Tories really have strange priorities, don’t they?
They seem to think people earning more than 80,000 a year – those in the top five per cent of earners in the entire UK – are more likely to need help getting onto the housing ladder than the other 95 per cent.
Can you understand that?
At the time of writing – less than an hour into the New Year and several bevvies the worse for wear – all I can suggest is that the Tories have been desperately trying to shore up the finances of this endangered minority of extremely rich people, in case Labour won the election on December 12.
But Labour didn’t win the election. And it’s the rest of us who are endangered.
So my guess is that in reality, the Tories were just pretending to be helping struggling first-time buyers.
They were previously criticised for handing money over to help pay for second homes, remember.
And I predict that many more policies will be presented as helping the poor… and then turn out to be excuses to give cash to people who don’t need it.
Meanwhile the rest of us will go to the dogs.
If you hear any Tory voters complaining, kindly remind them that it’s what they wanted. No – it’s what they demanded. And tell them: Own it.
Government loans to help families onto the housing ladder have been hijacked by rich buyers, new figures reveal.
The loans, part of the Help To Buy programme launched by former Tory chancellor George Osborne, see the government lend up to 20% of the cost of a newly built home to buyers.
But more than 10,000 of the loans have been taken out by households earning more than £100,000 a year, according to figures from the Ministry of Housing, Communities and Local Government (MHCLG).
And almost 16,000 have been taken out by households with an income between £80,000 and £100,000.
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The obvious solution: The government should be helping build new social housing – not forcing up the prices of what little there is.
It is astonishing that we have the Daily Mail to thank for this revelation (although This Writer had a feeling this is what was happening; I couldn’t find the information, though).
Not only is ‘Help to Buy’ pushing up house prices as the supply of homes diminishes, it is also helping the rich buy houses, rather than those who don’t have the funds to buy a first home – the people for whom the scheme was said to be intended.
That’s why Philip Hammond is pumping another £10 billion into the scheme. It will push prices up well beyond your ability to buy, making it more accessible by the rich.
The rest of us will be at the mercy of private landlords, facing up to the forthcoming huge increase in social rents, or on the street – as intended.
Wealthy families are exploiting a £7billion government scheme aimed at first-time buyers.
Help to Buy doles out taxpayers’ money so househunters can secure a mortgage.
Almost 135,000 families have taken advantage since its launch in 2013. But four in ten recipients were earning more than £50,000 a year and one in ten was on at least £80,000.
More than 5,000 purchasers had six-figure incomes. Help to Buy has also been highly lucrative for builders and their bosses, accounting for a third of private sales of new homes.
Profits, share prices and executive bonuses have soared at firms including Barratt, Bellway and Taylor Wimpey. Jeff Fairburn, chief executive of Persimmon, where around half of sales are through Help to Buy, is in line for a £130million payout.
Academics said the scheme – given a £10billion further boost by Theresa May this week – was driving up house prices.
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Theresa May has pledged to listen to young people. This is what she looks like when she tries [Image: Getty].
It’s also too obviously focused on the privileged young.
The announcement that tuition fees will be frozen is pointless, coming as it does after a rise of £250 a year was introduced earlier this month. When tuition fees were brought in, by Tony Blair’s New Labour, they were pegged at £1,000 per year and means-tested. Considering the astronomical increases since then – mostly under the Tories – it seems clear that Mrs May’s party has already done its worst here.
An increase in the repayment threshold will mean little to people who do not earn much after finishing their university courses as they are never likely to earn enough to do any more than pay interest on their loans. The offer to consider cutting interest rates on student loans is neither here nor there. Theresa May will probably u-turn on it as soon as it becomes expedient to do so.
Obviously, considering the cost of tuition fees and the debt burden of loans, being a student is now an occupation intended for the very rich; these are offers to the privileged, not to the population at large.
As for Help to Buy, which is intended to allow first-time buyers to get a mortgage – the scheme has been hit by several scandals: Some buyers were forced to pay ground rent at prices that increased hugely; others on Help-to-Buy ISAs found they could not use the money to actually buy a house. And in the meantime the scheme created an artificial increase in house prices, making them even less affordable for people on average or below-average wages.
So, again, this is a concession to the rich. It would be a trap for the poor.
