Tag: Progressive tax

Ed Miliband’s speech on the deficit and economy: George Osborne’s cuts are extreme and ideological

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Ed Miliband will today (Thursday) deliver a major speech on how the next Labour government will build a strong economic foundation by dealing with the deficit and balancing the books – but never going down the Tory road to take Britain back to 1930s spending levels which existed before the NHS.

In his speech, Mr Miliband will attack the Tories for pursuing an extreme project, motivated by ideology rather than necessity, which will put vital public services at risk:

“My speech today is about the deficit. Its place in our priorities, how a Labour government would deal with it, and how we would do so consistent with our values.

“The Tory plan is to return spending on public services to a share last seen in the 1930s: a time before there was a National Health Service and when young people left school at 14. There is only one 35 per cent strategy in British politics today: the Tory plan for cutting back the state and spending on services to little more than a third of national income.

“And they have finally been exposed by the Autumn Statement for what they really are: not modern compassionate Conservatives at all – but extreme and ideological, committed to a dramatic shrinking of the state and public services, no matter what the consequences.

“They are doing it, not because they have to do it, but because they want to. That is not our programme, that will never be our programme, and I do not believe it is the programme the British people want.

“This is a recipe for public services that will disintegrate and for a permanent cost of living crisis because we won’t be investing in the skills and education people need for good quality jobs, and indeed for sufficient tax revenues. And we know what the result will be: the Tories might be able to deliver the cuts they have promised, but they won’t be able to cut the deficit as they promised.”

Mr Miliband will set out a tough and balanced One Nation Labour approach to dealing with the deficit based on five principles:

1.      Setting a credible and sensible goal to balance the books and get the national debt falling as soon as possible within the next Parliament.

Not having a fiscal plan which sets a target of a 35 percent state, putting public services and productive investment at risk.

2.      Recognising that Britain will only be able to deal with the deficit by tackling the cost-of-living crisis.

Not allowing welfare spending to rise and tax revenues to fall because of low wages, insecure jobs, housing shortages and social failure.

3.      Making common sense spending reductions with departmental spending falling and using money better by devolving power, breaking down old bureaucracies, and rebuilding public services around early intervention.

Not cutting spending to 35 percent of national income that will lead to disintegrating public services and a permanent cost-of-living crisis because we won’t be investing in the skills needed for good jobs and healthy revenues.

4.      Protect everyday working people by ensuring those with the broadest shoulders bear the greatest burden.

Not cutting taxes for the wealthiest while asking everyday working people to pay more.

5.      Promising new policies only when they are fully funded, like Labour’s £2.5 billion time to Care Fund for the NHS, so that they do not require any additional borrowing

Not making commitments that depend on borrowing or promising unfunded tax cuts skewed to the wealthiest that will eventually be paid for by bigger cuts to public services or increases in VAT.

Ed Miliband will say:

“Labour will make fairer choices to help protect vital services and balance the books with measures including a Mansion Tax on properties worth more than £2 million, cracking down on tax avoidance, and reversing the millionaires’ tax cut to restore the 50p rate on incomes over £150,000 a year.

“In these hard times, we are determined to do everything we can to protect everyday taxpayers from bearing an increased burden and to do all we can to protect public services. And those who have done best, under this government and indeed under the last, must pay their fair share. 

We want successful entrepreneurs and those who do well to be rewarded. But we must pull together as a society not drift apart and we cannot do that if deficit reduction is simply on the backs of ordinary people.”

He will say that Labour will only make new commitments that are credible, costed and funded without additional borrowing – unlike the Conservatives who are promising unfunded tax cuts that would put public services at risk.

“This is an essential test of credibility. There is huge uncertainty about the deficit because of economic circumstances and on the basis of recent experience. That makes it all the more important that parties do not spray around unfunded commitments they cannot keep.

“It is why we will only make commitments in our manifesto that are properly funded – not commitments that depend on borrowing. That’s why we’ve explained how we will pay for every policy that we’ve put forward: costed, credible and funded.

“In contrast, the Conservative Party has pledged to make tax cuts when they have absolutely no idea how they will fund them: tax cuts that will cost over £7 billion a year at the end of the Parliament and even more, billions more, if they happen earlier in the Parliament.

“The Tories cannot say how they would fund their tax cuts skewed to help the wealthiest. This is not responsible and it is not right: the British people should be in no doubt what the Tory promise means: they will pay the price for tax cuts in higher VAT or even bigger cuts to public services. The Tories’ priority is unfunded tax cuts, Labour’s priority is to save our National Health Service.”

Labour’s costed and evidenced key policy pledges to date.

