Tag Archives: Fiscal Studies

The Tories could end austerity now – but you can bet they’ll use Brexit fears as an excuse not to

“End austerity? Me? But Brexit!” That’s what Philip Hammond would say.

The Conservative government could use £15 billion to end austerity policies after a surprise boost to the public finances – but you’d be a fool to think that will happen.

That’s the view of the Institute for Fiscal Studies, whose director Paul Johnson urged Philip Hammond to make good on the promises the Tories have been making for the past few months.

You see, it’s all very well saying austerity is over, but if the services the Tories have destroyed haven’t been restored, then it isn’t.

But even Mr Johnson admitted the Tories would be in a better position to boost public services if not for uncertainty over Brexit.

“There is a consensus that the economy would have been about 2 per cent bigger had the Brexit vote not occurred,” he said.

“In those circumstances the deficit would have been smaller still and the fiscal room for manoeuvre greater. The end of austerity could already have been rather more decisively with us.”

The IFS warned that the chancellor’s Spring Statement deferred crucial spending decisions in areas such as social care, public service funding and benefits which will put him under pressure to raise taxes further down the line.

The Treasury said on Wednesday that the “headroom” built up by the chancellor could go towards government priorities such as keeping tax low, reducing debt, public service spending and capital investment, so long as it is not soaked up coping with a no-deal Brexit.

Of course we should remember that George Osborne (remember him?) said on becoming Chancellor of the Exchequer in 2010 that the public finances would be restored to health by 2015 – nearly four years ago.

We may reasonably conclude only one thing:

Tories will use any excuse to continue squeezing public spending – they’ve used a fictitious crisis in the public finances; they’re currently using Brexit. It will be something else in the future.

Source: Government has enough money to end austerity if it wants to, IFS report concludes | The Independent


Vox Political needs your help!
If you want to support this site
(
but don’t want to give your money to advertisers)
you can make a one-off donation here:

Donate Button with Credit Cards

Here are four ways to be sure you’re among the first to know what’s going on.

1) Register with us by clicking on ‘Subscribe’ (in the left margin). You can then receive notifications of every new article that is posted here.

2) Follow VP on Twitter @VoxPolitical

3) Like the Facebook page at https://www.facebook.com/VoxPolitical/

Join the Vox Political Facebook page.

4) You could even make Vox Political your homepage at http://voxpoliticalonline.com

And do share with your family and friends – so they don’t miss out!

If you have appreciated this article, don’t forget to share it using the buttons at the bottom of this page. Politics is about everybody – so let’s try to get everybody involved!

Buy Vox Political books so we can continue
fighting for the facts.


The Livingstone Presumption is now available
in either print or eBook format here:

HWG PrintHWG eBook

Health Warning: Government! is now available
in either print or eBook format here:

HWG PrintHWG eBook

The first collection, Strong Words and Hard Times,
is still available in either print or eBook format here:

SWAHTprint SWAHTeBook

Graph shows how Osborne’s ‘One Nation’ budget attacks the poor

150711budgetimpact

George Osborne’s claim that a boost to incomes from his National Living Wage would leave ordinary families with a higher standard of living is bunk, according to the i paper and the Institute for Fiscal Studies.

The IFS said the budget would make the poorest 10 per cent of families about £800 a year worse off by 2019, while the next-poorest 10 per cent would suffer a greater loss as their annual incomes were slashed by £1,100.

The regressive nature of Osborne’s changes is revealed by the fact that the richest 10 per cent of families will see their incomes fall by only £350 a year, while the second-richest 10 per cent will lose virtually nothing.

“Child poverty is expected to shoot up and the majority of losers from the squeeze on tax credits will be people in work,” the newspaper stated.

And IFS director Paul Johnson pointed out that the £4 billion aggregate increase in employment income from Osborne’s £9-per-hour Living Wage would not compensate for the £12 billion cut in social security. Both are to be in place by 2020.

Osborne’s budget is more like Pandora’s Box – the more we see of it, the worse the evil that comes out of it.

Follow me on Twitter: @MidWalesMike

Join the Vox Political Facebook page.

If you have enjoyed this article, don’t forget to share it using the buttons at the bottom of this page. Politics is about everybody – so let’s try to get everybody involved!

Vox Political needs your help!
If you want to support this site
(
but don’t want to give your money to advertisers)
you can make a one-off donation here:

Donate Button with Credit Cards

Buy Vox Political books so we can continue
fighting for the facts.

