Some bullet-points based on my (possibly limited) understanding of the measures in the budget, followed by a more general analysis.
Cuts to Disability Living Allowance – this one has me confused and, I presume, deliberately so. I can’t see that introducing a medical will make any difference, since my understanding is that you don’t get DLA without producing reams and reams of medical evidence from every nurse or doctor you’ve done so much as sneeze in front of, and hence every applicant who can meet that test will also pass the medical, presuming the government-appointed medics are following the same criteria. I can only assume, therefore, that ‘introducing a medical assessment’ is code for ‘making the criteria far, far tougher, even though qualifying for DLA is already impossibly hard’. Saying that every existing claimant will be forced through the assessment seems positively cruel to me. I mean, every claimant? Including people who are so profoundly disabled they can’t co-ordinate their movements, can’t speak, can’t eat/ dress/ wash themselves – they all have to get a special, government-approved doctor to agree they’re disabled? Still, it sounds like this will be very lucrative for whoever gets the contracts to do the medicals. (Note for wealthy people: buy ATOS Origin shares.) I wonder if it’ll actually end up saving money, or costing more.
Housing Benefit – The whole concept of capping Housing Benefit, or cutting it by 10% if you’ve been unemployed for more than a year, is irreducibly stupid. Housing Benefit is paid to cover the cost of housing someone. It doesn’t matter if it costs £50 or £400 a week to house them, or how long they’ve been unemployed for – that’s still what it costs. If HB pays substantially less than the actual rent charged, that’s the same as paying nothing, because poor people are, strangely enough, poor, and thus have no other source of income to make up the difference, which means they can’t take up a partially-funded tenancy, and without the tenancy they’re not eligible for the benefit. A policy of instituting a national cap on Housing Benefit is, essentially, a policy to withdraw it altogether from people who live in expensive parts of the country. The decision to cut it by 10% for people who’ve been claiming JSA for more than a year is, in effect, a decision to withdraw it altogether from the long-term unemployed. If this – the phased withdrawal of Housing Benefit – is the Lib-Cons’ ambition, they could at least have the guts to say so. It is very hard to see how this policy will not trigger a dramatic rise in homelessness. I’d almost forgotten what it was like to see people huddled under blankets on every street corner but, of course, with a Conservative government in power we should expect to see it again soon.
Cuts to every other benefit – The decision to up-rate benefits in line with the CPI rather than the RPI sounds like a technical change of little significance, but will actually be equivalent to a real-terms cut in every benefit every year – currently the CPI is 1.7% less than the RPI. Assuming the difference stays the same (and it will almost certainly increase – unless Mr Osborne’s budget triggers a second recession, that is), that’s a cumulative real-terms cut of 6.8% by the next general election in May 2015, but announced without a single mention of the word ‘cut’. Very clever.
Increase in threshold for Income Tax – good in principle, but I suspect the effect will be wholly or largely cancelled out by the:
Increase in VAT – ooh, what a surprise. Actually, there is some surprise that the Lib Dems have swallowed this one. The Conservatives approve of VAT because it’s the most regressive of all the taxes – everyone pays the same, whether they’re multimillionaires like George Osborne and David Cameron (and Nick Clegg) or part-time school cleaners, which means it falls disproportionately lightly on the well-off, and disproportionately heavily on the poor. The Lib Dems have always professed to disapprove of it for the same reason. In fact, the move to a progressive tax system has been a central plank of the third party’s policies for as long as I can remember, which is getting on for 25 years. If the Lib Dems have been unable to block a decision that will make the UK’s tax-system significantly more regressive (because VAT will account for an increasing proportion of government revenue), it does beg the question of how much influence they have.
I mean, compromising on the determination to make the tax system more progressive, that would be one thing, but compromising to the extent that you actually vote in favour of making it less progressive – well, that’s a lot of compromise. Something, at any rate, is certain – the decision to increase VAT on fuel to 6% makes an absolute mockery of the claim that the coalition government is looking out for the interests of the poorest. Rich people will sigh over the increase in their bill, then pay it without noticing; come the winter, poor people will have to choose between heating and eating. Do keep in mind, at least until you’re deciding how to vote in the next election, that the Liberal Democrats have signed up to this in private negotiations, and will be voting in favour of it.
Voting in favour, in fact, of the entire budget which, according to the coalition rhetoric, protects the interests of the poorest and the most vulnerable in society, but in fact does the exact opposite. Because the poorest and most vulnerable people in society are people like the disabled, who will be facing additional hoops to jump through before they can get their hands on the pittance of money they’re paid. A pittance that will, in common with every other benefit, be being cut year-on-year, every year, from now until that benefit is either worthless, or some other government reverses the decision. And while they’re coping with this, they’re also coping with a threat to cap Housing Benefit that may, one day, mean they can no longer afford the roof over their heads. Not that they will necessarily have been that comfortable in their homes, since the increase in VAT on fuel will have made it harder for them to afford to turn the heating on. Because, of course, they’ll be struggling to find the money for the 1% increase in VAT on fuel at the same time they’re struggling to find the money for the 2.5% increase in VAT on everything else.
I didn’t vote for the Lib Dems. I’d taken note of their sharp lurch to the right under the leadership of Nick Clegg, and decided I didn’t like it. I’d watched with dismay the enthusiasm with which he talked about the need for ‘savage cuts’ at his party conference last autumn, at a time when even George Osborne was being more circumspect. So I have no real reason to feel angry, or betrayed – certainly far less reason than those millions upon millions of people who voted Lib Dem in the belief they were voting tactically for ‘anyone but the Tories’ because they wanted to avoid the unavoidable rebalancing of the public finances being carried out by the slash-happy Conservatives.
The Lib Dems will be trumpeting, I’m sure, the very modest increase in Capital Gains Tax for the uncommonly wealthy, and fair enough – George Osborne would have been unlikely to introduce the policy without their prodding. But this is the only tax change that takes from the wealthy and not the poor, and it’s expected to generate something like £1bn a year. Meanwhile, the VAT increase which falls hardest on the poor will bring in £12.1bn a year, and benefit cuts targeted primarily at the poor will save £11bn. This is not a budget aimed at protecting the poor and vulnerable. It’s a budget that does the absolute opposite of that, one that makes sure the bulk of the cuts and tax-rises are borne by the poor and the vulnerable. It’s a regressive budget, a consummately Conservative budget, one that, as far as it can, mollycoddles the rich while savaging the poor – and it’s being supported by the Liberal Democrats.
Let’s be clear – there were other possibilities here. Despite what you’ll hear again and again from the Liberal Democrats and the Conservatives over the next few days/weeks/months/years, it wasn’t a case of keep merrily spending all the way to IMF intervention, or this, and nothing in between. We could have had a progressive budget, the kind of budget we would all have expected from a government reliant for its very existence on the Liberal Democrats, who were forever telling us about their ‘firm commitment’ to progressive taxation. A progressive budget that would have increased taxes on the rich, not as punishment, but because they are most able to afford it, and would have used the money to offset some of the cuts in benefits for the very poorest people in society. A progressive budget that would have passed over an increase in an unfair tax like VAT in favour of a rise in a more progressive tax – like Income Tax, for example. Instead we’re getting the Conservatives and their determination to make sure that it’s the poor and vulnerable, the people who can afford it least, who will pay the most and pay hardest. And we’re getting it because that’s what Nick Clegg and the Liberal Democrats want us to get.