Tag: Institute for Fiscal Studies

The benefit cap, phrenology and the new Conservative character divination

“This is a round up.”

The song is about a world where citizens are deeply suspicious of one another, where fear of the Other is politically instigated and nurtured, social conformity, discrimination, exclusion and prejudice reign supreme. It’s about a society blindly climbing Allport’s ladder.

 

“Of the forehead, when the forehead is perfectly perpendicular, from the hair to the eyebrows, it denotes an utter deficiency of understanding.” Johann Kaspar Lavater, phrenologist (1741–1801).

 

Back in the nineteenth century, phrenology was the preferred “science” of personality and character divination. The growth in popularity of “scientific” lectures as entertainment also helped spread phrenology to the masses. It was very popular among the middle and working classes, not least because of its simplified principles and wide range of social applications that were supportive of the liberal laissez faire individualism inherent in the dominant Victorian world view. It justified the status quo. Even Queen Victoria and Prince Albert invited the charlatan George Combe to feel the bumps and “read” the heads of their children.

During the early 20th century, there was a revival of interest in phrenology, partly because of studies of evolution, criminology and anthropology (pursued by Cesare Lombroso). Some people with political causes used phrenology as a justification narrative for European superiority over other “lesser” races. By comparing skulls of different ethnic groups it supposedly allowed for ranking of races from least to most evolved.

It’s now largely regarded as an obsolete and curious amalgamation of primitive neuroanatomy, colonialist supremicism with a dash of moral philosophy. However, during the 1930s Belgian colonial authorities in Rwanda used phrenology to explain the so-called superiority of Tutsis over Hutus. More recently in 2007, the US State of Michigan included phrenology (and palm reading) in a list of personal services subject to sales tax. 

Any system of belief that rests on the classification of physical characteristics is almost always used to justify prejudices, social stratifying and the ranking of human worth. It highlights what we are at the expense of the more important who we are. It profoundly dehumanises and alienates us.

Though the saying “you need your bumps feeling” has lived on, may the pseudoscience of phrenology rest in pieces. 

CrIY-YQWEAQyIeg

Phrenology is dead: long live the new moralising pseudoscience

The Conservatives have simplified the art of personality and character divination. They have set up a new economic department of the mind called the Behavioural Insights Unit. This fits with the age old Conservative motif of a “broken Britain”and their obsessive fear of social “decay and disorder.” Apparently, we are always on the point of moral collapse, as a society. And apparently, it isn’t the government’s decision-making that is problematic: poor people are entirely responsible for the poor state of our country. Those who have the very least are to blame. That’s why they need such targeted austerity policies, to ensure they have even less. We can’t have the poor being rewarded with not being poor, that’s just bad for big business.

Under every Conservative government, we suddenly see the proliferation of bad sorts; cognitively biased and morally incompetent people making the wrong choices everywhere and generally being inept, non-resilient and deficient characters. The way to diagnose these problems of character, according to the government, is to establish whether or not someone is “hard working”. This is usually determined by the casting of chicken bones, and a quick look at someone’s bank balance. If it lies offshore, you are generally considered a jolly good sort.

If you need to claim social security, be it in-work or out-of-work support, then you are most definitely a “wrong sort”; a faulty person and therefore in need of some state treatment to put you right, just to ensure that your behaviours are optimal and aligned with politically defined neoliberal outcomes. Apparently, poor people are the new “criminal types.” The only cure, according to the government, is to make poor people even poorer, by a variety of methods, including a thorough, coercive nudging: a “remedial” income sanctioning and increased conditionality to eligibility for support; benefit cuts; increasing welfare caps and a systematic dismantling of the welfare state more generally,

Oh, and regular shaming, outgrouping, stigmatising and scapegoating in the meanstream media and political rhetoric, designed to create folk devils and moral panic.

The new benefit cap: a policy designed by the neoliberal rune casters

The regressive benefit cap will save a paltry amount of money in the short term. In the long term it will cost our health and social services many millions. It’s misleading of the government to claim that it will save the “tax payers” money, since most people needing to claim social security have worked and paid taxes too. VAT is also a tax, and last time I checked, people needing support because they lost their job or became sick or injured are not exempt from paying taxes. In fact the poorest families pay the highest proportion of their income in tax

We forget that people in poverty pay taxes because we forget how many different ways we are taxed:

  • VAT
  • Duties
  • Income tax
  • National Insurance
  • Council tax
  • Licences
  • Social care charges, and many others taxes
  • Bedroom tax

Of course there’s a stark contrast in the way the state coerces the poorest citizens into behaving “responsibly”, carrying the full burden of austerity, while there is an abject failure to rein in executive pay, or to tax the Conservative party paymasters, and recover the billions lost in revenue to the Treasury through tax havens.

