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Britain’s Budget: A Punch Dressed as a Kiss

Those of us misfortunate enough to watch the budget live had to endure waves of sycophantic roaring and grumbling.  Conservative members pirouetting on the announcement of cuts to tax credits and cuts to corporation tax.  Iain Duncan Smith could be seen in the corner tripping on a psychoactive substance, soon to be illegal.

George Osborne to form also came out with a series of untruths so familiar in political discourse that they are barely worth mentioning; up is down, black is white, ‘supporting hardworking people’ is ‘supporting hardworking people into a life of wretched poverty.’

There is no other way than to see this budget other than a perverted inversion of Robin Hood.  A wave of cuts and freezes – which amount to more cuts after inflation – mean that scores of Osborne’s beloved ‘hardworking people’ will be indeed working hard, but earning even more poverty for their work than they did before.

All is not lost, however. BBC and its budget calculator offer up algorithms that allow you to find out whether you should be grateful enough to warrant a trip down to Clinton’s Cards or go all the way and splurge on a John Lewis Voucher.  ‘I’m £5 better off under this budget; I’ve just spent it on a fucking card again.’

This budget, outlining £12 billion worth of welfare savings is like almost every one before; an attack on young people, with the attacks now extended to anyone born in the last 25 years.  Housing benefit has been scrapped for 18 -21 year olds, the new minimum wage will not apply to anyone under 25 and maintenance grants for poorer university students are gone, replaced with another loan. Our poorest students will now leave university with a higher debt than those from more affluent backgrounds.

Housing benefit is a huge relief to almost 20,000 18 – 21 year olds, among them care leavers, young people estranged from their families and others escaping violent relationships. According to homeless charity Shelter, the result of removing housing benefit from these vulnerable people will be more homelessness and despair for an already ostracised group of people. They warn that this policy will take us back to a 1980’s level of rough sleeping.

Since 2010, the contempt for the young has been consistent. Tuition fees trebled in 2010 and the Educational Maintenance Allowance scrapped. Now this budget announces that some universities will no longer have to cap their fees at £9,000. It was also revealed students will now have to pay back their loans sooner.

Osborne’s chorus was that we are striving for a ‘low welfare, low tax economy.’  Leaving aside that the Institute for Fiscal Studies said this is a ‘tax raising budget,’ the very notion that this phrase was used as a carrot to the British people is an indication as to how far we have come, or not. Moving beyond what the Daily Mail consider welfare to be, you would have thought that contributing to welfare in making sure the old man with Parkinson’s can get picked up for his hospital appointment, or that disabled people can live a life of independence, or that a National Health Service that treats poor and the rich the same would be a somewhat reassuring comfort to us all; to a clan of slashers and burners to which the welfare state is just another fly on their hinds, one that just needs to be dealt with.

Every bit of the budget is a punch dressed up as a kiss.  The new National ‘Living Wage’ – a re-branding of the minimum wage – is a welcome increase. An increase in the National Minimum Wage always sounds good and is, but a working age benefit freeze, a freezing of tax credits to supplement low pay and a halving of the threshold at which you can claim means that working families will see a decimation of their income. David Cameron said tax credits are ‘not going to fall’ on national television before the election.  But black is white. Up is down. The Institute for Fiscal Studies say 3 million families will lose £1,000 a year due to tax credit changes.  A huge sum for some of the lowest earning families in the UK. This chancellor, though, is a skilled politician; giving with one hand, and then cutting both your hands off with the other.

The pledge to increase the living wage has a depressing parallel with George Orwell’s 1984 in which a brutalised people organise demonstrations to celebrate and thank the generous Big Brother for increasing their chocolate ration to 20 grams per week. Winston Smith, our protagonist, knew full well it was actually a reduction to 20 grams. The people he noted, ‘swallowed the distortion of truth with the stupidity of an animal.’  Osborne’s ‘Living Wage’ is £7.20 per hour, compared with the *actual* living wage of £7.85.  The latter, also, as mentioned above, is calculated based on the now dismembered tax credit contribution.

