Austerity (in fact, subjugation) was a political choice. Now it’s starting to look like a bad one

Let’s call the policy what it is: Subjugation of the defenceless.

Does it look good to anybody at all, now?

The chancellor’s choice of words… is revealing… Cutting tax credits is not a necessity: it’s a “judgment call” – a deliberate act of policy.

As Osborne framed it, the cuts result from a binary choice between allowing taxpayer support for working families to balloon unsustainably, and shifting to – his current catchphrase – a low-welfare, high-wage economy.

There’s a second choice involved here: putting the weight heavily on spending cuts rather than tax rises to balance the books – about 80%-20% over the past five years.

And the government has made a third choice – picking its targets.

The state pension has been protected since 2010 by the “triple lock”, originally a Liberal Democrat policy, which Paul Johnson, director of the Institute for Fiscal Studies, said last week would eventually prove unsustainable.

A report from the Government Actuary’s Department, which was briefly published and then removed from the web earlier this month – but not before being spotted by eagle-eyed journalists – suggested that maintaining the triple lock is costing £6bn a year compared to just increasing state pensions in line with earnings. That would be more than enough to reverse the tax credit changes.

Other groups have been the beneficiaries of the chancellor’s generosity too. Corporation tax, already the joint lowest among G20 countries, alongside Russia, Turkey and Saudi Arabia, is set to be cut again. It was 28% in 2010; it will be 18% by 2020. The latest two-percentage-point cut, announced in July, will cost £2.5bn a year by 2020. The government would argue a lower rate attracts investment and helps create jobs; but it’s hard to see the rationale for continuing a race to the bottom you’ve already won.

Higher earners have been winners too, with the threshold for higher rate tax set to rise, and wealthy homeowners allowed to pass on a larger property to their children free of inheritance tax.

When challenged about the tax credit cuts, Osborne trumpets his new “national living wage”, the extension of free childcare and the planned increase in the personal tax allowance.

Yet most of the boost from these measures will not be felt by tax credit recipients. Many already have most of their childcare costs paid for, and the personal tax allowance is already high enough to exclude many lower earners.

But most importantly, as work by the Resolution Foundation has painstakingly pointed out, the structure of the cuts – which both reduce the earnings level at which tax credits are lost and increase the rate at which they are withdrawn – means many tax credit recipients will see almost all the benefit of higher wages wiped out.

Tax credits cuts may yet be the policy that sees Osborne’s carefully constructed political edifice start to crumble.

He chose austerity over investment, cutting back the state over taxing the rich, rewarding the comfortable over protecting the needy.

As Heidi Allen’s powerful maiden speech showed last week, those “judgment calls” may finally have caught up with him, by leading to policies even his own backbenchers are struggling to defend.

Source: Austerity was a political choice. Now it’s starting to look like a bad one | Business | The Guardian

8 thoughts on “Austerity (in fact, subjugation) was a political choice. Now it’s starting to look like a bad one

  1. Nick

    There is a awful lot of fuss mike with regards these tax credit cuts by the 3 million recipients of this benefit who stand to lose upto £1500 per year

    but where were these people in supporting the sick and disabled ? who were losing up to £6000 per year in ESA loss and up to £5000 PIP loss

    they lost so much that in many cases their whole way of thinking shut down and either committed suicide or in a few cases starved to death

    As i say where were all these tax credit voices in support of the sick and disabled ?

    the reality is these benefit claimants were blissfully unaware so i’m told on my estate where i live

    yes they voted conservative thinking they were ok and sod the likes of myself but i knew that they were wrong and will now like i have had to at that’s pay the price

    1. Brian

      Couldn’t agree more Nick, how selfish is that, and really could you say they deserve it. Those that were informed do, but sadly, many of those who did vote Tory, surely, could not have been informed. Depends what assumption you work on. For me, I’ll continue to believe in the voters ignorance. It’s only with sites like Vox Political that the real truth becomes apparent, Hail Mike.

      1. Nick

        mike is very good Brian and thanks for your agreement of my post

        The reason i know more then most is because i look after the estate in where i live and have done so for the past 40 years on all the estates iv’e lived on

        the problem is most people don’t understand politicians they just go along with what there told and not think about the much wider picture like where do i fit in this picture what could the conservatives do for me and my family to make this country a better and fairer place to live

        they didn’t and that’s the problem they might as well been blindfolded and stuck a tick at random at the ballot box

        most people at the end of the day have dreams of a better future but you still need to be thinking of reality when you vote and for most people they vote labour but at this last election they forgot about the wider picture of the very basics like high rents and house prices along with the 12 billion pounds worth of cuts and still voted conservative

        and now their in a dark place not knowing whats round the corner and will now have a reality check in to not be so stupid into voting conservative ever again

        how you could be on any type of benefit and vote conservative beggars belief and shows a severe lack of judgement along with very bad education

  2. Brian

    The Torie’s cunning plot to marginalise dissent is coming back to haunt them. They will eventually disappear up their own proverbial.

  3. Jean Hardiman Smith

    Are you saying it is OK to pull money from pensioners, many of whom are living in poverty, and many of whom are still paying mortgages and having to work to keep above the breadline 1.6m pensioners in the UK are living below the poverty line, and are “floundering” on low incomes. Maybe the numbers living in poverty have fallen since 2000, but progress has now stalled, and you are calling for it to be reversed, and probably at speed as has happened with other groups.. This is another divide and conquer tactic – please don’t talk about “comfortable” pensioners, when locally record numbers are turning up in A&E suffering from malnutrition, and I am not sure why pensioners have no right to be “comfortable” – which they won’t be anyway on just a state pension which is, I think, the second lowest of the developed countries, and a disgrace to the 5th or are we 6th now with the Osborne economic triumphs (not), richest country on earth. Your argument is not, and should not be, against “pensioners”, though it could well be against some mega wealthy pensioners like Rupert Murdoch, We must stick together and not be divided into smaller groups to be easily picked off. Osborne is merely treating pensioners as he should have treated everyone else. I am disabled, my condition goes frequently into crisis, which requires urgent hospitalisation and I have a restricted life expectation. I am in the firing line, and am standing up for all groups which are, and I can tell from the spin are soon going to be, in the governments sights. “Comfortable pensioners” is a slogan just as “scrounging workshy jobless” is. Please don’t fall for their tactics yet again.

    1. Mike Sivier Post author

      Are you saying you didn’t read the very first paragraph, before the quotes: “Let’s call the policy what it is: Subjugation of the defenceless”?
      Are you saying you didn’t read the earlier post about David Willett, who seems to be suggesting the government should be targeting pensioners?
      Are you playing right into the government’s hands by allowing yourself to be a pawn in another ‘divide and rule’ scheme?
      Have a think about it.

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