Poor people get the bargain basement package of behavioural incentives – which is all stick and no carrots – whereas the wealthy get the deluxe kit, with no stick and plenty of financial rewards. 

Nearly a quarter of a million children from poor families will be hit by the extended household benefit cap due to be introduced this autumn, according to the government’s latest analysis of the impact of the policy. It will see an average of £60 a week taken out of the incomes of affected households that are already poor, pushing them even deeper into poverty. About 61% of those affected will be female lone parents.

The cap will damage the life chances of hundreds of thousands of children, and force already poor families to drastically cut back on the amount they spend on essential items to meet basic needs, such as food, fuel and clothing. Originally benefit rates were calculated to meet basic survival needs – covering the costs of food, fuel and shelter only. 

The new cap unjustifiably restricts the total amount an individual household can receive in benefits to £23,000 a year in London (£442 a week) and £20,000 in the rest of the UK (£385 a week). It replaces the existing cap level of £26,000. All of this support is dependent on whether or not you comply with the very complex conditionality criteria. The support can be withdrawn suddenly, in the form of a sanction, for any number of reasons, and quite often, because your benefit advisor simply has targets to reach in order to let you know that nothing at all may be taken for granted: eating, feeding your children, sleeping indoors and keeping warm in particular.  

The government claims the cap incentivises people to search for work, and says that 23,000 affected households have taken a job since the introduction of the first cap in 2013. However, the government uses “off flow” as a measurement of employment, which is unreliable, as studies have indicated many claimants simply vanish from record.

Worryingly, an audit in January this year found that the whereabouts of 1.5 million people leaving the welfare records each year is “a mystery.” The authors also raise concern that the wellbeing of at least a third of those who have been sanctioned “is anybody’s guess.” It’s not the first time these concerns have been raised.

It emerged in 2014, during an inquiry which was instigated by the parliamentary Work and Pensions Select Committee, that research conducted by Professor David Stuckler shows more than 500,000 Job Seekers Allowance (JSA) claimants have disappeared from unemployment statistics, without finding work, since the sanctions regime was toughened in October, 2012.

This means that in August 2014, the claimant count – which is used to gauge unemployment – is likely to be very much higher than the 970,000 figure that the government is claiming, if those who have been sanctioned are included.

A Department for Work and Pensions (DWP) spokesman said: “The benefit cap restored fairness to the system by ending the days of limitless benefit claims and provides a clear incentive to move into work.”

However, firstly, social security is based on a national insurance contribution principle, and was already fair. Most people have worked and contributed to their own provision. Secondly, people in work are also poor. Those on low pay who need to claim additional support are also being sanctioned for “non-compliance”. In fact  much of our welfare spending goes towards supporting those people in work on low wages. We spend most on pensions, a large amount on in-work benefits and relatively little provision is for those out of work. The DWP don’t half chat some rubbish. A fair system would entail the government ensuring that employers pay adequate wages that cover rising living costs, instead of permitting employers to profit from our welfare state.

In a deregulated labour market, poorly paid workers are now held individually and entirely responsible for how much they earn, how many hours they work, and generally “progressing in work”. If they don’t “progress”, then what used to be an issue for trade unions and collective bargaining is now an issue addressed by punitive social security law, authoritarian welfare “advisors” and financial penalties.  

You can see where the incremental increases in the benefit cap are leading the public. The justifications and line of reasoning presented by the Conservatives are leading us down a cul-de-sac of rationale, where the welfare state is completely dismantled, and the reason given will be that this ensures “everyone works”, regardless of labour market conditions and the availability of reasonable quality and secure jobs that pay enough to support people, meeting their basic needs sufficiently to lift them out of poverty.

If these measures are intended to force people into work, this government’s self-defeating, never-ending austerity policy is hardly the ideal economic climate for job creation and growth, and where are the affordable social homes for the growing ranks of low paid workers in precarious financial situations because of increasing job insecurity and zero hour contracts? The gig economy is a political fig leaf.

An official evaluation of the cap by the Institute for Fiscal Studies in 2014 found the “large majority” of capped claimants did not respond by moving into work, and a DWP-backed study in Oxford published in June found that cutting benefit entitlements made it less likely that unemployed people would get a job. Not that we didn’t already know this. If people cannot meet their basic needs, then they simply struggle to survive and cannot be “incentivised” to meet higher level psychosocial needs. The government need to read about Maslow’s hierarchy of needs, and the Minnesota starvation experiment. (See Welfare sanctions can’t possibly “incentivise” people to work .)