To underline Labour’s determination to deal with the deficit fairly and balance the books as soon as possible in the next parliament, Ed Balls has written to members of the Shadow Cabinet. He says:

“It’s now clear the Tories have abandoned any pretence of being in the centre-ground with an increasingly extreme and unbalanced plan. They have made an ideological choice to pencil in deeper spending cuts for the next Parliament because they are refusing to ask those with the broadest shoulders to make a greater contribution and, crucially, are ignoring the need for a plan to deliver the rising living standards and more good jobs that are vital to getting the deficit down.10001887913_f8b7888cbe_o

In contrast, Labour will take a tough but balanced approach to getting the deficit down. Our economic plan will deliver the rising living standards, more good jobs and stronger and more balanced growth which are a vital part of any fair and balanced plan to get the deficit down.

We will make different and fairer choices from the Tories, including reversing this government’s £3 billion a year tax cut for people earning over £150,000 and taking action to close tax loopholes and introducing a mansion tax on properties worth over £2 million in order to help save and transform our National Health Service.

And unlike George Osborne, we will not make any spending or tax commitments without saying where the money is coming from.”

Ed Balls intends to raise state spending rather than complying with Mr Osborne’s austerity plans of further drastic cuts, and he said his party will ring-fence more Whitehall budgets. A recent report by the Organisation for Economic Co-operation and Development (OECD) has found what most of us already knew: that income inequality actually stifles economic growth in some of the world’s wealthiest countries, whilst the redistribution of wealth via taxes and benefits encourages growth. Osborne’s economic policy is damaging the economy. Miliband has consistently put equality high on the list of Labour’s priorities, and quite rightly so.

Labour have proposed progressive taxation, they have pledged to save the NHS, safeguard benefits and repeal the Bedroom Tax, which affects the poorest people: those on low wages and those on benefits, costing them money that was calculated to meet only the basic living costs of food and fuel, originally. Benefit was calculated on the assumption that full housing costs and rates/council tax were also paid by Local Authorities. That is no longer the case. The Tory welfare cuts and rising cost of living have meant a return of absolute poverty, not seen in this country since before the establishment of the welfare state.

At the moment, health, foreign aid and schools are protected from spending cuts, but in his letter, Mr Balls told members of the shadow cabinet that “our manifesto will spell out other limited areas which will have spending protected.”

The Tories’ stated plan to continue cutting even once the deficit has been eliminated has given Labour the opening needed to point out the damaging ideological drive to shrink the state, and to dismiss austerity once and for all. Given that the Conservatives have rigidly set the terms of economic debate and have established a dominant frame of reference since taking office,  I think the response to the Autumn statement from Labour is deft, careful and the proposals are costed, fair and viable.

Reducing the deficit can only happen once we have genuine (and widely shared) economic growth.

The alternative is the Conservative’s extreme, ideological never-ending austerity – all pain with no gain whatsosever for most people. For better or worse, deficit reduction is the political reality against which Labour’s economic credibility is now being defined. Cut the deficit Labour must; but they have taken reassuring steps to do it in a genuinely more comfortable, fair and intelligent way than the Tories.

The full text and more details of Ed Miliband’s speech about the deficit can be found here.

Related 

One of the most destructive Tory ideological myths has been officially debunked

Osborne’s Autumn statement reflects the Tory ambition to reduce State provision to rubble

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

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Many thanks to Robert Livingstone@LivingstonePics

One of the most destructive Tory myths has been officially debunked

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The Organisation for Economic Co-operation and Development (OECD) has discovered what most of us already knew: that income inequality actually stifles economic growth in some of the world’s wealthiest countries, whilst the redistribution of wealth via progressive taxation and benefits encourages growth.

The recent report from the OECD, a leading global think tank, shows basically that what creates and reverses growth is the exact opposite of what the current right-wing government are telling us, highlighting the truth of Miliband’s comments in his speech today – that the Tory austerity cuts are purely ideologically-driven, and not about effectively managing the economy at all. But again, many of us knew this was so.

The Labour Party’s economic plan, based on progressive taxation, equality and funding of public services is the best way forward for economic growth and social stability. The Conservatives have killed the potential for a sustainable economic recovery, and will continue to do so, because they promise endless austerity. This is rather akin to treating a disease with more disease.

Osborne’s economic policy is comparable with riding the fabled rubber bicycle.

We aren’t going anywhere.

The report showed evidence that the UK would have been at least 20 percent better off if the gap between the rich and poor hadn’t widened since the eighties under Thatcher, and successive Conservative administrations – the most recent having reversed the equality measures put in place by Blair. (Yes, he really did).

