The Diversion Tactics of #Budget2015

1) Housing Chaos

As a result of George Osborne’s Summer Budget this year, says Paul Waugh at The Huffington Post, “at least 14,000 fewer affordable homes will be built” in the UK. This statistic, from the Office for Budget Responsibility (the government’s “own financial watchdog”), came as a result of a small 1% cut in rents for council and housing association tenants (a seemingly positive measure) which would leave a ‘funding gap’ for housebuilding. And this was precisely why Shadow Chancellor Chris Leslie claimed the budget would “mean going backwards rather than forwards on new home construction”. For the TUC’s Frances O’Grady, this regressive move would combine with house price inflation (“forecast to increase faster than wages”) to put home ownership “out of reach of more workers” in the next five years.

In fact, according to the National Housing Federation (NHF), the “£1.45bn hit to housing association and town hall budgets” could even see “as many as 27,000 new homes” not being built. Alternatively, if we believe the NHF’s David Orr, that figure “could be much higher”. The worst part of all, says the Charted Institute of Housing’s Terrie Alafat, is that the government measures are “going to make it much tougher to build new homes at a time when we desperately need to do so”.

In other words, the 1% cut in rents announced by Osborne seemed, suggests Waugh, to be pandering to “‘working class Tory’ votes”, especially when we consider that, just two years previously, the chancellor had actually supported “a 10-year plan to let social housing rents rise by 1% above inflation”.[1] If he genuinely wanted to help citizens on the rental market, for example, he could have introduced rent control in the private sector (where a significant portion of housing benefits are currently spent[2]).

Housing charities, meanwhile, have attacked government cuts to housing benefits. Shelter’s Kate Webb, for example, speaks about how “large numbers of working households” would “see huge swaths of the country become unaffordable by the end of this parliament” thanks to benefit cuts. According to Webb, the previous Tory-led coalition had already “radically removed one of housing benefit’s strongest features” (i.e. its “responsiveness to actual rent increases”), making it increasingly harder for families to afford local housing. And the new freeze of Local Housing Allowance rates for four years (twice what was promised in the Conservative manifesto) will “inevitably exacerbate” this situation, she stresses. In short, the most vulnerable households will soon “struggle to find another home without moving large distances”, and it is “difficult to see how homelessness will not continue to rise”. Furthermore, the “huge national drift towards unaffordability” will continue, “pushing the system to breaking point”.[3]

Even Crisis (a charity “founded in the late 1960s by leading Conservatives”) insists that the new “short-sighted cuts” to housing benefit are “likely to increase homelessness” and cost the taxpayer “even more than they save” in the long-run. The organisation’s Jon Sparkes speaks in particular about how benefits are a lifeline “for many young people”, for whom “living with their parents simply isn’t an option”. Jon Stone at The Independent reminds us that, under the Tory-led Coalition, “homelessness rose from 1,768 in 2010 to 2,744 by 2014”.[4] In other words, both history and professional opinion suggest that homelessness will continue to rise in the next five years.

2) A ‘Living Wage’ Concealing Greater Inequality

The budget surprisingly introduced a ‘National Living Wage’ – something long argued for by the Left – which would “rise to £9 an hour by 2020” (below the current minimum wage in London).[5] The TUC found it difficult to criticise this measure, but insisted that the government was “giving with one hand [and] taking with the other”, with “massive cuts in support for working people” set to “hit families with children hardest”.[6]

The Joseph Rowntree Foundation, meanwhile, asserted that, while “the move to create a national wage which reflects living costs is an important and welcome recognition that the minimum wage falls well short of achieving an adequate standard of living”, Osborne’s “£12 billion cuts to welfare” have been “targeted at low-income working families, most of whom rely on tax credits to make work pay”. Whilst being very tactful in its comments, the organisation stressed that, essentially, “working families on low incomes will find it even harder to make ends meets” thanks to the government’s budget.[7]

The BBC’s Brian Milligan, meanwhile, reports on how the Institute for Fiscal Studies (IFS) has affirmed that “thirteen million UK families will lose £260 a year on average because of the Budget’s tax and benefits changes”. Three million families, according to the institute’s director Paul Johnson, “are likely to lose an average of £1,000” as a result of tax credit changes, even when “taking into account higher wages” as a result of the new ‘living wage’. For Johnson, “those in work – but receiving low salaries – will be the worst-affected”, and the Budget has essentially reduced “the incentive for the first earner in a family to enter work”. The Resolution Foundation shares this view, stating that the government measures would “weaken the incentive both to enter work, and earn more”.