Joanna Kennedy, chief executive of the charity Z2K, said: “Our experience helping those affected by the original cap shows that many of those families will have to reduce even further the amount they spend on feeding and clothing their children, and heating their home to avoid falling into rent arrears and facing eviction and homelessness.”

As Patrick Butler points out in the Guardian, the government have already been ordered to exempt carers from the cap after a judge ruled last year that it unlawfully discriminated against disabled people by capping benefits for relatives who cared for them full time. Ministers had argued that carers who looked after family members for upwards of 35 hours a week should be treated as unemployed.

A previous court ruling found that the benefit cap breached the UK’s obligations on international children’s rights because the draconian cuts to household income it produced left families unable to meet their basic needs. This is the fifth wealthiest nation in the world, and supposedly a first world liberal democracy.

The deputy president of the supreme court, Lady Hale, said in her judgment: “Claimants affected by the cap will, by definition, not receive the sums of money which the state deems necessary for them adequately to house, feed, clothe and warm themselves and their children.

As Stephen Preece from Welfare Weekly pointed out yesterday, the word vulnerable suggests that people are weak, when in fact they are only made vulnerable through the actions or inaction of those around them, including (and especially) the government. I agree. To label people as vulnerable displaces responsibility from government and diverts us from the reality and nature of the punitive policies aimed at poor citizens – this is political oppression. 

Ideological justification narratives and pseudoscience

I waded through the government document Welfare Reform and Work Act: Impact Assessment for the benefit cap. Basically the government use inane nudge language and their central aim is to “incentivise behavioural change” throughout the assessment. But they then claim that they can’t predict or accurately measure that. It is very difficult to measure psychobabble accurately though, it has to be said.

There are a lot of techniques of neutralisation and euphemisms peppered throughout the document. For example, taking money away from the poorest citizens is variously described as: “achieving fairness for taxpayers” (as previously stated, people claiming benefits have usually worked: they have and continue to pay taxes); “ensures there is a reasonable safety net of support for the most vulnerable” (by cutting it away further).and “strengthening work incentives”. 

For those alleged free riders claiming support because they fell on hard times, “doing the right thing” and “moving into work” is deemed to be the ultimate aim of the cap, regardless of whether or not the work is secure, appropriate, with adequate levels of pay to lift people out of poverty. Work, in other words, will set us free.

I also took the time and trouble to read the studies that the government cited as “evidence” to support their pseudoscientific claims. The government misquoted and misapplied the research they used, too. They made claims that were NOT substantiated by the scant research referenced. And there are many more studies that completely refute the outrageous and ideologically premised government claims made in this document. 

For example, Freud makes the claims that: “Children in households where neither parent is in work are much more likely to have challenging behaviour at age 5 than children in households where both parents are in paid employment. Growing up in a workless household is associated with poorer academic attainment and a higher risk of being not in education, employment and training (NEET) in late adolescence.”

The study cited was Barnes, M. et al. (2012) Intergenerational Transmission of Worklessness: Evidence from the Millennium Cohort Study and Longitudinal Study of Young People in England. Department for Education research report 234. It says:

“Though it must be stated that much of the association between parental worklessness and these outcomes was attributable to these other risk factors facing workless families. Parental worklessness had no independent effect on a number of other outcomes, such as children’s wellbeing (not being happy at school, being bullied and bullying other children), feelings of lack of control, becoming a teen parent, and risky behaviour. This evidence provides limited support for a policy agenda targeted only at getting parents back into work. ”

It is poverty, not “worklessness” that creates poor social outcomes. That is why around half of the people queuing at food banks are those in work. The biggest proportion of welfare support paid out is in-work benefits.

Freud also states that: “A lower cap recognises that many hard working families earn less than median earnings – a lower cap provides a strong work incentive.”

Actually, raising wages in line with the cost of living would be a far better incentive, instead of punishing unemployed people for the failings of a Conservative government that always oversees an increasingly desperate reserve army of labour, and ever-falling wages. 

Perhaps one of the most outrageous claims made in the document is that the cap is consistent with “UN Convention on the Rights of Persons with Disabilities.” Those sick and disabled people in the ESA work-related activity group are not protected from the cap. The government is currently being investigated by the UN for “gross and systematic” abuses of the human rights of disabled people, because of the previous welfare “reforms” (a euphemism for cuts).