Health Warning: Government! is now available
in either print or eBook format here:

HWG PrintHWG eBook

The first collection, Strong Words and Hard Times,
is still available in either print or eBook format here:

SWAHTprint SWAHTeBook

Benefit cap: Maximum deprivation, minimum result?

Source: OBR, Economic and Fiscal Outlook, December 2014 *  Incapacity Benefit includes Employment and Support Allowance, severe disablement allowance, income support and incapacity benefit.

Source: OBR, Economic and Fiscal Outlook, December 2014
* Incapacity Benefit includes Employment and Support Allowance, severe disablement allowance, income support and incapacity benefit.

The benefit cap has so far saved around £100m a year, according to the Institute for Fiscal Studies – just 0.1 per cent of the total £215 billion benefits bill if we don’t count the budget for pensioners, the Daily Mirror tells us.

The cap affects 27,000 families – 1% of working age households, a figure revealed yesterday in a report published by the Department for Work and Pensions.

Those who have been hit have lost at least £46 per week, but only half the total lost that minimum amount; the rest lost much more than this. Overall the mean loss was £70 per week or £3,640 per year – around one-eighth of their total income prior to the cap. That means the DWP has bitten a huge chunk out of many household incomes.

However, this claimed saving does not take into account the many costs that could be associated with the cap. Vox Political stated last year that the cap was expected to save just £110m a year, meaning that it has not saved as much as the government hoped, “barely a rounding error in the £201bn benefits bill” – and you’ll notice that the bill has increased by £14 billion in the meantime.

VP continued: “But even these savings could be wiped out due to the cost to local authorities of homelessness and housing families in temporary accommodation. As a leaked letter from Eric Pickles’s office to David Cameron stated, the measure “does not take account of the additional costs to local authorities (through homelessness and temporary accommodation). In fact we think it is likely that the policy as it stands will generate a net cost. In addition Local Authorities will have to calculate and administer reduced Housing Benefit to keep within the cap and this will mean both demands on resource and difficult handling locally”.

So, taking these other costs into account, how much has the benefit cap saved now?

130715benefitcap

The Mirror article then gets into a more difficult area: The number of people who have moved into work as a result of the cap.

It reports: “’About 2,000 families who were claiming benefits in May 2013 had someone [who] moved into paid work twelve months later in response to the cap’, the IFS said.

“This can be accounted for by improvements in the labour market, as the FT also notes, but statisticians at the Department for Work and Pensions also found evidence that the cap itself had an impact.

“In particular, 20 per cent of families whose benefits were capped in May 2013 found work within a year.”

But 20 per cent of 27,000 is 5,400 – not 2,000. The IFS figure suggests 7.4 per cent.

What about the bold claims made by the DWP in July last year, that at first 8,000 and then 12,000 people had moved into work after being warned about the cap? As those figures clearly conflict with the new data, are we now to conclude that they were a blatant lie? If so, who committed it – civil servants or Iain Duncan Smith, the secretary of state?

Either way, the Mirror‘s verdict – that “there have been very limited fiscal benefits” – can only be taken as an extremely mild response to the figures.

If the Tories win the General Election next May, they have promised to cap benefits still further – from the current £26,000-per-year-per-family to £23,000.

Perhaps their slogan should be: “More austerity – less prosperity”.

Follow me on Twitter: @MidWalesMike

Join the Vox Political Facebook page.

Vox Political needs your help!
If you want to support this site
(
but don’t want to give your money to advertisers)
you can make a one-off donation here:

Donate Button with Credit Cards

Buy Vox Political books so we can continue
analysing the facts in a depth the mainstream media cannot manage.

Health Warning: Government! is now available
in either print or eBook format here:

HWG PrintHWG eBook

The first collection, Strong Words and Hard Times,
is still available in either print or eBook format here:

SWAHTprint SWAHTeBook

Tories miscalculate welfare savings. No rich people affected

[Image: Institute for Fiscal Studies.]

[Image: Institute for Fiscal Studies.]

Public spending on benefits has fallen by just £2.5 billion, despite cuts aimed at saving nearly eight times as much (£19bn) – because the silly unqualified Conservative career politicians who dreamed them up had no idea of the knock-on effects of their plans.

The miscalculations have not affected any Tory donors or rich people likely to vote Conservative, so it seems unlikely the government will care.

