A pledge which Cameron looks set to break

In its preview of Cameron’s speech, the Sun highlights the Tory leader saying that “…in a Conservative Britain, if you put in the effort to bring in a wage, you will be better off.”  The implicit reference, here, is to Labour’s combined tax and benefit system, which frequently acts to disincentivise extra work.  All too often, effort isn’t met by reward – so what’s the point?

As the Centre for Social Justice’s recent Dynamic Britain report showed, this effect impinges, above all, on the least well-off in society – and with tragic consequences.  It’s all to do with effective marginal tax rates, which measure what proportion of a small rise in earnings would be lost to both tax and the withdrawal of benefits.  For those looking to get off benefits and back into work, the marginal tax rates are dauntingly, disgracefully, high.  On the journey back into full employment, many claimants receive only 5, 10, 15 pence from every extra pound they earn.