This is an authoritarian government that is coercing people into any low paid and insecure work, regardless of how suitable it is. It’s about dismantling the welfare state, bit by bit. It is about ensuring people are desperate so that people’s right to turn down jobs that are unsuitable, thus reducing any kind of scope for collective bargaining to improve working conditions and pay, is removed. It’s also about bullying people into doing what the government wants then to do, removing autonomy and choices. That isn’t “incentivising”, it’s plain and brutal state coercion. All bullies and tyrants are behaviourists. 

It’s impossible not to feel at least a degree of concern and outrage reading such incoherent, flimsy and glib rubbish from an ideologically-driven government waging a full on class war on the poorest citizens, and then claiming that is somehow “fair” to the “taxpayer”. And it’s noteworthy that there is a harking back to the discredited and prejudiced theories of Keith Joseph – “intergenerational worklessness” – which were debunked by the theorists’ OWN research back in the Thatcher era. It is being paraded as irrefutable fact once again. 

I’m expecting a government phrenology unit to be established soon.

And an announcement that the Department for Work and Pensions is to be renamed the Malleus Maleficarum.

220px-1895-Dictionary-Phrenolog


 

CONTRIBUTE TO POLITICS AND INSIGHTS

I don’t make any money from my work. But you can contribute by making a donation and help me continue to research and write informative, insightful and independent articles, and to provide support to others. The smallest amount is much appreciated – thank you.

DonatenowButton cards

Osborne’s tax credit omnishambles reveals the profound elitism of the Tories

Chancellor George OsborneI don’t know a single person on low pay that is happy about the Conservative proposals to cut their tax credits and subsequently, their living standards, further. This policy was deliberately left out of the Tory manifesto, and when asked directly if his government was going to cut tax credits, Cameron chose to lie and said no. Now the Conservatives are claiming that this policy, never declared before the election, is suddenly somehow a “central plank” of the budget. The claim that Conservatives had declared cuts to welfare doesn’t stand up to scrutiny, either, because they claim to be a party that is all about “making work pay”. 

The Conservatives are claiming that the cuts were “democratically voted” through in the House of Commons, yet their majority in the lower House may not have happened at all, had they been honest prior to the election and declared their intention to cut people’s tax credits. 

Furthermore, the cuts were presented in the form of secondary legislation – as a Statutory Instrument – which notoriously receive little scrutiny and very limited debate time in the Commons. Statutory instruments are intended to be used for simple, non-controversial measures, in contrast to more complex items of primary legislation (known as Bills.) The Government always ensure they have a majority on any Statutory Instrument committee and the MPs are chosen by Whips. This enables government to push through their legislative programme with very little scrutiny, exacerbating a lack of democratic transparency and accountability of the Executive.

The threats issued to the Upper House from the government arose because the Conservatives are facing probable defeat on what is an extremely unpopular reform, even amongst their own party ranks, and are truly remarkable, showing a contempt for democratic process and a lack of willingness to engage in genuine, transparent democratic dialogue.

Earlier this year, the Institute for Fiscal Studies (IFS) asked George Osborne to specify how he will reach targets announced in the budget, given that the poorest had been the hardest hit by draconian benefit cuts already. The IFS said that the worst of the UK’s spending cuts are still to come.

I said at the time that it’s not that Osborne can’t answer the IFS challenge: he won’t.

David Gauke, the Treasury secretary at the time was pressed repeatedly on the BBC’s Daily Politics to explain if the Tories would detail their planned welfare cuts beyond the £3billion previously specified.

He replied: “We will set it out nearer the time which will be after the election.”

Pre-general election television comments have exposed Prime Minister David Cameron’s lies about his party’s proposal to reduce child tax credits. During a special episode of BBC’s Question Time, aired in April, presenter David Dimbleby asks: “There are some people that are worried about you cutting child tax credits, are you saying absolutely as a guarantee that you’d never have it?”

To which the Prime Minister responds: “First of all child tax credit we increased by 450 pounds…” Dimbleby interjects: “And it’s not going to fall?” to which the PM clearly replies: “It’s not going to fall.”

As Simon Szreter, Professor of history and public policy at the University of Cambridge, points out about the party claiming “A Britain that rewards work” as its slogan:

It is a measure of just how much George Osborne’s post-election attack on tax credits represents an assault of genuinely historic proportions on Britain’s poor that his PM has made reference to the 1911 Parliament Act in his railing against popular protest and his fear of blocking measures in the House of Lords. Let us remember why the act was brought in by the Liberal government of Asquith and Lloyd George.

