) – they might instead choose to look elsewhere for savings.
So for Alistair Darling to assert that it is Conservative Party policy to remove child tax credits for households on an income of £30,000 (or £31,000) cannot be condoned by FactCheck. Equally, however, it is clear that the Tories still have some way to go before their costings add up.
Cathy Newman’s verdict
Vince Cable reinforced his reputation – telling the truth for example on the income gap being worse than when the Tories left office.
Alistair Darling, on the other hand, boobed on the death tax. And George Osborne remains confusing on child tax credits.
And here’s the lesson for all three political parties as the campaign gets underway: the public likes honesty.
Our online voters made Cable the winner. And FactCheck’s provisional analysis is that he has been rewarded for speaking truer than his two opponents but we’ll have more analysis for you tomorrow.