The budget, policy and party power
Similar many people, I puzzled over the budget on Midweek. Many were puzzled by the complexity of working out what the bear on of some significant changes in both revenue enhancement and welfare would be. Others were puzzled—baffled, or just evidently wrong-footed—by the mix of proposals. As Nick Robinson said on the BBC that evening, there were things that would have clearly pleased Margaret Thatcher, and things that conspicuously would not have. Chief amidst these was the remarkable pledge to raise the minimum wage, now called the 'living wage', to £9 per hr past 2020. Thatcher would have seen this as an unacceptable and unwelcome interference in the market, and commentators have suggested that information technology will pb to real problems for business, and possible job losses—and the introduction of the minimum wage by Labour was something the Tories bitterly opposed for just these reasons.
But there is something else remarkable well-nigh this measure, along with the commitment to clamp down on revenue enhancement evasion and avoidance and the loss of taxation privileges for 'not-doms': these are lifted straight from Labour's manifesto, and in some cases, exceed what Labour promised to do. The last thing we expected of this Bourgeois government was to out-Labour old Labour. As Jonathan Freedland put it rather wittily:
Similar a grasping relative rummaging through the closet of a dying family member who lies helpless on the bed, Osborne set most stealing any item of Labour clothing that took his fancy – picking out all those with mainstream appeal.
It seems to me that, if the Conservatives are wanting to move more to the centre basis, this can merely be a good thing. In some ways, this appears to be doing what Tony Blair did in the other direction in 1997. This is surely good for the electorate, equally it blunts the edges of our crude first-past-the-post, all-or-nothing electoral organisation. In the absence of any hope of electoral reform, it is somewhat comforting that, even if the election box did not listen to the range of views of the people, someone in the Regime has. Later on all, the promised cuts to welfare reform were widely unpopular; vi out of x did non like what was proposed (the election outcome withal) and the aforementioned was even true of 4 out of 10 Tory voters.
It is not the first time this has happened. The modified austerity programme implemented by the Coalition Government took them not to the position they themselves had planned, merely to almost exactly the place that Labour had promised earlier the previous election.
Information technology is difficult to know what internal dynamics, in Osborne or the cabinet, led to this poaching of policy. But it was clear that Work and Pensions Secretary Iain Duncan Smith was delighted. His double fist dial as the living wage was appear went viral. Possibly it was his own Christian convictions that had made him push for this, and compensated for criticism he has received from Christian leaders on other issues.
How would Labour respond? During the budget, they all looked like they were sulking. Not only had they lost the election; at present they had even lost their manifesto. But this was the wrong reaction. Surely Harriet Harmon should have stood there, and on these three issues, proclaimed how delighted she was that the Conservatives had seen fit to adopt Labour policy. They might take lost the vote, but on these three issues at least, they had clearly won the statement. Unfortunately, to say something like this you would need to think that policies and principles were more important than party and ability, and there is not often evidence of that in Parliament. For a good example of the desire for power triumphing over personal principle, have a look at Nicky Morgan's move from opposition of aforementioned-sex marriage to campaigning endorsement in return for a cabinet post.
That would all accept been interesting plenty, until the analysis of the touch on of the upkeep started in earnest. Nick Palmer, sometime MP for my constituency of Broxtowe, offered his own assessment:
The current changes practice iii important things:
- Tax credits are severely squeezed, so that your income if yous get them may well go down substantially: three one thousand thousand low-income families volition lose an average of £m/year.
- A "Living Wage" of £9/hour is introduced, pushing employers to pay the poorest workers more, to make upward for the drop in tax credits. Effectively this transfers responsibility from the State to the employers.
- There is a desperate and little-noticed cut in Employment Support Allowance for people who are unwell – if it'south thought that yous're not yet well enough to piece of work but can take measures to fix for information technology, you currently go £29/week to encourage you. This is being abolished.
Afterwards looking at the numbers, he offered a sobering assessment:
The economic state of affairs remains difficult, so it's articulate to everyone that either tax increases or spending reductions are needed. But it's striking that a huge proportion of the impact is being focused on low-income people, while high-income earners actually do rather well out of the Budget. That, to be political for a moment, is what Bourgeois Governments do. Information technology'south in many people'due south short-term interest, but do nosotros really want a more divided country?
This was confirmed past the politically neutral Found for Fiscal Studies.
Thirteen million U.k. families will lose £260 a year on average because of the Budget'southward tax and benefits changes, says the Institute for Fiscal Studies (IFS). Tax credit changes could hit three 1000000 families, which are likely to lose an average of £1,000, it said. Fifty-fifty taking into account higher wages, people receiving tax credits would exist "significantly worse off", said Paul Johnson, manager of the IFS.
This does not just look incredibly unfair; information technology also fails to make much economic sense either. I can run across the economical logic of transferring the burden of responsibility abroad from the welfare system and the state to employers—just there is no economic sense in doing this in a fashion which really penalises people in work, or on the boundaries of work.
"It volition reduce the incentive for the first earner in a family to enter work," [Johnson] said. The IFS analysis suggests that those in work – but receiving low salaries – will exist the worst-affected. Those in the 2d poorest category are likely to lose more £1,200 a year. By contrast, the richest 10% stand to lose less than £400 each. And those in the second wealthiest category will exist better off, past more than £100.
Just a glance at the the IFS graphic on the likely consequence on different economic groups makes the impact of these changes articulate.
Is at that place anyone out there who voted for this Government who can wait at this and not shudder? Is there any possible economic or moral justification for this kind of net alter in a land with already accelerating inequality between the rich and the poor?
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