The regressive nature of the budget, Milligan reports, can be seen in the fact that “those in the second poorest category” in the UK “are likely to lose more than £1,200 a year” while “the richest 10% stand to lose less than £400 each” and “those in the second wealthiest category will be better off, by more than £100”. Although Osborne has logically sought to defend his budget, claiming workers will be better off, the IFS has insisted that “higher wages [will] not compensate for cuts to tax credits”.

“We shouldn’t think that a higher minimum wage will compensate all low income working families for their losses”, insists the Resolution Foundation’s Gavin Kelly. “Many working households will be left significantly worse off”, he stresses. [8]

3) Another Slap in the Face for Youngsters from Low-Income Families

The Guardian, meanwhile, reports that many sixth formers and university students have condemned the replacement of maintenance grants for poorer students with a system of loans. The paper suggests that “this additional lump of debt” could well be “the straw that breaks the camel’s back” and once again discourage poorer students from going to university. Edinburgh University student Emilia Bona, for example, says that if she had not had the maintenance grant, she “wouldn’t have been able to go to university”. She continues, asserting that prospective students have to “weigh up the benefit of the degree, against the years of debt”. In short, she stresses, the new Conservative strategy is “based on a philosophy that says if you’re poor you don’t deserve better”, as it will make things “even harder” for a group that already finds it incredibly difficult to go to university.

Jade Dagwell-Douglas, who still hopes to go to university in the future, says “I can’t help my situation and I can’t help that I’m in a low income family”. University often acts as a bridge that gives young people a chance to think freely about what they want to make of their lives, and this is precisely what Jade was hoping to do as she has no set career in mind. In spite of facing many years of debt, then, she feels like she has no choice but to bite the new bullet shot down from the Tory cabinet.

University of Westminster student Daisy-Mae Greenaway, meanwhile, asserts that, on top of her full maintenance grant, she has also had to get a “zero-hour contract job”. Without the grant, she insists, she “definitely wouldn’t have been able to afford to go away to uni”, and would “have had to go straight into work”. The value of her degree, she says, simply would not have been “worth that much debt”.

Southampton University student Freya Jeffries, who also has the full grant, states that the extra money “takes the stress away”, as “worrying about money would really affect [her] studies”. Without it, she says, she would have had to look for a job and would have had very little time to relieve herself from stress. In her opinion, the message sent by Osborne’s new elitist measure “is that you’re not welcome, and only the rich can go”.

Warwick University’s Abbie Button suggests that, as a twin, the lack of a full maintenance grant would have left her parents with the difficult choice of deciding who most deserved to go to university. At the same time, she points out, “I might have thought differently about where I went if I didn’t have the grant”. In summary, she insists, “scrapping maintenance grants is taxing the poor”.

Manchester Met student Ellis Mallett says that, even with a maintenance grant, money worries make her “lose sleep at night” for, while she can “try and ignore the scale of the loans while at university”, she knows her debts are increasing on a regular basis.[9]

Looking at the comments of this small handful of students, we can conclude that the new government measures will hinder social mobility even more, limit the adequate and appropriate training of the brightest youngsters from low-income areas, and make university an even less desirable prospect. In short, Osborne has sent out a message that economically privileged youngsters are more welcome in higher education than their deprived counterparts.

4) Increasing Injustice Aided by a Spineless Opposition

Tom Clark in The Guardian suggests that Osborne has once again relied on false premises to push through largely regressive economic measures, having already blamed New Labour in 2010 for having caused the recession with public sector spending. Now, Clark argues, the government’s continued destruction of the welfare system is defended by a “second important untruth”, that poverty is somehow “the product of the government having given poor people too much money” in the past. With the budget, he says, the Conservative party is simply “sheltering behind an eye-catching rise and rebranding of the minimum wage, which will have less effect than the headlines suggest because it is restricted to over-25s”, whilst at the same time ensuring: that “low earners will be able to keep less of their pay packet before they start losing benefits”; that “children will be cut out of the system, and therefore impoverished”; and that the tiny percentage of citizens “higher up the pay scale” will actually “enjoy real income tax cuts”.

