The Budget of deception and despair

It is an austerity budget full of deception – thousands taken from the poorest, tens of thousands given to the richest, more tax cuts for businesses and a savage battering of the young.

The poorest have been made poorer. Their kids made poorer by cutting  housing benefit. And poorer students are now saddled with £3,000 a year more debt as university grants get abolished and changed into loans.

The government has announced big cuts to welfare spending. The headline cuts are a four-year freeze on working-age benefits, and other cuts to tax credits, universal credit and housing benefit.

But there were no such worries for some – like the tax hand outs for those inheriting wealth and further cuts to the tax on business profits. Giving greater tax advantages to those who already have money seems very generous given the ongoing squeeze on public finances – how can we possibly afford them?

And the squeeze is horrendous. Government spending levels on goods and services will have fallen between 2010 and 2020 by “5.8 per cent of GDP over a 10 year period – unprecedented in UK peacetime history,” according the office of budget responsibility (OBR).

So Osborne’s plan to get Britain exporting again? Just look at the figures for how much we make and export, against what we import – the trade deficit. According to the OBR this deficit “widened to 5.9 per cent of GDP in 2014 – the largest annual peacetime deficit since at least 1830, based on the Bank of England’s historical dataset.”

And no sign it will return to surplus anytime soon. Or indeed, ever.

The productivity figures – how much each worker produces – are appalling. Raising productivity is key to raising pay and living standards through a high skill, high paid work.

They are stuck at rates last before the banking collapse. If they had followed the general annual rise – rather than stay stuck – they should be 15 per cent higher than they are.

That would have made a real dent in the deficit as well. On productivity Osborne will talk the talk, but like the export-import deficit, he won’t walk the walk.

And as for our GDP – government spending as a percentage of the value of what we make? Well it’s back to levels last seen under the Tory government of 1957 and just staying above levels last seen during the 1930s.

Trail of destruction

For beleaguered public service workers it’s a trail of destruction with another 400,000 job losses by 2020 and another four years of one per cent pay rises – which will be well below the forecast rate of the Retail Price Index and even the lower Consumer Price Index.

Britain’s need for a pay rise stops at the door of the hospital and your local council services.

And such is Osborne’s desire to privatise public assets that he’s launching the biggest programme of privatisation seen since the mid-1980s. This includes his dash to make a £7bn loss on selling off shares in the banks which collapsed – and making that sound like a good idea.

Growth in the economy looks very much like it’s based on two things – a rising population creating and consuming more; and households borrowing more and spending it.

Cruellest deception

But the living wage claim is probably the worst and cruellest deception. It’s in fact giving a boost to the National Minimum Wage, increasing it from the current level of £6.50 an hour to £7.20 an hour next April.

Given the NMW would have been going up anyway, it will probably mean the equivalent of a rise of 40p an hour above where the minimum wage would have been. When you are earning low pay, that rise is well worth it.

But the deception is claiming that £7.20 is the ‘National Living Wage’. The Living Wage is currently £7.85 an hour, and £9.15 in London. Osborne’s ‘Living wage’ is well below that.

It gets worse. The Living Wage is currently calculated on the assumption that all benefits such as tax credits and housing benefit are claimed.

It means if you cut or remove those benefits, the living wage has to go up. If all in-work benefits were stopped the Living Wage would have to go up from ÂŁ9.15 an hour in London to ÂŁ11.65 an hour.

But Osborne is not doing that. Tax credits are to be cut as are housing benefits and those will have a stunning impact on the quality of life of the lowest paid while Osborne claims they get a living wage.

It works like this. Even set at ÂŁ7.20, those on a Living Wage will get higher pay, but will see in-work welfare benefits taken away at twice the rate they are gaining.

The overall loss will be around ÂŁ1,000 a year. That is a huge amount of money snatched from the pockets of the poorest.

It will be worse for those with more than two children.

And if you are under 25?  No living wage for you – be young, be poor seems to be the message.

The overall result will impoverish the poor while claiming the opposite. No wonder Iain Duncan Smith looked on with sheer joy as he shook his fists in the air.

Changes to tax thresholds won’t help the poorest paid. Raising tax thresholds helps higher earners most. The six million people who currently earn so little they don’t pay tax cannot be lifted out of paying tax. They already don’t pay tax.

The more you earn the greater the benefit of tax threshold being raised.

Biggest deception

But the biggest deception was in the run up to the last election. Osborne’s Con-Dem autumn statement ran into criticism and he tweaked spending levels while creating a roller coaster of cuts set out to 2020.

Osborne suckered the LibDems into backing pre-election budget cuts plans he quickly changed when he got re-elected. The election was fought on spending plans that have been tweaked and ditched within months but with the meat put on the bones of severe welfare cuts.

The so-called Northern Powerhouse is turning to dust. Osborne seems to be turning over the last burnt offerings of what remains of local government finances to northern cities.

Improvements to northern transport services seem to be cuts, re-announcements or repackaging. Rail investments now seem centred on London and the south east.

None of this takes the UK forward. It has all the look of back to the future, with old presents taken from the back of the cupboard and re-gift wrapped.

As acting Labour leader Harriet Harman put it, “people are just weary of hearing the same old re-announcements on roads – they could resurface the A14 with the Treasury press releases about it.

“To be One Nation – you need every region to be productive, vibrant and powering ahead – not just some. The Chancellor has made much of his commitment to devolution. But you can’t build a productive economy on a political slogan.”

And Unite’s general secretary Len McCluskey hit out at Osborne’s clinging to austerity and attacking the poor when he should be investing in prosperity.

He said, “There is another way. With interest rates at rock bottom, the Budget was a sorely missed opportunity to borrow to build and invest through an industrial strategy to boost productivity.

“The slower pace to the pain of austerity will be no comfort to people just about surviving. The last Tory government left us a less equal, divided country. I fear once again we have a Tory party ready to take this nation backwards.”