The Resolution Foundation, which campaigns for low and middle income families says that there are a variety of people that will be worse off as a result of these changes. One of those is single parents. If working 20 hours a week with two children for £9.35 per hour, they will lose £1,000 per year and would require an immediate 35% increase in their wage to mitigate the reduction of their tax credits and other benefits.  Paul Johnson of the Institute for Fiscal Studies said: “The increase in the minimum wage simply cannot provide full compensation for the majority of losses that will be experienced by tax credit recipients.”  Again yesterday, Osborne said “the best way out of poverty is work.” Not so it seems.

Low earning families are losing up to £545 per year from the cutting of the family element of tax credits with the government also putting a cap on any families claiming child benefit if they have more than two children.  A dabble at eugenics not beyond such putrid imaginations.  The government has said it will develop some rules to protect women who have a third child through rape and other exceptional circumstances.  As of yet, no details have been provided.

After the media were quick to adopt Osborne’s deceitful ‘Living Wage’ as sacrosanct the business droids at the CBI were even quicker to show signs of concern over its impact on business. A worker friendly chancellor sticking it to the business world? On closer examination, what we see is actually a mitigation of this wage increase with another substantial cut in corporation tax – already the lowest in the G20 – to 18%, thus providing ample compensation for businesses making these modest increases to workers’ wages.

But ‘Britain deserves a pay rise,’ said Osborne.  If we apply the rule that up is down and black is white, then we see that Britain actually deserves less pay and if you’re in the public sector, another pay freeze of 1%. This comes on top of five years of pay freezes since 2010 whilst prices rose by 12%.  Government departments face a further £20 billion of cuts to be outlined soon.  The Office for Budget Responsibility expects another 500,000 job losses.  What we can expect is more poverty by diktat.

And there cannot it seems be a Conservative budget without remuneration for their loyal demographic through one of the most ostentatious redistributions of wealth seen for a while. It was the pledge to extend Inheritance Tax Relief to estates worth up to £1 million.  Though only 5% of the population was subject to any IHT as it previously stood, Mr Osborne saw it necessary to extend it to those impoverished families who leave estates worth upwards of £625,000.  This policy will cost the government £1 billion.  Not a great deal in the context of a government budget. But placed inside £12 billion of welfare cuts make it a clear redistribution of wealth from those who need it, to those that don’t.  Even the Economist wrote: ‘cutting benefits to the very poor while reducing inheritance tax for the wealthy is indefensible,’ and called the move ‘the daftest economic policy of the decade.’

And as Osborne and co glance over their checklist of victims, they did not forget the much beleaguered social housing sector, singled out for another blow. This time they have been ordered to reduce rents by 1% year on year.  This SOUNDS good.  Cheaper rent for those in social housing can’t be bad, and to an extent it is not.  But this will substantially reduce social house building as housing associations in the social sector use rent revenues to fund new affordable home building. The Office for Budget Responsibility said this policy would likely reduce social house building by 14,000. This comes not long after the government’s catastrophic Right-to-Buy scheme that continues to remove affordable homes from the social housing stock. Another assault on the welfare state and a friendly handshake that turns your bones to dust.

The chancellor did nothing to address one of the real problems in the housing sector, private rent prices.  Happy to legislate for the reduction in social rents, he failed to do anything in the private sector.  He did remove mortgage tax relief for private landlords.  Again, the chancellor taking on the private landlord lobby?  Not quite. The IFS said “there is a big problem in the property market making it difficult for young people to buy, and pushing up rents. The problem is a lack of supply. This change will not solve that problem.” Experts warn that it will be no surprise to see private landlords push up rents to alleviate the loss of tax relief on their buy-to-let mortgages.

So this budget continues with the same narrative a weary country has had to endure since 2010. We must strive to be a ‘country that lives within its means,’ says the chancellor.

This budget only goes to show we are already a country that lives and loves to be mean.

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Tom Colclough is a journalist from Sheffield, England. His interests are the Middle East and giving words back their meaning. You can follow him on Twitter @tommy_colc or email him at tcolclough.tc@googlemail.com.

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