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.
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: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.
Follow me on Twitter: @MidWalesMike
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