The budget is a cynical one-nation fraud. The reality is a huge transfer of resources from poor to rich

Reposted from the Guardian 

Couldn’t have put it better myself!

A cleaner polishes the door of 11 Downing Street, the official home of George Osborne. ‘Tax credit cuts mean taking money from cleaners, care workers and supermarket checkout staff.’ Photograph: Peter Nicholls/Reuters

It’s a long-established Tory tradition to play their most outrageous cards as soon as possible after winning an election: impose the most savage cuts and stuff the pockets of their friends without restraint. Margaret Thatcher could barely contain herself in 1979, abolishing exchange controls and cutting the top rate of tax for the wealthiest from 83% to 60% a month after coming to power. Her chancellor, Nigel Lawson, hacked it back again to 40% in his first post-election budget in 1988, fuelling boom and bust in the process. And George Osborne unveiled his calamitous programme of cuts, tax breaks for the rich and tax rises for the poor the month after the 2010 election.

That halted economic recovery and eventually had him booed out of the Olympic stadium. It was only by calling a temporary halt to austerity and pumping up the housing market that he was able to rescue his reputation and lay the ground for the upturn that saved his and David Cameron’s bacon last month.

But he was at it again today in the first fully Conservative budget for a generation: inheritance tax is to be abolished on homes worth up to £1m and corporation tax on company profits is to be slashed further, while benefits and tax credits for the sick, large families, the working poor and the young are to be cut or ditched altogether.

But this time he has learned his lesson, and the class spite at the heart of an austerity package the chancellor declared would be the basis of a “new settlement” came wrapped in a one-nation package of spin, political cross-dressing and sleight of hand.

Now his omnishambles days are behind him, Osborne has developed a reputation as something of a political wizard. And his coup de grace today – an increase in the minimum wage, dressed up as a living wage and cynically undercut by a full-frontal attack on tax credits – was immediately hailed as a masterstroke that cemented the Conservatives in the centre ground in their new guise as “the party of working people”.

What would otherwise seem little more than a bizarre pose is helped by the prostrate state of the official opposition. Labour’s acting leader, Harriet Harman, today assured the chancellor that her party would be “grown up and constructive” and was in fact up for all manner of cuts itself.

Those include the benefits cap, which punishes children born into large familiesand is now to be reduced still further. “Hardworking families”, lionised by Tory and Labour politicians, are the ones who will be paying the continuing cost of the bankers’ crash and David Cameron and Osborne’s half-cocked deficit-reduction programme.

More than £12bn is being cut from working age benefits and tax credits. A family with one earner on average earnings stands to lose over £2,000 in tax credits. Someone on employment and support allowance registered as sick will be £30 a week worse off. Tax credit cuts, which will hit 3 million families, mean taking money from cleaners, care workers and supermarket checkout staff.

That cash has been used to subsidise the low-paid, insecure jobs that have multiplied as the share of wages in national income has fallen, just as housing benefit fills the pockets of private landlords. A serious boost to the minimum wage would help, especially if it was actually enforced. But increasing it by 7% with one hand, which is what has been announced for next year, while making deeper cuts in working age benefits with the other, is simply a political fraud.

Rebadging it as a living wage, currently above Osborne’s planned rate, doubles the scam. If the government were seriously interested in boosting wages, it would be encouraging trade unionism and collective bargaining. Instead, ministers are going to cut public sector pay in real terms year after year and raise the legal bar for industrial action to the point where strikes will be effectively outlawed in public services.

What has in fact been unveiled this week is a huge transfer of resources from the poor to the rich. While billions are handed to the corporate sector, and 26,000 wealthy families get an extra £940m from the inheritance tax cut, low-paid workers will be picking up the bill with lost tax credits and benefits.

The Conservatives point to tax threshold increases as an anti-poverty measure, though the 6 million lowest-paid pay no income tax, and most of the benefit goes to higher earners. Nor does Osborne borrowing Ed Miliband’s policies on non-doms, buy-to-let or training levies remotely mean “we’re all in this together”.

They’re pragmatic measures, amply compensated by the main business of tax and benefit cuts. As the Guardian reported today, the government presides over an internationally lavish corporate welfare and subsidy regime, worth an estimated £93bn a year – more than the entire budget deficit, even though corporate investment levels are dire. All that is without the still unspecified cuts to unprotected government departments, which will also hit the worst-off hardest.

The reason for this savagery is that, contrary to their incessant claims that their long-term plan is working, five years of Osbornomics has been an outright failure, even in its own terms. The chancellor promised to wipe out the deficit in one parliament. Now he’s had to postpone his goal of a surplus for yet another year for fear of repeating the growth-strangling impact of his 2010-11 cuts, and rely on the largest sale of public assets ever to fill the gap.

That’s after presiding over the weakest recovery on record, far behind his own forecasts of five years ago, and a disastrous productivity performance – predicted by the Office for Budget Responsibility to go on getting worse for years. That this is regarded as any kind of success story is only possible because of a pliant media and a political class in thrall to City-dictated austerity.

What Cameron and Osborne have succeeded in doing is set us on course for US-style levels of public spending, and loaded the costs of a continuing crisis on to the backs of those least able to shoulder the burden – while dressing it up as an even-handed necessity, and convincing Labour leaders to dance to their tune on the back of 37% of the vote. That’s what the chancellor means by a “new settlement”. How long any such settlement will be accepted, as Europe is demonstrating, is another matter.

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