It seems incredible that the media are touting this as Theresa May’s answer to Labour’s overwhelming popularity among young voters.
All anybody younger than 24 has to do is think about it, and they’ll never want to vote Tory again in their lives. I predict a u-turn on the whole idea.
Theresa May is set to announce that tuition fees will be frozen at £9,250, as part of an effort by the Tories to appeal to younger voters.
Speaking ahead of the Conservative Party Conference, the Prime Minister told the Sun on Sunday there will be an increase in the repayment threshold, meaning graduates only start paying their loans back once they are earning £25,000.
The changes to the loan system will be accompanied with another pledge to extend the Help to Buy scheme, with Ms May acknowledging that the generation gap in terms of wealth and opportunity has opened up in the country.
With the number of first-time buyers falling steadily, the Prime Minister will pledge another £10 billion to expand the Help to Buy scheme, which attracted criticism for artificially inflating prices in the already overheated London housing market.
The extra funding will go to a further 135,000 first-time buyers, allowing them to get a mortgage on a new-built home with a deposit of just five per cent.
The Conservatives are also considering cutting interest rates on student loan repayments – which have rocketed for recent graduates.
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Did we just have the worst-ever Budget from Britain’s weakest-ever Chancellor? All the indications suggest it.
George Osborne stole his best ideas from the Labour Party and claimed he was trimming his planned austerity back – raising mockery from those who said he was running like a rabbit from Labour’s “back to the 1930s” attack.
“George Osborne blinked,” said Paul Mason on Channel 4 News. “He looked at the scale of austerity he promised in December and realised it wasn’t going to be that popular.”
Did he, though? An alternative view might be that he has been trying to trick us – setting out a plan that suggests a horrific level of cuts at first, then claiming to relent and suggesting that he will inflict less damage and spend lots at the very end of the next Parliament.
So his promise is hideous suffering for four more years, with the vague possibility of greater spending at the end of it – if all has gone well.
Based on his current record, that’s a promise George Osborne can’t keep. Did he balance the books in this Parliament? No. Did he cut the deficit without cutting frontline services? No. Did he balance austerity fairly between the poor and the rich? No – the poor have taken a hugely disproportionate amount of the pain while the richest in the UK are now twice as rich as they were in 2009; for them, we have been in an economic boom.
What a shame those “naughty Trotskyites” (thank you, Mike Collins) at the Torygraph had to burst Osborne’s balloon by pointing out the huge growth of the national debt on his watch – more than £517 billion so far, which is more than every Labour government in history.
Labour’s bank levy and the changes to pensions that would have funded Labour’s tuition fees cut were stolen by Osborne. This is why Labour has been keeping future policies quiet – to prevent such things from happening. In making these moves, Osborne has helped Labour because critics of Labour’s failure to announce policies in advance will now have to shut up.
He said living standards would be back where they were in 2010 by the end of the current financial year – but using a scale (Real Household Disposable Incomes) that is disputed, and in any case is only a projection. According to the Mean Income scale, we’re nowhere near.
And Osborne’s claim assumes that household incomes will rise by no less than 3.1 per cent this year. Unlikely!
And remember – as Mr Mason put it: “Prices are falling because of oil prices and potential deflation; it’s not because a load of bricklayers and plumbers and taxi drivers are putting down their prices – and wages up.”
He repeated the claim that he has halved the deficit – but this is as a proportion of GDP. What if we have another economic shock (as seems likely) and GDP drops? Suddenly that figure won’t look as good. In money terms, the deficit has come down by around one-third to something like £90 billion a year. This means Osborne hasn’t even achieved what the previous Labour chancellor, Alistair Darling, said was possible in 2010 – and Labour would not have caused anything like the misery George Osborne’s party and the Liberal Democrats created for people on housing benefit, the sick, the disabled, and low-paid workers.
He didn’t mention the huge budget cuts to come over the next five years (if we get lumbered with more Tory rule) – worse than “anything over the past five years”
As the BBC’s Robert Peston tweeted: “If Tories win, OBR says ‘sharp acceleration’ in pace of cuts to day-to-day spending on public services & admin 2016-17 & 2017-18.” In those two years – under Tory rule – we would get double the amount of austerity cuts that we’ve had at any point in the last four. We don’t even know where those cuts will happen.