The BBC reported that the Institute for Fiscal Studies (IFS) has said the reasons for the increased spending included a rise in the cost of pensioner benefits (yet another BBC inaccuracy – the rise was in the cost of state pension payments) and an increase in housing benefit spending.

Let’s look at that.

The IFS said the £5 billion increase in state pensions was due to the “more generous” entitlements of a new generation of pensioners who had recently retired. This is entirely predictable and should have been included in the Conservative Party’s calculations before the Tories ever got anywhere near the Department for Work and Pensions. It is an avoidable mistake that they didn’t avoid. And they’re financially reliable?

Switching from measuring inflation using RPI – which shows a higher rate – to CPI (in order to pretend that the cost of living isn’t rising quite as fast as it really is) hasn’t saved the £4 billion the government expected. This relates more to pensions than any other benefits, as these are linked to inflation. The government was hoping to save billions because CPI inflation rises more slowly than RPI – but it hasn’t happened, for reasons stated in the paragraph immediately above. The Tories should have known this; they didn’t. Stupid Tories.

The BBC reported: “There had been an ‘unanticipated’ rise in housing benefit spending of £1bn, despite cuts of £2bn, which was down to the growth of the private rental sector, rising rents and slow earnings growth.

Are the Conservatives seriously trying to tell us that they didn’t realise the Bedroom Tax would lead to an increase in Housing Benefit claims on privately-rented properties? What did they think was going to happen? Oh no, wait… That was the plan! Tip people out of social housing on the pretext that they are under-occupying, and send them off to rent from private landlords. But private landlords always – always – charge more and the Conservative Party, many of whose members happen to be private landlords, would know that. So we have an increase in the amount of public money being spent on rents that are charged by Conservative-voting landlords. What a handy way of getting money into the pockets of your rich voting base! Let’s conclude that this particular bit of extra spending was in the plan from the start.

Rising rents are a logical consequence of an influx into the private rented sector from social housing. Suddenly there’s a squeeze on space and private landlords are able to hike rents. Again, Tory-voting landlords get a boost from the government.

Slow earnings growth was also planned by the Conservative Party, and is connected to spending on unemployment benefits. The benefits uprating cap of one per cent per year means an increase in social insecurity, intended to force people to seek work of any kind, no matter how low-paid. It’s not so much about making work pay as it is about making it the better of two bad options. The knock-on effect is that there is no job security any more. Anyone agitating for higher wages can be told there are hundreds of people willing to work for less. That will shut them up. The Tories planned this. It seems bizarre that they did not realise people would have to claim in-work benefits in order to make ends meet. That’s why spending on tax credits has fallen by less than expected. So – again – this should have been included in Tory calculations before they got into the DWP. It is another nail in the coffin of their financial reliability.

Here’s a personal favourite: “‘Significant delays’ in the replacement of Disability Living Allowance with the ‘less generous’ Personal Independence Payment had led to a £1.6 billion increase in spending, rather than a £1.2 billion cut.” It seems the Conservatives did not reckon on the people they’re trying to rob doing all they can to stop their money being taken away.

More seriously, this means that all the cuts to the social security budget should never have happened – nor should the thousands of deaths due to the increased pressure placed on claimants by the DWP on the order of its ignorant secretary of state, Iain Duncan Returned-To-Unit Smith.

Follow me on Twitter: @MidWalesMike

Join the Vox Political Facebook page.

Vox Political needs your help!
If you want to support this site
(
but don’t want to give your money to advertisers)
you can make a one-off donation here:

Donate Button with Credit Cards

Buy Vox Political books so we can continue
pointing out the idiocy of Conservative economic policy!

Health Warning: Government! is now available
in either print or eBook format here:

HWG PrintHWG eBook

The first collection, Strong Words and Hard Times,
is still available in either print or eBook format here:

SWAHTprint SWAHTeBook

Coalition drags out the pain with promise of many more cuts

140205cuts

The BBC has reported findings by the Institute for Fiscal Studies, showing that the Coalition government will be less than halfway through its planned spending cuts by the end of the current financial year (March 31).

The organisation said 60 per cent of the cuts were still to come.

