Osborne to Axe Welfare State with £25bn of New Cuts. What’s he Coming for Next?

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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

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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”[1], and that austerity was simply temporary spending restraint based on a necessary effort to cut the deficit, not “some ideological zeal”.[2]

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[3].

Austerity is Dangerous

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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”[4]. 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[5], 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%[6].  By 1986 it was 36%.  In 1999 it dropped to 30%.  Under the Coalition, Corporation Tax has been cut from 28% to 20%[7].
  • The Top Rate of Tax has been cut by 5%[8] – this, together with other tax breaks means that a person earning more than £1million a year will be saving £107,500 a year[9].

Yet in spite of this remarkably reduced tax burden, tax avoidance is costing the UK Treasury almost £70bn[10] each year.

Only one in four of the UK’s top companies pay their taxes[11], 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[12], 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[13], 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[14].  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%[15] 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[16].
  • 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[17], and 32 have died every week for the last three years, while undergoing stressful ATOS ‘work capability assessments’[18].
  • Hate crimes against disabled people shot up 25% in 2012.
  • The number of people reliant on Food Banks tripled in 2013[19], 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.[20]
  • Statutory Homelessness [1] rose by 21% in England and 17% in Wales in 2012[2]. 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 [3].
  • The average cost of a single room in a care home has risen to over £27,000 a year[21].  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[22], and 24,000[23] dying each winter because they cannot afford to heat their homes.

Where Will the Axe Fall Next?

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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

axe004Liberal 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.

 


[9] Ibid

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18 thoughts on “Osborne to Axe Welfare State with £25bn of New Cuts. What’s he Coming for Next?

  1. Pingback: Austerity | *Orbis non sufficit*

  2. Pingback: Osborne to Axe Welfare State with £25bn o...

  3. In my imagination, I visualise a tree full of monkeys. They are all chattering and screeching as they do. It seems they are having a good old party. A whale of a time ! A good representation of all the politicians, bankers and elitist. In their little minds they entertain them selfs by throwing any object they can in the path of us poor dumb humans. They are all blissfully ignorant of their arrogance, this game play is normal to them, they know no other, they really are that stupid.

    Just press the print button George. You normally do and David will take care of the media because, he is now the media editor chief.

    I really enjoy my garden. One thing I do know all the waste should be burnt and a really good bush fire would be very healthy for all concerned.

    To cut few billion from George’s fantasy numbers I suggest Bring our troops home from the fictitious war that Tony started, that would save at least 6 billion then we could start of the white elephant palace in Brussels that alone would be enough. George. Remember it’s only monopoly money, sorry — currency and you thought it was all so real 😉

  4. Couldnt agree more Ro Atkinson lining their own pockets while they can. Cameron has publicly stated he intends borrowing a further 700 billion, the recession is only just beginning.

  5. What has always chewed me up ever since I started working, was the massive differentials in salary between the highest and the lowest paid in our society. There must be a few billion that could be saved by capping some of the outlandish salaries of the professionals, such as the Legal profession workers ( and many others). Some of this money should be redistributed downwards, which would have a reducing effect on the welfare state. Getting rid of useless, costly institutions such as the House of Lords, would save another billion or two. A closer look at official expense accounts, and the cost of some of those ridiculous ceremonies such as the state opening of parliament, grotesque pensions of parasitic councillors who have bled the system for far too long, and supplying security for loaded fat cats who could pay for their own security to name but a few cost saving exercises, which come to mind. I could go on (and probably will), but I am sure there are plenty reading this, who could add to this short list!

  6. What about the tax dodgers? There is much more than £25 billion going begging in their tax havens. Add to that the big corporation tax dodging, and the country could be quite well off ( as a nation of satisfied individuals), if those taxes could be recovered, instead of the divided society we have now.

    • “£25 billion going begging in their tax havens..”

      The truth….Many TRILLIONS £/$ going begging in their tax havens.

      The Queen of England/UK ALONE is rumoured to have TRILLIONS of £’s in secret accounts, well hidden away, please remember the royals have had centuries to accumulated their ill gotten gains that really belongs to the peoples of the world where the royals have raped, murdered, and pillaged their way throughout the centuries…..

    • http://www.ft.com/cms/s/0/1895045c-76dc-11e3-a253-00144feabdc0.html#ixzz2phCbd3uv

      George Osborne set a tough challenge for a future Conservative government on Monday, committing it to cut welfare by an extra £12bn a year after the next election while protecting pensions – the biggest single item of social security spending.

