Today, the new Chancellor of the Exchequer, George Osborne, announced his budget. Variously named an emergency budget or an austerity budget, it is clearly more a slasher horror.
We already knew that the Tories were going to be savage with the public purse, but we are beginning to see a Liberal Democrat Party beholden to a liberal economic theory, and the sidelining of that party’s social democratic wing in the name of coalition government.
As everyone predicted, the new budget is a screw-the-poor budget: child benefit frozen for three years (huge impact on low-income families), housing benefit capped (those on low incomes will be forced out of some areas), SureStart maternity grant limited to first child (affects most families), tests for disability allowance to get tougher (fairly degrading to many claimants, costs to administer and will likely find fewer ‘bogus’ claimants than the Daily Mail expects) and VAT to increase to 20% (massively affecting the spending power of the poorest in society).
Danny Alexander, Chief Secretary to the Treasury, was quoted on the Daily Politics saying that a VAT rise is a progressive tax because the rich spend more! It is quite clear that a blanket price increase hits the poorest hardest, thus making the tax clearly one of the most regressive.
The new banking levy is a lightweight moneyspinner. If the banks are not too worried about, we can tell that it’s not really going to make them pay. Although many seem to want punitive measures against the banks, we surely must be able to find a more intuitive solution that involves rethinking how the financial business operates. The budget couples this with pushing through the selling off of bits of Royal Mail, and the selling off of air traffic control: the continued privatisation of essential infrastructure. The old Tory mantra that if you help businesses the profits will trickle down through society is back in play: clearly they believe it more important to help businesses to keep the economy afloat than to help those on low income to keep society afloat. It didn’t work in the past and it won’t work now.
Many aspects of public-service cuts are already with us ahead of the planned 25% cut in many departments. However, it is clear that so-called ‘ring fenced’ departments will be severely affected by pay freezes and other knock-on effects. Working in higher education, I’ve seen jobs advertised and then withdrawn as the funding for them disappears. Living close to two large colleges of further education that provide skills and training for many, I am worried to hear that a large number of teaching jobs are to be axed in both places. This might save money now, but severely deskills the future workforce.
This is a cynical and shorttermist budget. It does nothing to think about the underlying issues of government borrowing and spending (no one is asking why governments borrow the way they do), the failings of the free market to provide any kind of security, and the almost absolute decoupling of money from value. Many will oppose this wholesale destruction of jobs, infrastructure and welfare; I pray that we might overcome.