By Unite political director Jennie Formby
With just one more economic theatrical event – next year’s budget - George Osborne’s autumn statement is the last but one throw of the political dice.
This is the tenth round of cuts for the people who didn’t cause the economic crisis but are paying a heavy price. As the recent report from the LSE/Essex University demonstrated, tax and welfare policies have had the effect of transferring income from the poorer to the richer half of households.
Remember June 2010 Nick Clegg showed his true colours with his sickening back slapping when George Osborne sat down after delivering his emergency budget predicated on an ideological austerity programme? We knew then from the congratulatory braying Tories on the backbenches, and the willingness of the then chancellor’s sidekick, Liberal Democrat David Laws, that public services would suffer, wages would stagnate and higher bills and increases in VAT would lead to misery for vast swathes of people. It has also led to economic failure.
So when this government boast that jobs have been created, growth is up and the economy is recovering it’s a chimera. Instead we have zero hours, insecure jobs and part time working – a recovery not lived by most of us, a recovery built on consumer spending and unsecured debt and even this comes after years of stagnation. It is the worst recovery for 300 years. A consequence has been a lower tax take from working people on low wages and squeezed cost of living.
Yet even those corporations that have had tax reductions, for the global giants such as Amazon, it’s not enough instead they devise schemes to avoid paying taxation that would result in the greater public good. And they continue to sit on a £500 billion cash hoard rather than invest it in our economy.
Why then do commentators talk of the government leading in the approval stakes when it comes to economic management? Quite simply those who approve are as expected from the more affluent part of the electorate the so called ABC 1s while the C2DE’s – those less affluent sections of society – so give the coalition a negative rating with a net negative rating of 18 per cent
Today’s autumn statement brought little cheer to working people. For 50 minutes George Osborne rattled off statistics. Suddenly we hear that the Office of Budget Responsibility (OBR) have revised the statistics so that growth is better, borrowing is better, predictions are better. It was difficult not to think about that old axiom there are lies, damned lies and statistics. And on cue Ed Balls in his response read out OBR figures which gave a different picture on the economic forecasts. The OBR has revised down its projections for the economy in 2016–18, and have revised down average earnings projections for 2014-16.
So with the ‘economic lights flashing in the eurozone, Osborne, without the merest hint of irony, blames global economic difficulties for any failure.
The chancellor again made the claim that the rich were contributing the most so ‘we are all in it together’. Yet, within the statement, apart from the claim that the gender pay gap was lessening, not heard since male wages have gone down, and that there would be further controls on public sector pay, wages were hardly mentioned.
On public service Osborne set a trap for Labour with a vote in the House in January which would seek to tie the opposition to Tory/Lib Dem cuts.
There were measures on taxes with the personal allowance going upwards and a so-called ‘Google tax’ to deal with multinationals avoiding taxes. In future, he said: ‘profits made here will be taxed here – no longer able to be shifted off shore’. Sounds welcome but we will need to see the small print before letting these global tech companies off the hook. Richard Murphy estimates £25 billion lost each year through tax avoidance – this ‘crackdown’ barely scratches that surface.
Stamp duty is being described as Osborne’s ‘rabbit out of the hat’ with duty increasing in stages as property prices go up from the thousands to properties worth millions. Some commentators are saying it is a nod to Labour’s ‘mansion tax’ and SNP’s land tax. What is clear is that this is a belated measure to reduce some of the cost of buying a home, but it does not begin to tackle the very deep housing crisis we face and the need for more homes, for councils to start building houses again and for security in the rented market.
The accumulative impact of Osborne’s changes made to the tax and savings system continues to have a reinforcing beneficial effect on those who have built up larger savings pots. Todays’ announcements included continuing ISA tax free status when you die and it passes to your spouse, and the equivalent applied to pensions. This comes after previous announcements in the budget around increasing the ISA threshold and reducing inheritance tax. Of course this also combines with the increase in the personal allowance on £10,600 – a measure that continues to deliver no benefits for those on the lowest pay and benefits those at the top most of all. In addition, we see the increase of the higher rate of tax threshold.
According to Osborne this is not the time to squander economic growth. He says the electorate should let them finish the job. If it sounded like a threat as we think of finishing the job on the privatisation of the NHS, further destruction of public services and never ending austerity, that’s because it is.
Instead of taking a more positive approach by going down the austerity route people have been sacrificed on the altar of deficit reduction and they have even failed on that.