      The chancellor made a radio studio commitment on Monday morning to “find a further £25bn of cuts after the election” as part of efforts to balance the UK budget by 2018. He later explained in his full speech that nearly half of that should come from measures such as restricting housing benefit or council housing subsidies for richer people.

      http://www.ft.com/cms/s/0/1895045c-76dc-11e3-a253-00144feabdc0.html#ixzz2phCz9kMF

      Last December, the Institute for Fiscal Studies predicted that, without further cuts to social security or other annually managed expenditure, the annual real cut to government departments would be 3.7 per cent after April 2016, even deeper than the average 2.3 per cent yearly cuts already pencilled in between 2010 and 2016.

      At the time, the IFS said an additional £12bn a year savings in the social security budget would be needed to ensure that the average rate of cuts to public services did not intensify after 2016 and the chancellor acknowledged that figure was accurate in his speech.

      If £12bn of cuts to social security are found, the next government will still have to cut all departments by 2.3 per cent per year in real terms in order to eliminate a deficit currently running at about £100bn a year.

      If Osborne wants to protect the health and education budgets, as he did in this parliament, he will again have to find greater cuts in other areas, raise taxes or limit his deficit reduction ambitions.

      Finding £12bn of saving from public spending on tax credits and social security will not be easy. By committing to raise the state pension each year by the highest of 2.5 per cent, consumer price inflation or earnings growth – the so-called triple lock, most of the £111bn spent on pensioner benefits is untouchable for Conservatives.

      Mr Osborne would have to attack the £93bn bill that is spent on people of working age – mostly the sick and disabled.

      He suggested cutting housing benefit for the under-25s, but with these claimants accounting for only 7 per cent of the total, savings in this area would not get him much more than one-tenth of the way to the total.

      A willingness to look again at the pension triple lock would be potentially much more valuable to the next government. The OBR currently estimates that this uprating commitment would raise state pension spending by more than 6 per cent by 2018-19, enough to reduce the welfare bill by more than £5bn a year, almost half the total required.

      Cutting universal pensioner benefits such as free bus passes, winter fuel allowances and free television licences would save up to £4bn a year.

      But with such radical changes unlikely, the three main political parties will face difficulties in spelling out their election priorities.

      For the Conservatives, the challenge will be to convince the electorate that their potential welfare savings from non-pensioners figures are achievable and desirable so that a budget surplus can be achieved in 2018-19 as currently forecast.

      Labour, which is also committed to running surpluses, will have to spell out whether it will slow the rate of deficit reduction, whether it will match the Tories’ plans on welfare cuts or whether it will raise taxes.

      The Liberal Democrats, who say Mr Osborne’s plans are “extreme” and “unfair” will need to quantify which taxes they would raise and which other cuts it would impose to meet the deficit targets with which they agree.

      • in 1970s and 1980s the newspaper narative was, nationalize/denationalize same same tis privatize/de privatize… and usually it was left political party bring in right political practice… same same

        if wwii was to save us from something like 12million uneccessary death pr. yr … well we got facism

  7. My dearest wish for this year is for Osborn and cameron and his fat bully boys would all become severely disabled, then when someone mentions the words sick, disabled I love to see the fat faces smile then.
    The most evil government ever to rules Britannia, the most murderous government ever to rule Britannia, when will this evil stop? 2015 IS WHEN THIS EVIL GOVERNMENT WILL STOP THIER MURDEROUS DESTRUCTION OF BRITANIA.

  8. I don’t think Nick Clegg has gone down to zero cred. We all knew he was Dave’s bitch and it is probable that he is going to become even more vehemently what he promised to be before their civil partnership, if only out of shame. In the early days he must have known he was going to have to take a lot of flack for mixing with the tories but he can’t possibly have known just how bad they were going to get. They just keep getting worse. They are now at the point where I am seriously wondering when we are going to find out that they have been taking massive bungs for the changes they are making.

  9. It is the same agenda across the entire western world,achieved by differing means from country to country ,but the result is the same ,the impoverishment of the general populace,to remove any vestige of political power/economic power,for the man without either of these is simply a slave,that can be dictated to with no means of redress,just do as you are told or starve.Yet all of the millions of English people,whos delusions compel them to consider themselves intelligent,will meekly vote for more of the same,and complain when they get it,time after time they ignore their self interest and that of their children,thier country ,their world,truly it is time for change,but while there are tits in the sun and foreigners playing the national game on the back page they will happily drag us all to ruin,tyranny and oppression simply because they are so self-obsessed that they will not unite against it.

    • Well written and starkly laid out, thanks.

      We need to focus and fight now for change. Post war welfare state was used to appease the working/poor people because they were strong and united then and those on power could see their status quo (the workers earning the money for the rich) was going to be toppled. So the welfare state was the pay off.

      With that gone, the ‘workers’ (by workers I mean the working class) need to be ready for change, we need to be ready to topple this system that works for only a very few.

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