It is important to note that we won’t get cuts on anything like this scale under a Labour government, according to shadow chancellor Ed Balls.
In the meantime, Osborne has managed to pull a few rabbits out of his hat:
The tax allowance has been raised again, lifting more low-earners out of paying Income Tax. But those working part-time on low wages, including most apprentices and people who are self-employed, are already unlikely to pay income tax and will miss out entirely on the benefits of this tax change.
Meanwhile the threshold at which people will pay tax at the ‘high’ 40 per cent rate will also rise, meaning people earning up to £42,384 will get a massive tax break.
Beer duty is being cut again.
There will be a new savings tax break, meaning more than 90 per cent of savers won’t pay tax on this money.
And Osborne is launching a new ‘help to buy’ ISA for people trying to get on the property ladder.
All of these remove income from the Treasury, meaning the austerity measures Osborne plans to introduce will be more severe than you may be expecting. Note that the high-earners benefiting from the rise in the tax threshold will profit again – they can’t be hurt by cuts to benefits they don’t receive.
And what about tax dodging? Osborne omitted his failure to tackle this issue from his Budget speech. Perhaps this is because the wounds inflicted by the HSBC scandal are still too raw; perhaps it is because everybody knows Osborne and the Coalition have re-written tax law to make avoidance much easier for the filthy rich and the corporates. 38 Degrees caught the mood in a nutshell:
Regarding the ‘help to buy’ ISA, it’s notable that Osborne didn’t mention the lack of new homes built since 2010.
Osborne did not mention the Coalition government’s disgraceful treatment of the National Health Service at all. There will be no new money for the service. His omission prompted the following – scathing – response:
However, as Mark Ferguson of LabourList pointed out on Twitter: “Cameron again takes credit for more doctors. Now it takes seven years to train a doctor. So those are Labour’s doctors.”
Oh, and there was a sideswipe at the SNP. North Sea oil revenues have taken a vertiginous tumble as a result of the cut in oil prices, meaning investment has also declined markedly. Osborne has cut the supplementary charge and introduced investment incentives to prop up this income stream, in a move that Tom Bradby describes as “trying to shoot SNP foxes”.
On employment, Osborne quoted his claim that there are 1.9 million new jobs and the jobless rate is at 5.3 per cent. He omitted the figures on how many are zero-hours (1.8 million in a snapshot taken last August) or off the dole due to sanctions. The number of people unemployed and not claiming JSA is at its highest level ever, as this graph shows:
[Thanks to @InclusionCESI for this information.]
So, as one commentator put it, the Tories go into the 2015 general election with debt, in-work poverty and net migration higher – and the NHS in crisis compared to 2010.
Labour’s Michael Dugher followed up on this with: “Are the Tories really going to run on ‘You’ve never had it so good’?”
He has offered a few small freebies in a lame bid to influence the vote, hoping all the while that you won’t ask questions about the important economic issues he hasn’t bothered to mention.
Not only are we at the end of a zombie Parliament, but its own chancellor has crippled it in its final lurch to the election.
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The BBC is reporting that the UK economy has grown by 2.6 per cent in the last year – less than the 3 per cent originally thought. In the third quarter of 2014 the increase was 0.6 per cent.
“So what?” you’re probably asking. “Isn’t 2.6 per cent enough?” Well, it’s certainly much better than the limbo days of 2011-13 when the economy was in and out of the red and Ed Balls’ claim that it had “flatlined” was literally true.
The lower growth has been attributed to smaller government and business investment than had previously been expected, and higher imports.
There’s nothing to be done about the increase in the balance of payments deficit (that’s the difference between import costs and export takings) to 27 billion – especially if both government and business investment is down; it seems that Britain simply has nothing to sell.
So much for the “nation of shopkeepers” as Napoleon Bonaparte (among others) famously described us!
Perhaps George Osborne has restricted government investment in order to meet his (revised-revised – and probably revised again) deficit reduction target for 2014-15. If so, he’s even more of a short-sighted fool than we all thought because this will cause greater harm in the long run.
And there’s also the impending crash when the property bubble created by Osborne’s artificially-engineered housing boom pops. Help to Buy and Funding for Lending stimulated the economy when the private sector ignored Gideon’s call for help, but won’t go on forever.
