George Osborne used his first speech of 2014 today to warn that a further £25bn of cuts in public spending is required after the 2015 general election. £12bn in Welfare cuts will be made in the first two years of the next government.
According to the Financial Times: “The chancellor’s comments are intended to frame the political debate leading into the 2015 election, as he tries to portray the Tories as the only party capable of taking tough decisions on the deficit.” Austerity isn’t necessary of temporary, it’s ideological and permanent so long as these people are in charge.
Austerity is Ideological
On arrival in government, the Conservative section of the Coalition government were keen to present austerity as temporary, necessary and purely practical. Back in 2010, Cameron claimed that he “didn’t come into politics to make cuts”, and that austerity was simply temporary spending restraint based on a necessary effort to cut the deficit, not “some ideological zeal”.
What we can now see, is that ‘Austerity’ is delivering the half century long ambition of the Conservative party: to revoke the post-war social contract of the United Kingdom.
The modern welfare state: decent pensions, affordable and decent social housing, a publicly funded and managed healthcare system, a reliable and low cost transport system, the guarantee of a decent education regardless of circumstances of birth. This was the social contract the UK public signed up to in the post war period. Why? Because these generations had lived through the horrific consequences of unrestrained capitalism; enormous inequality, widespread poverty and destitution, starving and malnourished children, an entrenched class system, the benefits of the hard work of the many enjoyed by a privileged and undeserving few.
David Cameron is taking the country back to those dark days. Wearing white tie, standing at a gilded lectern, speaking to the Bankers and Brokers of The City of London in late 2013 (pictured above) – he stated categorically that ‘Austerity’ is ideological, and permanent under a Tory government.
Austerity is Dangerous
The government provides tax cuts and subsidies to corporations, paid for by public money they remove from public services. In his Autumn Statement of 2013, Osborne promised a “responsible recovery for all”. Who is he kidding?
Life at the Top
- Corporation Tax is lower today than at any time in its history. According to data from the Institute for Fiscal Studies, Company taxes now constitute only 12.5% (Corporation Tax is just 7%) of the tax revenues of the UK. In comparison, the people’s taxes, (income tax and VAT) make up more than 60% of the tax income.
- UK Corporation Tax in 1984 was 52%. By 1986 it was 36%. In 1999 it dropped to 30%. Under the Coalition, Corporation Tax has been cut from 28% to 20%.
- The Top Rate of Tax has been cut by 5% – this, together with other tax breaks means that a person earning more than £1million a year will be saving £107,500 a year.
Yet in spite of this remarkably reduced tax burden, tax avoidance is costing the UK Treasury almost £70bn each year.
Only one in four of the UK’s top companies pay their taxes, meanwhile they receive tax credits to the tune of hundreds of millions of pounds by people who did pay their taxes.
The Assault on the Welfare State
- The Health & Social Care Act has effectively privatised half of the National Health Service, whilst new competition regulations going live in April open the service up to the highest bidders to take over.
- The Academy and Free Schools programmes turn public schools in profit making companies, and PFI debt is transferring ownership of schools from the state sector to banks.
- The profit making public asset of the Royal Mail was sold off for less than half its value, gifting a working service and vast profits to wealthy investors while defrauding the taxpayer.
- Public sector workers (nurses, street cleaners, teachers, scientists) have had their pay restricted to a 1% rise each year. With inflation at almost 3% this amounts to a real terms wage cut of 2% for the last three years.
- The cut in Council Tax Benefit (which supports the same groups) rolled out in April 2013 will mean rise of up to 333% in council tax bills.
- Workfare has been imposed which has ended the tradition of a contribution based social security system.
- The cumulative impact of the Bedroom Tax, the Benefits Cap and cuts to disability benefit meant 600,000 disabled people losing as much as £131 a week.
- Over 90% of all care home provision (up from 61% in 1990) to elderly people is in the independent/private sector after the public sector was encouraged to outsource provision in an effort to cut costs. The same period has seen an astronomical rise is the cost of care home places.