Polly Toynbee, meanwhile, says that the budget represents a “deep and permanent shrinking of the state” which brings public spending below the EU average and even below that of the USA. Effectively, she stresses, these cuts mean that “everything that makes people proud is waning, from science to the arts, transport, libraries, sports, parks and swimming pools”. In other words, the Tories are turning the UK back into a country of “public squalor amid private excess”, where low-earners, children, and students will suffer the most.

For Matthew d’Ancona, the budget showed that Osborne “is an astute political strategist” who has sought to use a “balancing innovation” to hide his savage cuts to welfare. The Left has long claimed that the taxpayer should not be forced to “subsidise the parsimony of employers” with benefits, and many Conservatives “instinctively hate interventions in the labour market”, having even “warned of mass unemployment when New Labour introduced the national minimum wage”. However, in spite of the fact that there will still be Tories unhappy with the idea of the new ‘living wage’, Osborne’s decision to run with it essentially represents an “audacious land grab” of terrain long considered to be New “Labour’s sovereign soil”.

Aditya Chakrabortty agrees with d’Ancona, calling Osborne’s budget “a serious invasion into [New] Labour territory”. While it is indeed true that “the rise in the minimum wage… is undermined by the hacking away at tax credits”, the fact is that Ed Miliband pledged in the run-up to the elections a mere £8 an hour minimum wage by the end of the decade. At the same time, while the “crackdown on non-doms” was “not hard enough”, insists Chakrabortty, it is “much better than anything Blair and Brown managed in their 13 years” in power. In short, the chancellor was attempting to convince voters that the Conservative Party was like an ‘economically responsible’ version of New Labour.

The £1billion “cut in inheritance tax” for the wealthiest 8% of the country, however, for which even the Tories had previously said there were “not strong economic arguments”, showed that the budget was essentially benefitting the “very richest in society” in a clearly disproportionate manner. The reduction of corporation tax to 18% by 2020, meanwhile, “in a country that already has lower corporation tax rates and more generous corporation tax benefits than the US, Germany or any of our major competitors”, was just a kick in the teeth for ordinary British citizens (especially considering that the government already “hands businesses £93bn a year in direct corporate welfare” [see [10]]).[11]

Liberal Democrat MP Tim Farron points out that public sector workers are being hit with pay rises of just 1% (“well below inflation”) for four more years, while working-age benefits are being frozen precisely as “6.6million people in working families live in poverty”, creating “a real terms cut of 11% over four years”. In short, he insists, this dichotomy summarises well the “Conservative approach”, i.e. “hitting the working poor, the disadvantaged young, and the hard-working public sector” whilst “helping the very wealthiest”.[12]

Nonetheless, argues Chakrabortty, the New Labour frontbench (“in disarray” after failing to inspire voters in the recent elections) remains largely “too frightened to say anything leftwing” and criticise in any meaningful way how the Conservative regime is “cruel to those in low-paid or no work, even while directing cash to the richest”. In short, New Labour has for too long been “retreating from [its] own territory” and “leaving Osborne to rush in and plant a big blue flag on it”.

Gaby Hinsliff supports this view, insisting that New Labour has been left “floundering”, with many citizens distracted by the rabbit taken out of Osborne’s hat in the budget (and not focussed on him “rifling pockets” off camera). The Tories’ “unexpected moves”, though, including the “curbing [of] the buy-to-let boom by reducing landlords’ tax relief” and the “ending [of] permanent non-dom status”, cannot hide the fact that the 2015 Budget seriously damages equality, social mobility, and the future of the country.[13] In other words, a summary of the new measures is that life is being made a whole lot more difficult for the most vulnerable people in society, and a whole lot easier for those at the top.















About Ed Sykes

Independent journalist. Co-founder of Phoenix Media Co-operative. Author of Rojava: An Alternative. Ex-Canary editor and writer (2015-2020). Aka 'Oso Sabio' - see @ososabiouk on Twitter.
This entry was posted in Budget 2015, Conservative Party, Conservatives, Labour Party, New Labour, Tories, UK, UK Elections 2015, UK Politics and tagged , , , , , . Bookmark the permalink.

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