The landed wealth elite, including men such as George Osborne’s direct ancestors, the Anglo-Irish baronets of Ballentaylor, dominated the House of Lords. They rejected the elected government’s policy – democratically tested at the bar of two general elections in 1910 – to impose new progressive forms of taxation on the super-wealthy to help fund such basic social security measures for the working poor as pensions and the first National Insurance Act.

He goes on to say:

Mr Cameron is darkly mentioning the Parliament Act of 1911 to cow the House of Lords into compliance because the upper chamber is no longer exclusively the club of the wealth elite as it was in 1911. The alternative, as Mr Cameron’s timely recollection of the 1911 Parliament Act reminds us all, is for parliament to ensure that the financial elite pay their way more fully in our society, a case that is all the more compelling considering their undisputed role in punching a hole in the nation’s finances in 2008.

The problem today is not control over the House of Lords. Today’s financial elite have found that it is much more efficient to exert their control over the House of Commons itself. This they do though a Tory party that is almost entirely funded by them and whose administration is safely in the hands of a chancellor who fully appreciates the importance of looking after the interests of the nation’s wealth elites. After all, he is the future 18th baronet of Ballentaylor.

Even Conservative MPs, such as Heidi Allen, have pointed out the hypocrisy of the proposed tax credit cuts. But as I’ve pointed out previously, the slogan “making work pay” has a lot in common with the 1834 Poor Law principle of less eligibility, rather than it being a genuine statement of intent from the Tories. Unless of course, you ask “Making work pay for whom?”

Further cuts to provisions, services and welfare – support for the poorest – is unthinkable and untenable, especially when there are other choices that the government could have made.

For example, the prime minister made it clear that lavish tax cuts for the better off will be the £7bn prize for returning him to Downing Street. This came after a £48bn in public service cuts, the like of which the country has never known.

“The people whose hard work and personal sacrifices have got us through these difficult times should come first,” Cameron said.

So who exactly worked hardest and took the heaviest burdens – and what exactly will be their reward? Certainly not those who made most sacrifices – the same low earners whose working tax credits and benefits George Osborne will happily cut again by another £12bn.

ed wealthRelated

Tax Credits Cuts ‘Will Widen The Gap In Inequalities’

Cuts To Tax Credits Could Breach Children’s Rights, Warns Commissioner

Follow the Money: Tory Ideology is all about handouts to the wealthy that are funded by the poor

There is no such thing as a ‘one nation’ Tory: they always create two nations

Conservatism in a nutshell

The word “Tories” is an abbreviation of “tall stories”

BBC reports unsurprisingly that Newcastle City Council has been ‘forced’ to plunder welfare funds

Newcastle Civic CentreNewcastle City Council said it would have to stop providing crisis loans to vulnerable residents

The BBC reports that a north-east council says government budget cuts are forcing it to use funding earmarked for vulnerable residents.

Newcastle City Council is using money previously ring-fenced for welfare and crisis loans on other frontline services.

Labour council deputy leader Joyce McCarty said it was facing “really tough choices”.

The government said local councils were best placed to decide priorities.

However, the government is proposing to cut a further £12bn from its annual welfare budget.

Funding for welfare grants and crisis loans was devolved to local control in 2013/14.

Ring-fencing was removed from 2015/16 and the cash now goes into the council’s central budget.

The authority said it could not prioritise discretionary loans over its statutory obligations and would only be able to allocate £120,000, compared with last year’s £229,000, for emergency welfare payments.

The Council had been forced to “make some really, really tough choices between providing frontline services and offering this level of support” to poorer residents, Ms McCarty said.

The Tees Valley Community Foundation, a private charity which helps to support those in need, said they expected more requests for help as a result.

Chief executive Hugh McGouran said he expected to see “a rapid increase” in demand.

“Twelve billion is such an eye watering figure,” he said.

“There’s going to be some significant cuts and I think people will start to turn more and more to charities to try and plug that gap.”

The government claim that nationally-run community care grants and crisis loans had been “poorly targeted and failed to help those most in need”.

“Local authorities now choose how best to support local welfare needs,” a Department for Communities and Local Government spokesman said.

“Additional money had been provided to assist authorities dealing with pressures on local welfare and health and social care,” he said.

However, I believe that this comment is little more than a platitude, intended to blur central government accountabilty. The government know precisely how much money is available to each council. How is it conceivable that local authorities have been provided with additional funding when this is offset with overall steep local authority budget cuts by the same government?

