Tim Woolley examines the first Conservative Majority budget in 19 years.
The buzz-word in Westminster today is ‘stability’. As crisis looms in the South Mediterranean, the Chancellor has a dismal financial backdrop over which to weave his tapestry of supposed economic recovery. The Opposition, split between two left-leaning parties, is in comparative disarray. Indeed, as Nick Robinson pointed out earlier, the pre-election forecast for the budget actually painted a vastly grimmer picture than that which we’ve seen today, and that got them elected (just). This landmark budget could not have come at a better time for the half-new government.
But has it come at a good time for us?
After all, this is the first all-Conservative budget for Mr. Osbourne, and, no longer shackled to the altruism and rationality of their former coalition partner, the Government were free to broadcast all the inequality and wage disparity they wanted. Amusingly, despite claims from both sides, in some respects this budget is far less radical than both we’d feared and, indeed, the Government had indicated.
In reality, the Chancellor has presided over a large re-branding exercise. The new, glorious ‘living wage’ is really just a one-pound increase in the minimum wage for next year, rising to £9 by the end of this parliament. Coupled with the raising of the personal allowance, but counter-acted by benefits caps and reduced tax credits, we may have a cleaner working wage, yes, but for some it will be a reduced one – far from the ostentatious claim of a ‘living wage’. Ideologically, this supports the Tories’ commitment to personal financial independence (read: getting everyone off benefits), but the ‘for some’ reaffirms the stigma of them as the party of the status quo.
There is a human cost to this budget. For some of the most vulnerable – the least paid, especially those with children – uncertain times lie ahead. A crucial detail though is that those already in the Tax Credit system will not be affected by the new proposals; future claimants will theoretically have to plan now before having children (God forbid more than two). Tory supporters might claim that this further encourages responsibility – those who can’t afford a family theoretically shouldn’t start one. The jury’s out on that. Many already in the system stand to lose out; perhaps those not yet in it might know no different.
The devil, then, is in the detail (and maybe not in No. 11): under-25s are exempt from this ‘radical’ new Living Wage. Ah. Apparently the work done by arguably the fittest, freshest members of society doesn’t warrant the same rate of pay afforded to everyone else. That young people will have to ‘earn or learn’ before receiving benefits is perhaps sensible, in theory, assuming there are work placements or higher education places available. You can’t ‘earn’ if there are no jobs in which to earn; unemployment is falling, but jobs hardly abound at the moment (just ask most of us trying to find temporary summer employment to tide them over until their next Maintenance Grant instalment …oh).
For us at university, it is in the long term that our burden is borne. The previous parliament saw university fees tripled to a claim of widened participation to students from poorer backgrounds. In this budget, we see the conversion of the Maintenance Grant into an increase in the Maintenance Loan (from 2016-17). Yes, more bright, working-class kids might have access to a university education, but these shining examples of social mobility are will now be in the trammels of even deeper debt, so will still be worse off in the long term than those from richer backgrounds. So whilst their reverse-Robin Hood reputation may ostensibly be dissolving, the Tories’ favouring of the older over the younger certainly is not.
Now time for some holism. I don’t mean to encourage him but the Chancellor did have a point in exemplifying Greece as the failed economy du jour down to, in part, irresponsible debt management. A household that spends more than it earns, borrows to cover the shortfall, and then borrows to cover the debt repayments, is sucked into a spiral of debt: the system is unsustainable. The same is true of governments, although the rhetoric of ‘that will happen to us’ is stretching it. Lo, we students are all apparently committed to sustainability (anyone remember Go Green Week?), so why should this not extend to economics?
Mr. Osbourne forecasts that, by 2020, the Government will be running at a surplus (albeit a year later than initially suggested). The primary issue is not the ends—for balanced books are a sensible aim and the only sustainable option—but the means. Indeed, far-off promises of prosperity are less sexy than the short-term allure of more cash now, but when people stand to lose out – some unjustly more than others – the promise of a brighter future is harder to swallow. There should not be a binary choice between fiscal prudence and helping the worse-off; yes, welfare needs reform, but not when poverty is a potential outcome. We are, of course, all in it together.
This is a budget of ‘privatising’ benefits. Firms are now to pay more to account for the loss of tax credits (ignore the shortfall for a second); over-18s are now to stop under their parents’ wings well into university or until they can find a job; the BBC is expected to pay over-75s’ Licence Fees. The Government sheds its responsibilities (read: burdens) and other institutions are left to make up the shortfall. The Government is not trying to take money out of the system (no, they do not wish to ‘screw over’ and chunk of society), but just stopping it coming out of their coffers.
Loath though I am that we young’uns are being squeezed more, we are sharing the cost of financial stability. Indeed, it does seem unfair that those who work for much less than we will after graduating should pay our way during education. But, and it’s a big ‘but’, all members of society should share the burden equally; whichever echelon gets the worse deal is more indicative of whose favour the Government are currying, laying bare the inherent inequality of our politics.
If you are a ‘hardworking’, middle/high-income family, this budget is for you, in the short term. In the long term, having unfairly borne the brunt of the recovery, the benefits of future economic recovery and sustainability, if you buy that, will be there for us down the line. For now, though young, single people, students (less so), and low-income families will be disproportionally worse off. However fair policies such as the Inheritance Tax relaxation may seem, ideologically, they should not come at the expense of the worst off. Treat the ill before you treat the well.
But of course, that’s the issue with Conservative government. The Tories tread a fine line: they must satisfy their traditional core voters (lest they come over purple and yellow), and, more importantly, their considerable donors, but must not be seen to do so by the public. That they who lose out most from this budget are they who largely didn’t vote is not a coincidence: equally, the young who would likely have opposed these unfavourable reforms had no way of knowing their extent back in May. That’s our system: we vote for a flavour of government, but only discover the ingredients after the taste is bitter and it’s too late.
Harriet Harman, valiant though her effort was to oppose the budget propositions, seemed to falter in her response today, and I think that’s because the budget, in its direction, is largely sensible. It starts a countdown to stability and prosperity, apparently, but, as ever, we must weigh up the immediate human cost of reform against the promise of what’s to come. We should all be pitching in, but the new budget is unfair to those who have arguably the smallest voice in politics, which tells us a lot about our system. We should not be shouting indiscriminately about ‘cuts’, as per five years ago, but discussing all of the details of the proposals, who should be bearing them most, and why we haven’t got it entirely right yet.
P.S. Along with varied other reforms, such as the divisive Sunday Trading Hours legislation, very little was made of the NHS and Defence budgets, both of which are to increase, and that’s that. Though this is for further discussion, against the current global backdrop, further reducing military spending and failing to meet our basic NATO requirement would be less than imprudent. Indeed, the galling stupidity of 2010’s SDSR still stings (like what happened to our newly-refurbished Harrier fleet). And the NHS political football is over the fence, for now, and it will be up to the Opposition in the coming months to sheepishly ask for it back, once they get their stuff together.
Tim Woolley, Features Spanish Correspondent