Yesterday’s Autumn Statement was shamelessly populist, and clearly designed to set a political trap for Labour. And though George (nee Gideon) Osborne attempted to put a positive gloss on the statistics and estimates he had to announce included an admission that the Coalition will fail in its primary aim: to have the national debt to GDP ratio falling by 2015. Were it not for the fiddling of the figures announced last month, the budget deficit would have risen this year, and even now austerity will continue to 2018. Furthermore, the economy will have shrunk in 2012.
This has forced Osborne to make a token attempt at fiscal stimulus. News that the Fuel Duty increase of 3p a litre, which was planned for January, has been scrapped altogether is welcome. As Ed Balls said: “We’re glad the Chancellor followed Labour’s advice”. It is measures such as this that inject cash into the pockets of those that will benefit from it most, and will boost demand. The fact that it will by the Tories a couple of percentage points in the polls surely had nothing to do with it.
One tax cut that will be both expensive and useless is the reduction in the upper Corporation Tax rate to 21%. This won’t fuel investment, it will merely inflate dividend payments at the expense of the British taxpayer. In light of the major draconian spending cut that was announced shortly after, it seems unacceptable that business shoulders a shrinking burden whilst the public pay the full cost of austerity.
So here’s the big one: Tax Credits, working age benefits, family allowances and statutory maternity pay will all rise by 1% in cash terms for the next three years, meaning a real terms cut of between 5% and 7.5%. The
changes will require legislation (which will easily pass: it’s been a good few months since the Liberal Democrats betrayed a large chunk of the electorate. And the Tories welcome any opportunity to hurt the poor). Labour has not committed to voting against it yet, but have said the current set of proposals are very unfair. They say that they’ll “see what they [the Coalition] come up with in legislation”, but I don’t see them changing their position.
The Coalition is going to try to win political support for the measure by claiming it will hurt the supposed army of benefits
scroungers the most. In reality, the £18 billion that has already been cut from the social security budget has been taken away largely from the disabled, with the cartel of criminally irresponsible claims assessment firms like ATOS (whose staff recently abandoned a wheelchair-bound man in one of their centres when a fire alarm went off) carelessly withdrawing meagre benefits from those clearly unfit to work.
But now, it is families and employed benefits recipients who are the targets for the cuts. It is estimated that over 60% of those affected will be in work, which the Coalition should think about before making this move. They are giving (fuel duty freeze) with one hand and taking with the other, but in such a way that the conscientious poor are worse off. So the next time One Nation Labour is accused of class warfare, ask who it is who has actively redistributed wealth from poor to rich, in every budget without fail. When the Conservatives question why benefits should be maintained in real terms why wages are falling, ask why is it that our incomes are shrinking. We can’t afford to perpetuate the race to the bottom mentality, in tax, employment rights, wages, or elsewhere.