But what does all this mean for the average person on the street?
Not much, it turns out.
All this talk of economic improvement may sound good – indeed, it is intended to do so. But it hasn’t translated into any improvement in living standards. They’ve been plummeting ever since the Conservative-led Coalition government took office.
Tories are bad for the nation’s living standards. So are Liberal Democrats.
Household incomes have dropped by a massive £1,600 every year – a huge amount for the poorest to bear and a considerable inconvenience for those of middle incomes as well.
Pay rises have been non-existent or below the level, even of CPI inflation – which doesn’t take into account all the costs that households must bear. That’s why the Tories and Liberal Democrats switched to using it as their main indicator back in 2010.
Where are all the new full-time jobs?
The only people to benefit from any economic upturn have been the corporate bosses and the Conservative Party (thanks to donations from the corporate bosses).
This means that, instead of asking, “So what? Isn’t 2.6 per cent enough?” you would be better-advised to ask:
“So what? When do I get my share?”
The answer is: “Under the Conservatives and Liberal Democrats?
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[Image: David Symonds for The Guardian, in February this year.]
Britain has returned to prosperity, with the economy finally nudging beyond its pre-crisis peak, according to official figures.
Well, that’s a relief, isn’t it? Next time you’re in the supermarket looking for bargains or mark-downs because you can’t afford the kind of groceries you had in 2008, you can at least console yourself that we’re all doing better than we were back then.
The hundreds of thousands of poor souls who have to scrape by on handouts from food banks will, no doubt, be bolstered by the knowledge that Britain is back on its feet.
And the relatives of those who did not survive Iain Duncan Smith’s brutal purge of benefit claimants can be comforted by the thought that they did not die in vain.
Right?
NO! Of course not! Gross domestic product might be up 3.1 per cent on last year but it’s got nothing to do with most of the population! In real terms, you’re £1,600 per year worse-off!
The Conservatives who have been running the economy since 2010 have re-balanced it, just as they said they would – but they lied about the way it would be re-balanced and as a result the money is going to the people who least deserve it; the super-rich and the bankers who caused the crash in the first place.
You can be sure that the mainstream media won’t be telling you that, though.
Even some of the figures they are prepare to use are enough to cast doubt on the whole process. The UK economy is forecast to be the fastest-growing among the G7 developed nations according to the IMF (as reported by the BBC) – but our export growth since 2010 puts us below all but one of the other G7 nations, according to Ed Balls in The Guardian.
And it is exports that should be fuelling the economy, according to JML chairman John Mills in the Huffington Post. He reckons the government needs to invest in manufacturing and achieve competitive exchange rates in order to improve our export ability.
“Since most international trade is in goods and not in services, once the proportion of the economy devoted to producing internationally tradable goods drops below about 15 per cent, it becomes more and more difficult to combine a reasonable rate of growth and full employment with a sustainable balance of payments position,” he writes.
“In the UK, the proportion of GDP coming from manufacturing is now barely above 10 per cent. Hardly surprising then that we have not had a foreign trade surplus balance since 1982 – over thirty years ago – while our share of world trade which was 10.7 per cent in 1950 had fallen by 2012 to no more than 2.6 per cent.”
All of this seems to be good business sense. It also runs contrary to successive governments’ economic policies for the past 35 years, ever since the neoliberal government of Margaret Thatcher took over in 1979.
As this blog has explained, Thatcher and her buddies Nicholas Ridley and Keith Joseph were determined to undermine the confidence then enjoyed by the people who actually worked for a living, because it was harming the ability of the idle rich – shareholders, bosses… bankers – to increase their own undeserved profits; improvements in working-class living standards were holding back their greed.
In order to hammer the workers back into the Stone Age, they deliberately destroyed the UK’s manufacturing and exporting capability and blamed it on the unions.
That is why we have had a foreign trade deficit since 1982. That is why our share of world trade is less than one-third of what it was in 1950 (under a Labour government, notice). That is why unemployment has rocketed, even though the true level goes unrecognised as governments have rigged the figures to suit themselves.
(The current wheeze has the government failing to count as unemployed anyone on Universal Credit, anyone on Workfare/Mandatory Work Activity and anyone who whose benefit has been sanctioned – among many other groups – for example.)
