So Gorgeous George’s last bribing budget came out, with 50 days to go until the General Election. 50 Days of Yes to More Austerity….and very few surprises, with the expected concessions for the oil and whisky industries. The novel Help-to-Buy ISAs have been criticised by the Institute for Fiscal Studies, as (if done without a housebuilding programme) they would push up house prices, and heat the (predominantly southern – with house prices going up by 13% in London last year) housing bubble even more. Current economic growth comes from 130 billion of subsidised mortgages – which enable consumers to feel comfortable about borrowing again…creating a mini consumer boom…which only lasts until interest rates start to go up.
Supposedly Osborne also revealed a new harder-to-forge pound coin design – perhaps someone had suggested to him that this one would be more difficult for the Scots to ‘steal’?
Perhaps the one real surprise was that he said that the economic recovery was progressing well – yet made no attempt to present a budget ameliorating the previously projected cuts…until some 5 years time. So, of course, this left plenty of room for HM Opposition, the Labour Party, to leap in and play progressive posturing, with less cuts, or slower cuts, or a smaller overall total. Ok, they had been claiming that the government were planning a further 75 billion in cuts, so the ‘reveal’ of a mere 30 billion over the next two years might have taken a little of the wind out of their sails, but they would still have room to descry the coming axe in some form or another…
Except that they didn’t. Shadow Chancellor Ed Balls explicitly said that he would not change or wish to reverse ANYthing of what had been announced by the Chancellor. Labour’s much vaunted declaration that they would not cut so much or so fast, has been shown ultimately to be hollow. Yesterday in Glasgow, Miliband tried to distance himself from the Conservatives in order to try to recover Labour’s position in Scotland, by saying that the Chancellor was making cuts not because he had to, but because he wanted to. But then, where does that leave Labour, if their Shadow Chancellor is saying that he would make the same cuts?
This not only vindicates what may have previously been judged to be ‘cruel’ or ‘unfair’ comparisons with the Conservatives, and suggestions that there was not any difference larger than a cigarette paper between them. They do not simply have the same political priorities, the scale of those priorities is identical, even when they could make political capital in the last weeks of a general election campaign. Their desire to be as vanilla-identical to the Conservatives in order to get those votes in the SE of England is so great, that they might as well marry the two parties together. As Richard Walker remarked, after Osborne’s budget and the failure of Labour to criticise it: “The expected influx of SNP MPs in the General Election will not just benefit Scotland, in the shape of the extra powers it can wrest from Westminster control. It will also give Britain the effective opposition so obviously and dangerously missing from the House of Commons”.
This also follows on from Shadow Welfare Secretary Rachel Reeves’ comment: “We are not the party of people on benefits… we’re not the party to represent those who are out of work.” If the Labour Party is not the party of the poor or the unemployed (or the ‘economically inactive’) – and, let’s face it, neither of the current coalition partners seem likely to be in a rush to take over that role…then who does represent these 11 million UK residents that are left without political advocacy?
Derek Bateman noted on February 1st that Britain has some of the lowest social mobility in the developed world, with the OECD figures showing that our earnings are more likely to reflect those of our fathers than any other country: “Social mobility hasn’t changed since the 1970s – and in some ways has got worse”. The Institute for Fiscal Studies noted directly after Osborne’s budget that the Coalition’s policies have singularly targeted the poorest in the UK (leaving middle-to-high earmers “astonishingly protected”, as their Director put it). Overall, the IFS says that median income for 22-30 year olds is 7.6% lower than it was in 2008. If looked at by share of average earnings, the UK pension is 23rd out of 27 in the European Union. From 2008-2014 9% of public sectors jobs were lost, with only a 4% concomitant increase in private sector jobs. Since the coalition government took office in 2010, the average wage is worth 2.5K less (and is 3.3K down on its pre-crisis peak). From 2002-2014, the number of single people living in emergency homeless accommodation in Scotland (for which housing benefit cuts in both support and eligibility are largely to blame) increased from around 4,000 to over 10,000.
As observed by the Bank of England’s chief economist, this is the worst fall in living standards since Queen Victoria was monarch in mid-19th century: the illusion of a recovery is generated by service industries subsisting on low pay and insecure work. And as Osborne announced last week, a further 12 billion (mostly unspecified) in ‘savings’ are planned for the welfare budget.
Currently, there are three generally recognised grades of poverty: Relative Poverty (household income less than 60% of the UK average); Severe Poverty (household income less than 50% of the UK average, 11.5K in 2012-2013); Extreme Poverty (household income 40% or less than the UK average 9.2K in 2012-2013). Although relative poverty has fallen in the last ten years, Severe Poverty (affecting half a million Scots, including 330,000 working-age adults, 100,000 children, 80,000 pensioners) and Extreme Poverty have both increased: the combination of welfare cuts and eligibility changes, with insecure contracts and low income (the living wage of 7.85 and hour is 20% above the legal minimum wage), against a background of costs rising faster than wages, means that once you are in poverty, it is extremely difficult to get out of it, and the reduction in Relative Poverty probably is mainly a reflection of those who have fallen out of it down to Severe and Extreme levels. A Scottish Government Report on the 17th March made the observation: “In short, poverty is changing; work is no longer a guarantee of a life free of poverty; people in poverty face increasing costs; and those in receipt of benefits and tax credits – which of course includes many in work – are finding their incomes squeezed.” Hence, the chilling new term of the ‘in-work poor’. And so we have 167 organisations across Scotland trying to provide food, with emergency food aid now being rolled out to those in work as well as on a wide variety of social security payments, with the numbers using foodbanks increasing from 5,726 in 2011-2012 to 71,428 (almost a third of them children) in 2014. There is also an increased rise noted by police in people shoplifting for food – a sign that the social stigma of accepting charity is still difficult for many to overcome.
And let us not look to the ‘new legislative powers’ resulting from the Smith Commission to save us. A new study by the University of Edinburgh has concluded that a last minute intervention, specifically by Ian Duncan Smith, blocked extensive tax and welfare devolution, due to his fears of repercussions on UK policy. Thus we are left with 81% of welfare still controlled by Westminster, 70% (37.3 out of 53 billion) of tax revenues from Scotland still being controlled by Westminster. And the worries concerning the transition from one government to another of the few newly devolved components (particularly those being voiced by the voluntary sector with regard to the introduction of Universal Credit, in a letter signed by 56 Scots voluntary sector organisations in January), do not promise a smooth and seamless handover, at a time when those in extremely vulnerable situations can ill-afford to be fumbled or lost in transition.
“It’s just not deliverable. The UK Government’s approach to benefits is completely the opposite to the Scottish approach to public services. They are two different bureaucracies heading in different directions. The idea that they could call this [the command paper, ‘Scotland in the United Kingdom: An Enduring Settlement’] when it is really just a political quick fix tells its own story.” (Martin Sime, CE of Scottish Council for Voluntary Organisations, 10/2/2015)