This raises a few urgent questions. Firstly: This government was formed on the promise that it would balance the books by 2015, which presupposes that its entire plan for doing so would be in place long before then. We know that this ambitious claim was dismissed after years of failure, but part of the reason for this failure was that George Osborne stopped a recovery that was already taking place, and which would have led to economic growth of 20 per cent by now, if it had been allowed to continue (according to Michael Meacher MP). My question, therefore, is: Have the Conservatives been working to ensure that they would have an excuse to make more cuts, rather than to restore the economy and balance the deficit?

Secondly: We may presume that these further cuts will be inflicted over a period of years (as even the Tories know it is important to enact change gradually, rather than inflict sudden shocks on the economy that could create entirely unforeseen consequences). Are the Coalition parties assuming that they will be re-elected next year, and is it not supremely arrogant of them to believe this, considering the harm they have caused so far?

Thirdly: If the Coalition parties do want to be re-elected, it is clear that they will need to try to bring a majority of voters back on-side. Therefore we may reasonably expect to see all sorts of gifts coming our way over the next year – tax breaks or whatever else they can devise – aimed at increasing the amount of money in our pockets. However, knowing that 60 per cent of the Tory/Lib Dem cuts process is still to come, this means they will want to make even more cuts if they are returned to office. Why would we want to give them our vote, in return for presents they’ll grab back as soon as they’ve got what they want?

Fourthly: Iain Duncan Smith has inflicted £28 billion of cuts on people receiving benefits from his Department for Work and Pensions. If the IFS statement is accurate, then the total amount he’ll want to cut is a staggering £70 billion. If we consider that the amount spent on pensions (more than £100 billion) is safe, this leaves only tiny amounts for all the other benefits supplied by the DWP. Are people currently on Jobseekers’ Allowance to get nothing in the future? What about disabled people getting DLA or PIP? How about all the many, many people on Employment and Support Allowance, including those currently going through the appeal process because of wrong decisions? Mr… Smith might claim that all these benefits are being rolled into Universal Credit, but that won’t happen until 2016 or 2017 according to his own estimates, and the rest of us know that it’s not going to happen at all. Will we have any benefit system left if these cuts continue – or will the Tories try to trick us into buying duff health and employment insurance policies from their friends at Unum instead?

The BBC report said George Osborne wants a budget surplus by 2018-19, but “additional spending, population growth and extra demands on the NHS meant more cuts were needed”. This statement is not supported by any source material and we may take it this is a further sign of BBC right-wing bias.

The additional spending was made necessary because of unintended consequences of the cuts – the Tories got their sums wrong. Population growth, if due to the EU immigration that everyone complains about, will have led to a net growth in the economy as it has been proved that migrant workers from the European Union contribute more to the Treasury than they ever take out – so this is not a cause of increased spending. If the indigenous British population has been growing faster than expected, let us remember that Child Benefit is to be restricted to the first two children in a family (Cameron has denied it so it must be true) and therefore any further growth in individual families will have no bearing on the government’s bank balance. Extra demands on the NHS are a thorny subject as the Coalition promised to inject billions of pounds into the health service but no evidence has yet appeared to show that it has. Since this money was promised many years ago, it should have been included in national budgets and should not be a burden now.

The IFS also reports that there is no evidence of a housing bubble in the UK, as a result of Osborne’s ‘Help To Buy’ scheme. This was introduced last year, when Osborne realised that his austerity programme had failed and resorted to a Keynesian ‘pump-priming’ scheme to boost the housing market. Fears that this would lead to a debt-fuelled ‘bubble’ made commenters like myself cautious about the plan.

However, if there are no signs of a debt-fuelled bubble, then we should consider this to be proof that Keynesian economics was always the way forward and austerity has led us up an economic dead-end for the past four years.

This means none of Osborne’s ridiculous cuts were necessary (barring a few to eliminate waste and corruption – but under a Conservative-led regime we have no evidence that these took place and every reason to believe the opposite to be true. Look at the current ‘cronyism’ row over the appointment of Conservative ‘yes’-people to senior quango posts).

It also means the government and the right-wing media have been lying to you for four long years – and will continue doing so in self-justifying stridence for another 14 months to come.

Let them talk.

But don’t ever let them convince you their cuts are necessary.

Vox Political won’t inflict any cuts on you!
But we can’t deliver value for money without funds.
That’s why YOUR help is vital.
You can make a one-off donation here:

Donate Button with Credit Cards

Alternatively, you can buy the first Vox Political book,
Strong Words and Hard Times
in either print or eBook format here:

SWAHTprint SWAHTeBook