Moreover, the largest cuts have been made in the poorest areas, as the Institute for Fiscal Study (IFS) point out, with the same areas set to lose the most again over the next few years.

During the last term, local authorities in England with communities ranked in the top 20 per cent for health deprivation and disability have faced an average reduction in spending power of £205 per head – 12 times the average for places in the bottom 20 per cent.

Communities ranked in the top fifth for income deprivation affecting older people saw an average reduction in spending power of £229 per head while the average reduction for places in the bottom fifth was just £39.

Perhaps it’s worth noting that those authorities in the most deprived areas tend to be those that are predominantly Labour. This clearly indicates that the government is purposefully targeting Labour councils for dispropotionately higher cuts than Conservative ones.

The Joseph Rowntree Foundation (JRF) also point out that severe cuts to local authority budgets are having a profound effect on the services people receive. The poorest communities and residents are being hardest hit and those least able to cope with service withdrawal are bearing the brunt of the Conservative austerity drive.

It’s inconceivable that this isn’t intentional, targeted austerity on the part of the government.

The shadow Secretary of State for Communities and Local Government, Hilary Benn, said earlier this year that it was “irresponsible and unfair” for the Conservatives to have imposed the biggest reductions in local authority budgets on those communities with the highest numbers of older people living in deprived households.

“The A&E crisis in our NHS, driven in part by insufficient social care provision where it is needed, shows that the Tories can’t be trusted with vitally important health and social care services,” he said.

David Cameron promised a further £7.2 BILLION tax cuts to the rich at the expense of the poor

1450041_569755536427312_1698223275_n

I wrote an article last year – Follow the Money: Tory Ideology is all about handouts to the wealthy that are funded by the poor – which outlines Coalition policies that have widened inequalities and increased poverty by handing out public money to the wealthy that has been taken from the poorest. I pointed out that this Government have raided our tax-funded welfare provision and used it to provide handouts to the very wealthy – £107,000 EACH PER YEAR in the form of a tax break for millionaires, amongst other things.

And what does our imperturbable chancellor promise if this disgrace of a government is re-elected? True to Tory form, more of the same: austerity for the poor and public services cuts, and tax breaks for the wealthiest.

But further cuts to lifeline benefits and public services is surely untenable. Absolute poverty has risen dramatically, this past four years, heralding the return of Victorian illnesses that are associated with malnutrition. People have died as a consequence of the welfare “reforms”. Supporting the wealthy has already cost the poorest so very much, yet this callous, indifferent, morally nihilistic  government are casually discussing taking even more from those with the very least.

This isn’t anything to do with economic necessity: it’s all about Tory ideology. Under the guise of austerity, the Tory-led Coalition have stripped our welfare and public services down to the bare bones. Any further cuts will destroy what remains of our post-war settlement.

Despite facing a global recession, the Labour Government invested in our public services, and borrowed substantially less in thirteen years than the Coalition have in just three years. UK citizens were sheltered very well from the worst of the global bank-induced crash.

Gordon Brown got it right in his championing of the G20 fiscal stimulus, agreed at the London summit of early April 2010, which was a continuation of his policies that had served to steer the UK economy out of the consequences of a global recession, and to protect citizens from the consequences of cuts to services and welfare.

Osborne’s policy of imposing austerity and budget cuts on an economy that was actually recovering was a catastrophic error. The austerity propelled the economy backwards and into depression; and, far from using public spending as a countervailing force against the cutbacks in private sector investment, the Coalition’s budget cuts served to aggravate the crisis. Many people are suffering terribly as a consequence, reduced to a struggle for survival.

And in these socio-economic circumstances, the Tories have pledged a further £7.2 BILLION tax cuts to the rich. The funding for the tax cuts will come from further catastrophic “savings” made at the expense of the poorest yet again – £25 billion more to be sliced from welfare, Local Authorities,  education, police and other vital services.

Three things are immediately clear. Firstly, without the ramping up of VAT in 2010, to 20%, Osborne would be in even more dire financial straits than he is.

Secondly, income tax has, despite allegedly rising employment, failed to increase.

Thirdly, corporation tax, targeted for cuts, year after year, has slumped. The tax system is increasingly veering toward very regressive – biased in favour of the wealthy – consumption taxes, which affects the poorest, most, and failing to deliver fairer taxes on income.

This is the result of government policy: increasing VAT but cutting corporation tax, and the engineered kind of “recovery” we have ended up with. The Office for Budgetary Responsibility (OBR) reminded us in October of the extent of the Coalition’s failure to reduce the deficit.