You may wish to argue that the economy is fine – after all, that’s what everybody is saying, including the Office for National Statistics.
Not according to Mr Mills: “The current improvement in our economic performance, based on buttressing consumer confidence by boosting asset values fuelled by yet more borrowing, is all to unlikely to last.”
(He means the housing bubble created by George Osborne’s ‘Help to Buy’ scheme will burst soon, and then the economy will be right up the creek because the whole edifice is based on more borrowing at a time when Osborne has been claiming he is paying down the deficit.)
Ed Balls has got the right idea – at least, on the face of it. In his Guardian article he states: “We are not going to deliver a balanced, investment-led recovery that benefits all working people with the same old Tory economics,” and he’s right.
“Hoping tax cuts at the very top will trickle down, a race to the bottom on wages, Treasury opposition to a proper industrial strategy, and flirting with exit from the European Union cannot be the right prescription for Britain.” Right again – although our contract with Europe must be renegotiated and the Transatlantic Trade and Investment Partnership agreement would be a disaster for the UK if we signed it.
But none of that affects you, does it? It’s all too far away, controlled by people we’ve never met. That’s why Balls focuses on what a Labour government would do for ordinary people: “expanding free childcare, introducing a lower 10p starting rate of tax, raising the minimum wage and ending the exploitative use of zero-hours contracts. We need to create more good jobs and ensure young people have the skills they need to succeed.”
And how do the people respond to these workmanlike proposals?
“You intend to continue the Tories’ destructive ‘austerity’ policies.”
“The economy isn’t fixed but you broke it.”
There was one comment suggesting that all the main parties are the same now, which – it has been suggested – was what Lynton Crosby told David Cameron to spread if he wanted to win the next election.
Very few of the comments under the Guardian piece have anything to do with what Balls actually wrote; they harp on about New Labour’s record (erroneously), they conflate Labour’s vow not to increase borrowing with an imaginary plan to continue Tory austerity policies… in fact they do all they can to discredit him.
Not because his information is wrong but because they have heard rumours about him that have put them off.
It’s as if people don’t want their situation to improve.
Until we can address that problem – which is one of perception – we’ll keep going around in circles while the exploiters laugh.
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Ms Leadsom is now responsible for the government’s Help to Buy property scheme, making this even more embarrassing as the allegations against her refer to shares in a property company.
The allegation is that she took advantage of offshare banking arrangements for her buy-to-let property company, placing her shares into controversial trusts in order to reduce her inheritance tax bill, for the benefit of her children.
The property firm Bandal, created by Ms Leadsom and her husband, another ex-banker – also created charges over two of its buy-to-let properties in favour of the offshore branch of an investment bank. Apparently this indicates that she obtained loans from the Jersey-based bank that were secured against the buy-to-let properties.
While none of the above is actually unlawful, it does mean there is at least one alleged tax avoider – not only in the Conservative Party but in the Treasury. The self-styled ‘Party of Financial Competence’ has become, once again, the Party of Financial Fiddles.
According to The Independent, “Since becoming an MP, Ms Leadsom has campaigned vigorously against bankers’ bonus caps and a financial transaction ‘Tobin’ tax.
“It is not the first time millionaire Tory ministers have been caught up in tax avoidance claims.
“The Defence Secretary Philip Hammond, former Chief Whip Andrew Mitchell and Mr Osborne were all accused of legal tax avoidance in 2010 by Channel 4’s Dispatches programme. All three men denied any wrongdoing.”
This is a serious embarrassment for George Osborne, who told the nation, “If you’re hiding your money offshore, we are coming to get you,” in a speech last week.
In the case of Ms Leadsom, it seems, he doesn’t have far to go.
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What an embarrassment: George Osborne should be ashamed of the rubbish he spouted in his speech yesterday (Friday).
George Osborne is flailing.
He’s a desperate man, trying vainly to convince us that the current state of the British economy was his plan all along when anybody with half a brain can see it wasn’t.
Yesterday he was in Washington, trying to convince Americans that he knows what he is doing, but US economists are far too canny to accept anything he says at face value.