Life at the Bottom
- The cost of living is rising at four times the rate of wages. In fact UK wages are falling faster than any other ‘developed’ country.
- Thirty four disabled people have killed themselves, and 32 have died every week for the last three years, while undergoing stressful ATOS ‘work capability assessments’.
- Hate crimes against disabled people shot up 25% in 2012.
- The number of people reliant on Food Banks tripled in 2013, with 350,000 people unable to feed themselves without charity support. In Winter 2013/14, the Red Cross launched its first emergency food aid programme on UK soil since World War II.
- Statutory Homelessness  rose by 21% in England and 17% in Wales in 2012. While Rough Sleeping has risen even faster, at 31% in England. Outreach workers from Homeless Charity Crisis performed a count in London which found a 62% rise in rough sleepers in the capital in just the last two years .
- The average cost of a single room in a care home has risen to over £27,000 a year. This is higher than the average UK annual wage (£26,000) and more than double the average annual pension income of £13,208. In fact since 2011, care home costs have risen at twice the rate of inflation. While standards of care are plummeting.
- 1 in 6 British pensioners now live in poverty, and 24,000 dying each winter because they cannot afford to heat their homes.
Where Will the Axe Fall Next?
So it is in this context, of a broken and unbalanced economy with the poor getting poorer and the rich getting richer – that Osborne announces: Good news plebs! More cuts a-coming!
But where will the axe fall this time? What is left to cut? Well, David Cameron gave a speech on welfare in June 2012 where he outlined a series of potential cuts. Here are those:
- The restriction of child-related benefits for families with more than two children.
- A lower rate of benefits for the under-21s.
- Preventing school leavers from claiming benefits.
- Paying benefits in kind (like free school meals), rather than in cash.
- Reducing benefit levels for the long-term unemployed. Cameron said: “Instead of US-style time-limits – which remove entitlements altogether – we could perhaps revise the levels of benefits people receive if they are out of work for literally years on end”.
- A lower housing benefit cap. Cameron said that the current limit of £20,000 was still too high.
- The abolition of the “non-dependent deduction”. Those who have an adult child living with them would lose up to £74 a week in housing benefit.
George Eaton of New Statesman writes:
“To this list we can likely add a reduction in the household benefit cap of £26,000 (Osborne said last month that “future governments could change the level” and that it would “continue to be a subject of fierce debate”) and, perhaps, the withdrawal of universal benefits, such as Winter Fuel Payments, free TV licences and free bus passes, from wealthy pensioners.”
The Austerity Apocalypse
Liberal Democrat Leader Nick Clegg responded to Osborne’s speech, saying “It is simply not serious politics by the Conservative party to say we are so reluctant to make the wealthiest in society make even a smidgen of a contribution that we are going to ask all sacrifices to come from the working-aged poor. Not only is it unrealistic, it is unfair and reveals something about the Conservatives’ values.”
If only he had held that position when he came to power in 2010, and every day since, when he has manifestly failed to protect the poor and vulnerable from unfair and un necessary cuts. Quite the opposite. He and his party have enable the transfer of public money into private pockets over this entire parliament. Clegg has zero credibility with voters on this issue now, the cup of trust is empty.
As for Labour. Bad news folks. One important line from Ed Balls’ response to Osborne should fix itself to your memory like fly paper:
“Labour will have to make cuts and in 2015/16 there will be no more borrowing for day-to-day spending.”
With Rachel Reeves, the shadow Secretary of Department of Work and Pension promising to be “tougher than the Tories” on benefits, and so far no plans from Labour to scrap any of the Tory policies except the Bedroom Tax – Britain needs to brace itself. Austerity is becoming a way of life. Jam tomorrow, the promise of every party. Perhaps it isn’t the party of government that Britain needs to change? But the system of government itself.
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