Public sector net borrowing in 2013-14 was originally expected to be £60 billion; the out-turn for borrowing was £108 billion (on a comparable basis). This amounts to a shortfall of nearly £50 billion, with borrowing approaching double the original predictions made when the government’s austerity policies were announced in 2010.

Much of this shortfall is accounted for by the current earnings crisis. UK workers are suffering the longest and most severe decline in real earnings since records began in Victorian times, according to an analysis published by the TUC. But Tories always lower wages, and hike up the cost of living. And whilst workers are struggling to make ends meet, private business owners/Tory donors are raking in millions of pounds. But this is exactly how Tories like to run society in a nutshell.

It’s their imposition of a feudalist schemata for social relationships. Cognitively, Tories are the equivalent of historical egocentric toddlers: they are stuck at this painful stage of arrested development.

“The deficit reduction programme takes precedence over any of the other measures in this agreement” – stated in the Coalition Agreement.

For a government whose raison d’etre is deficit reduction, the Coalition really isn’t very good at all. But austerity reflects the triumph of discriminatory Tory ideology over needs-led, evidenced-based policy making.

The OBR said the forecast from 2010 was over-optimistic because it did not take into consideration the effect of lower wages as well as a higher levels of tax-free personal allowance on the upper brackets of income tax. National Insurance contributions were also £7.4 billion below forecast.

Which brings us back to the issue of further tax cuts for the wealthy, with no mention of raising wages for the poorer work-force, and of course there is the promise of more cuts to come for those relying on lifeline benefits. I don’t think that the Coalition cares that their policies don’t balance the books, as it were, or mend the economy. Nor do they care what the consequences are for the wider public.

TUC General Secretary Frances O’Grady said:

The government’s failure to get wages growing again has not only left families far worse off than in 2010, it’s put the public finances in a mess too. The economy has become very good at creating low-paid jobs, but not the better paid work that brings in income tax. The Chancellor’s sums just don’t add up – he can’t make the tax cuts for the better off that he is promising and meet his deficit reduction target without making cuts to public services.

His cuts would be so deep that no government could deliver them without doing damage to both the economy and the fabric of our society. We can’t cut our way out of this problem any more than we can dig ourselves out of a hole. More austerity would only keep us stuck in a downward spiral. The Chancellor should use next week’s Autumn Statement to invest in growth and to put a wages recovery at the top of the agenda.

Shadow Chancellor Ed Balls said:

Nobody will be fooled by pie in the sky promises of tax cuts when David Cameron cannot tell us where the money is coming from. Even the Tories admit this is an unfunded commitment of over £7 billion, so how will they pay for it? Will they raise VAT on families and pensioners again?

Cameron has also announced the basic rate before we start paying tax would rise from £10,500 to £12,500. While a worker on £12,500 would save £500 a year, someone earning £50,000 would keep £1,900 extra.

Those earning up to £123,000 would be £484 richer. Someone on £12,500 would save £500 a year, while someone on up to £50,000 would keep £1,900 extra. And the £500 tax cut for basic rate earners will be almost wiped out by George Osborne’s raid on in-work benefits.

Paul Johnson of the Institute for Fiscal Studies think tank says it was:

very difficult to see how the £7billion tax giveaway could be paid for.

We’re looking at promises of £7billion of tax giveaways in the context of an overall plan to get the deficit down but even without tax giveaways that requires pretty extraordinary levels of spending cuts such that most government departments will see their spending cut by a third by 2020.

How are you going to afford this? Even more dramatic spending cuts?

At the Tory Conference, Cameron promised to expand the National Citizen Service youth project for every teenager in the country, have the lowest rate of corporation tax of any major economy.

There was also a pledge to abolish youth unemployment by the end of the decade. But the Tory faithful gave the loudest applause for his pledge to scrap the Human Rights Act.

This is a truly terrifying pledge, because human rights were originally formulated as an international response to the atrocities of the 2nd World war, and to ensure that citizens are protected from abuses of their government.

A Labour Party analysis found the proposed tax break would hand David Cameron and other Cabinet ministers an extra £132 a year. But a family with two children with one earner on £25,000 a year would lose £495 by 2017-17 due to the benefits freeze announced by Mr Osborne.

The Tory plan is based solely on spending cuts, mainly directed at the working age poor. And the Conservative plan to raise the higher rate threshold to £50,000 means that  working-age poor people are to fund a tax cut that is four times greater for higher rate tax payers than for basic rate taxpayers.