Prior to the global recession, the Tories said they would match the Labour government’s state spending and suggested they may even further it. However, when the global crash happened, a sudden opportunity presented for Tories to become fully-fledged… Tories, grinding their ideological axe, taking a neoliberal swing at the “bloated” public sector and at Labours’ public spending for the protection of public services and the most vulnerable citizens during the economic crisis.

It’s worth remembering that the Coalition has borrowed more in just 3 years than Labour did in 13. In fact Osborne has borrowed more than every Labour government since 1900 combined. And the current government have nothing to show for it, whereas the Labour government at least adequaltely funded public services and effectively sheltered the poorest citizens from the worst consequences of the global crisis.

Let us not forget that this feckless government inherited an economy that was in recovery. They destroyed that and caused a UK recession by imposing austerity, savagely cutting public spending and public services. Thatcher used the same basic strategy to redistribute public wealth to private bank accounts and create inequality, although she didn’t cut as deeply. It didn’t work back then either. She caused a deep recession, as did John Major – Tories being Tories.

Let us not forget that despite the finger-pointing blame game that the Conservatives indulge in – their perpetual attempts to undermine Labour’s economic credibility and bolster their own ineptitude – that it was Osborne that lost the triple A Fitch and Moody credit ratings, despite his pledge that he wouldn’t. We are regarded as an economic liability on an international level, which flies in the face of Osborne’s lies about economic growth and removes any credibility from his blustering, swaggering claims. I do wish the public more broadly would engage in some joined-up thinking, since many have believed that the cuts were inevitable, but Tory propaganda, in fairness, is designed to fragment the truth and disjoint rationality.

The truth is that Gordon Brown was right with his ideas about fiscal stimulation (rather than Osborne’s coercive fiscal contraction): it’s been a confirmed model over and over by economists and by the fact that we were out of recession in 2010. The Tories’ austerity measures have since damaged the economy profoundly.

But austerity was never about what works. Austerity is simply a front for policies that are entirely founded on Tory ideology, which is  all about handouts to the wealthy that are funded by the poor. 

Accumulation for the wealthy by dispossession of the poor.

The OECD report highlights the fact that Conservative economic rhetoric is based on utter nonsense: it isn’t remotely rational. Tory ideology is incoherent, vindictive towards the poorest and extremely damaging, socio-economically. It shows us that the sacrifices of austerity, which were cruelly imposed on those least able to carry that burden, were justified by a malicious lie dressed-up as a promise of economic growth. But that is precisely what the Tories are destroying.

We knew that the laissez faire capitalism of industrial capitalism  and the more recent financial capitalism of post industrial neoliberalism  extend inequality. How can such systems, founded on competitive individualism, not do so? But now we have the evidence that inequality damages rather than encourages economic growth.

I’ve said elsewhere that Conservatism is centred around the preservation of traditional social hierarchy and inequality. Tories see this, erroneously, as an essential element for expanding economic opportunity. But never equal opportunity.

Conservatives think that civilised society requires imposed order, top down control and clearly defined classes, with each person aware of their rigidly defined “place” in the social order. Conservatism is a gate-keeping exercise geared towards economic discrimination and preventing social mobility for the vast majority.

David Cameron’s Conservative party got into Office by riding on the shockwaves of the 2008 global banking crisis: by sheer opportunism, dishonesty and by extensively editing the narrative about cause of that crisis. The Conservatives shamefully blamed it on “the big state” and “too much state spending.”

They have raided and devastated the public services and social security that citizens have paid for via taxes and national insurance. Support provision for citizens is cut to the bone. And then unforgivably, they blamed the victims of those savage, ideologically-directed cuts for the suffering imposed on them by the Conservative Party, using the media to amplify their despicable, vicious scapegoating narratives.

Conservatives really do think that inequality is necessary, they think that our society ought to be divided and hierarchical. They are traditional rather than rational. They have an almost feudalist approach to economic policy, blended with a strong old boys network of corporocrats.

The Tories have long been advocates of the market society, which turns everyone and everything into a commodity. Neoliberalism is an invisible hand in an iron glove, with its whispered broken promise of a mythological “trickle down” as justification – now the new right neoliberals are officially a cult of vicious cranks.

 

Related

The BBC expose a chasm between what the Coalition plan to do and what they want to disclose

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

Conservatism in a nutshell

Osborne’s Autumn statement reflects the Tory ambition to reduce State provision to rubble

A list of official rebukes for Tory lies

 

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Many thanks to Robert Livingstone @LivingstonePics


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