His principal claim was that critics of what he and the ConDem inner circle still laughably call “the government’s long-term economic plan” have been proved “comprehensively wrong”. Some of us would like to see his proof of that.
Back in 2010, when Osborne took over at the Treasury, trashed a perfectly good Labour-stimulated recovery and sent the economy into freefall, those of us with any sense said the situation would worsen until it hit the point at which the economy would stabilise of its own accord, without any interference from politicians. Then it would start to improve because demand would start to rise again.
We reached the lowest point possible in the British economic cycle; from there, the only way was up. That is why there is a recovery – and a mean, meagre little thing it is, too. We should be 20-25 percentage points above where we are. Instead, we’re 1.4 per cent behind our pre-recession peak and the money is going to the wrong people.
The only question you should be asking is why this Tory illiterate has held us back.
Osborne told America that the British economy was growing faster than any other in the G7 – which means nothing. When an economy has shrunk more than any other, it is easier for it to grow. It doesn’t mean that our economy will be bigger than the others, although that is certainly the impression that Osborne wants to convey.
He said the growth was “despite warnings from some that our determined pursuit of our economic plan made that [economic growth] impossible”. This was a lie.
Osborne knows perfectly well that nobody said growth was impossible. They said Osborne’s policy would delay any recovery, causing misery for millions of medium- and low-waged people and providing a spurious justification for his colleague Iain Duncan Smith’s purges of benefit claimants – actions that have caused many thousands of unnecessary deaths.
Apparently, to quote members of a previous Tory government, that is “a price worth paying”. For what?
He said: “Fiscal consolidation [austerity] and economic recovery go together, and [the economic turnaround in the UK] undermines the pessimistic prognosis that only further fiscal stimulus can drive sustainable growth.” This is not what the data shows. It shows, as already stated, that the British economy hit rock-bottom under Osborne’s guidance and has now started the long climb upward of its own accord. That is not an endorsement of his policy; fiscal stimulus along Keynesian lines would have arrested the decline and boosted the economy back into growth – as evidenced four years ago, when Osborne inherited an economy that had been growing for five consecutive quarters and sent it right back into decline.
Osborne claimed, yet again, that a Keynesian scheme would create more debt – denying the simple economic fact that the boost it would have provided would have put more money into the Treasury and cancelled the debt far more quickly than his cuts.
It’s obvious, really. Any growth is despite austerity, not because of it. If you take money out of a system, it’s harder for anybody to make a profit on which tax can be paid. Economics 101, George. But you studied history, didn’t you? And towel-folding.
We should also remember that in Osborne’s first Budget he promised – promised – a “steady and sustained” economic recovery. Instead, we had three years in which the economy flatlined. Then he brought in ‘Help to Buy’ – a very crude fiscal stimulus scheme that has created a housing price bubble that is hugely damaging for low earners while putting money into the pockets of people who don’t need it. The economy picked up, because housing relies on other industries, but the crash that is to come might create a worse situation than before.
Osborne wants us to believe that wages will start to rise above inflation, even though the experience of the Americans to whom he delivered his speech is that 95 per cent of post-recession growth went to the richest one per cent of the population. He wants us to believe living standards will improve, but there is no evidence for this at all.
It’s all just another big lie.
Just take a look around you and you’ll see the facts. Osborne was charged with keeping the economy on its knees because that is what the Tories needed, in order to suck the cash from the middle-class, working-class and unemployed people of the UK.
Tories need mass unemployment to maintain the UK as a low-wage economy, creating more profit for bosses while keeping the workers under the cosh.
They need stagnation in much of the economy in order to ensure that the deficit does not go away and the national debt rises, thereby making it possible from them to continue selling off the National Health Service and dismantling the welfare state.
They need a housing bubble in places like London, to ensure that it is too expensive for undesirable poor and middle-income people, ship them out to other towns that have suffered the planned decimation of their economic bases (in order to ensure that they could not make a better living there), and make the capital city a playground for the rich.
And they have done it all by manipulating the media into telling you the worst lies about your own well-being – lies like those in George Osborne’s speech yesterday.
The last 40 years of British history represent the worst decline in living standards for the British people in the entire history of our nation. Never before did we have as much as when the Conservatives came to office in 1979; never before did we have so much to lose.
And we gave it away to liars like George Osborne, just because they had honey on their forked tongues.