Ed Balls said in response:

David Cameron’s speech showed no recognition that working people are £1,600 a year worse off under the Tories nor that the NHS is going backwards on their watch. The only concrete pledge we’ve had from the Tories this week is a promise to cut tax credits by hundreds of pounds for millions of hard working people while keeping a £3 billion tax cut for the richest one per cent.

TUC general Secretary Frances O’Grady added:

No amount of dressing up can hide the fact that the policies in this speech pass by those who need the most help to reward richer voters.

Alison Garnham, Chief Executive of Child Poverty Action Group, said:

What was missing in the PM’s speech was any recognition that independent projections show that child poverty rates are set to soar. We know that raising the personal tax allowance is an ineffective way of supporting low paid families.Independent analysis shows that just 15% of the £12 billion required to raise the PTA to £12,500 would go to working families in the lowest-income half of the population.

Many simply don’t earn enough to benefit from this policy, and those that do just see their benefits and tax credits withdrawn as their incomes rise.

The Institute for Fiscal Studies showed in their Green Budget publication this year that just 15% of the gains from increasing the personal allowance would benefit the poorest half of Britons, concluding:

There are better ways to help the low paid via the tax and benefit system.

Ex-Treasury official James Meadway,  now a senior economist at the New Economics Foundation, said Cameron’s changes were:

irresponsible, expensive gimmicks that scarcely affect the poorest workers.

They imply swingeing public sector cuts and mean handing over more cash to the already rich.

Ed Miliband will respond tomorrow (Monday), declaring that the Tories’ failure to tackle the cost-of-living crisis has helped cost the Exchequer £116.5 billion – leading to higher borrowing and broken promises on the deficit. The price tag, equivalent to almost £4,000 for every taxpayer, is based on new research from the House of Commons Library being published by the Labour Party.

This shows that low pay and stagnant salaries, combined with soaring housing costs and the failure to tackle root causes of increased welfare bills, means that over the course of this Parliament:

  • Income tax receipts have fallen short of forecasts by more than £66 billion.
  • National Insurance Contributions are £25.5 billion lower than expected.
  • Spending on social security is £25 billion higher than planned [despite brutal cuts to lifeline benefits]

Mr Miliband is expected to say the test for George Osborne in this week’s Autumn Statement will be to set out a plan to build a recovery for working people – one which recognises the link between the living standards and Britain’s ability get the deficit down.

He is expected to say:

For a very long time, our country has worked well for a few people, but not for everyday people. “We live in a country where opportunities are too skewed to those at the top, where too many people work hard for little reward, where too many young people can’t find a job or apprenticeship worthy of their talents, and where families can’t afford to buy a home of their own.

For all the Government’s boasts about a belated economic recovery, there are millions of families still caught in the most prolonged cost-of-living crisis for a century.  For them this is a joy-less and pay-less recovery.

My priority as Prime Minister will be tackling that cost-of-living crisis so that hard work is properly rewarded again, so that our children can dream of a better future, so that our public services including the NHS are safe.

Building a recovery that works for everyday people is the real test of the Autumn Statement.

But that isn’t a different priority to tackling the deficit. Building a recovery that works for most people is an essential part of balancing the books.

The Government’s failure to build a recovery that works for every-day people and tackle the cost-of-living crisis isn’t just bad for every person affected, it also hampers our ability to pay down the deficit.

Britain’s public finances have been weakened by a Tory-led Government overseeing stagnant wages which keep tax revenues low.

Britain’s public finances have been weakened by Tory policies which focus on low paid, low skilled, insecure jobs – often part-time or temporary – because they do not raise as much revenue as the high skill, high wage opportunities we need to be creating.

And our public finances have been weakened by higher social security bills to subsidise low paid jobs and the chronic shortage of homes.   

The result has been David Cameron and George Osborne missing every single target they set themselves on clearing the deficit and balancing the books by the end of this parliament.

Their broken promises, their abject failure, are not an accident. They are the direct result of an outdated ideology which says all a Government has to do is look after a privileged few at the top and everyone else will follow.

That is why this Government has done a great job of squeezing the middle, but a bad job of squeezing the deficit.

The test this week for David Cameron and George Osborne is whether they recognise that Britain will only succeed and prosper for the long term by tackling the cost-of-living crisis and building a recovery which works for the many, not just for a few.

Or whether they will just offer more of the same old ideas that have failed them, failed everyday working people, and failed Britain over the past four years.

10001887913_f8b7888cbe_o

Thanks to Robert Livingstone for the brilliant memes