Shall we play a game? This one’s called join-the-dots. I didn’t really like it when I was younger and I doubt that you will, after you see the picture we’ll be creating.
We’ll start here: The government wants to cut another £10 billion from the welfare budget – that’s the bit of public spending that keeps millions of people off the streets, if only on the breadline. The government could, alternatively, try stimulating the economy to make that money in taxes, but policy seems to be pushing hard the other way, as we’ll see shortly.
So: cuts are coming. How to perform them? Draw a line to where the government announces it wants to break the link between benefits and inflation, and link them to average earnings instead.
George Osborne thinks this is a good idea because inflation hit 5.2 per cent last September, much higher than rises in earnings – remember, the man who won’t do what his initials demand (GO) has kept public sector wages frozen for the last few years and private sector wages are also stagnant. As a result, Gideon has been paying out more than he thinks he should to people who, honestly, deserve a break from his miserly administration.
Now draw a line to the results of the NatCen survey that came out earlier this week, stating that people do not want to see more money being spent on welfare than is being spent already. This is the excuse that Mr Osborne wants to use – he can say there is polling evidence that puts significant numbers in support of an end to so-called benefits uprating. Never mind that only 3,000 people were asked or that none of the main parties ever intended to increase the proportion of government spending that goes on welfare; this is his justification and he’s sticking to it.
I wonder what will happen if wages start to rise faster than inflation? Will the Nasty Party write a new clause into the contract, that benefits should rise along with inflation or wages, depending on which is lower? Officials have already stated that they do not want a huge increase in benefits if wages start to climb sharply, so they are already working on ways to ‘fix’ the linking mechanism. Evil, isn’t it?
Never mind; the current plan uses wages, so now draw a line to this: The government still wants to introduce regional pay settlements for the public sector. The Tories – sorry, the Coalition – believe that national pay settlements inflate public sector wages in certain parts of the country far beyond what their private sector counterparts can manage. They also believe that forcing regional settlements on us will save them a fortune in salaries.
Think what this will achieve: The ghettoisation of much of the UK. With regional pay deals, people will have less money available for things other than necessities, meaning fewer trips to the shops (which have already suffered thanks to the idiotic VAT increase to 20 per cent, which cut a large chunk of growth out of the economy). What happens then? The shops shut and their suppliers go out of business too. More people end up on benefits and looking for work.
You see, this right-wing government does not accept the simple fact that welfare benefits help keep the economy stable. Yes, government spending increases as payments are made, but businesses keep their customers, the economy stays afloat and the country as a whole avoids a terminal spiral of decline.
Cutting welfare, thereby reducing the incomes of society’s poorest, creates fiscal hindrance. As billions of pounds (£10 billion in this case) are taken from the active economy, businesses lose customers and lay off staff.
In a recession, increased welfare spending benefits national income so that each pound is worth £1.60 when it has worked its way through shop tills and paycheques. When welfare is cut, this works in reverse, so cutting £10 billion from benefits will increase the UK’s recession by more than one per cent.
This means a longer recession, a larger deficit and more debt. (The above information courtesy of the False Economy website, which has produced a handy factsheet for you to download, keep, and show to anyone spouting Tory propoganda)
Now draw a line to: The government wants to cut more money from the welfare budget.
Look at what you’ve drawn. A big, fat zero.
This is what the government’s plan will achieve for the people, and economy, of Britain.