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Cart crash: In line with the theme explored in this article, not only is it likely that George Osborne won’t even have the right vehicle to carry his budget – he’ll probably crash it, too.
Part-time Chancellor Gideon George Osborne will be having another go at delivering a budget next week; while we can all hope he does better than the last four wrecks, experience – and a voodoo poll on the ConservativeHome website – suggests the opposite.
The poll asks readers to prioritise possible policies on a scale of one to 10, where one is “low” and 10 is “high”. The policies themselves?
“Cut spending further, so that the deficit can be reduced faster”. Clearly this is nonsense. Osborne’s massive spending cuts have, so far, delivered tiny reduction in the national deficit of only £7 billion – from £118 billion to £111 billion. In four years. Clearly, he needs to change his ways.
Other possibilities include cutting the higher rates of tax (or raising the threshold for them) – helping the very rich; extending National Insurance cuts for employers taking on young workers – helping employers; cutting business rates – helping businesspeople; and privatising more state assets, such as roads – helping rich investors and penalising the poor.
Other ideas intended to harm the poor include regionalising public sector pay, extending the freeze on public sector pay rises or cutting public sector pay, lowering the benefit cap to less than the current £26,000 per family and lowering a cap on broader social security spending that is yet to be introduced (it is scheduled for 2015).
All of the measures mentioned in the above two paragraphs will harm the British economy, rather than helping it. If Osborne includes any of them, he will deserve censure (if not prosecution, although it might be hard to find an offence on which to charge him after five years of Tory/Tory Democrat tinkering with the legal system).
By now, dear readers, some of you will be sitting with your blood boiling at this insolent blogger who’s telling you your prized policy ideas won’t work. You’re probably itching to demand what I would do to address the challenge.
I would have examined the economy from a different angle. Let’s look at it metaphorically.
Imagine the British economy is a haulage lorry or, better yet, a horse and cart. Tories are pushing us back towards pre-industrialism so we might as well get used to the idea. Either way, the job in hand is to take provisions to different parts of the locality that will allow the people there to prosper – and return with a share of that prosperity, to be distributed equally for the benefit of everyone.
Firstly, you need fuel. This is where we can prove that Osborne’s austerity is completely useless. How far can a lorry travel with an empty fuel tank? How far will a horse pull a cart if you don’t feed it? Not very far at all.
Then you need to make sure you’re providing the right kind of fuel. A diesel lorry won’t go far on petrol or vegetable oil before it starts to complain; give a horse the wrong kind of food and it will develop who-knows-what kind of digestion-related illness and keel over. This is what happens to an economy that is over-reliant on – for example – a single economy sector such as finance, or an economic ‘bubble’ like the housing growth triggered by Help to Buy (although this scheme could work well with the correct controls, in the same way you can probably keep a horse working with the correct medicine).
The result in both cases – no fuel or wrong fuel – is the same: Your supplies don’t get out to your people and they suffer as a result. The last four years of Tory/Tory Democrat rule has proved this.
In non-metaphorical terms: There must be investment, and it must be the right kind.
Then, of course, there is the question of what you have in the back of your lorry (or on the cart). You must be providing your people with what they need, otherwise there’s no point in making the journey and the fuel/food in which you have invested – in fact, the whole journey – will have been wasted (like Osborne’s last four budget attempts). Your choice of supplies will depend on what your people are doing – what crops they are growing or products they are making – and on whether these can be traded with your neighbours. If they have been misled into producing wares that can’t be traded, what good is that?
Get it right and you’ll be able to make a return trip laden with goods and supplies that will – with a bit of wise distribution and trade – help build up your society, meaning that the load might not be so great on the next trip. This means less fuel/horse feed will be needed and there won’t be as large a load in goods to be redistributed on the return journey (although an expanding economy means there might be farther to travel, so this must be recognised in the amount of fuel to be used).
That’s about as simple a metaphor as I can devise at the moment.
If I had to predict what will happen on Wednesday, though, I would probably expect Osborne to be demanding that we leave the lorry in the garage (or the horse in the yard), and struggle out on foot with all our burdens on our own back.
Not so much “all in it together” as “everyone for themselves” – and that’s how we’ll all be ruined.
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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.
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