Ben’s Western Morning News Column: 22 March 2012

March 22, 2012 in Uncategorized

Remember “We’re all in this together”? The very clear promise made by both our governing parties – before and after the last election – that the weakest and most vulnerable would be protected while those with the “broadest shoulders” would carry the greater load in reducing the deficit.

I fully accept the deficit had to be reduced. Where I take issue with the Government is the speed and severity of its austerity and that people on low and middle incomes are in fact carrying the heaviest burden.

Labour’s Chancellor, Alistair Darling, was committed to halving the deficit in one Parliament. His was a responsible and credible plan which commanded the confidence of the markets and when Labour left office our economy was growing and unemployment falling.

Then, long before the crisis in the Euro zone, George Osborne, in his “emergency budget” in 2010 slammed on the brakes, spoke in apocalyptic terms of Britain being like Greece and announced he planned to eradicate the deficit in a single Parliament. This had never been done before and no other country was attempting such drastic deficit reduction in the wake of the spike in borrowing caused by the banking crash. The result was our economy stopped growing and unemployment started rising again and we’re now borrowing £160 billion more than if growth had continued along the Darling path. In the United States by contrast, where President Obama, continued with an approach closer to Labour’s, the economy has been motoring and unemployment falling.

If the speed and depth of austerity here has been a mistake, the disproportionate squeeze on those on middle and low incomes has been plain wrong. All the analysis by independent economists, including the respected Institute for Fiscal Studies, has shown that the combination of this Government’s tax and spending policies has hurt the poorest most and the wealthiest least. Families with children and young people have been particularly hard hit. So what does the Chancellor do to provide relief to such people and boost the economy? Cut VAT? Reverse the cuts to tax credits and child benefit? No, this Chancellor’s main priority is a give-way to the wealthiest 1% – cutting the 50pence tax rate on income above £150,000, while clobbering pensioners with a “granny tax”. The sop to the Liberal Democrats of moving a little more quickly in raising the income tax threshold cannot disguise the fact that the Government is quite brazenly taking from people on middle and low incomes and giving to the rich. The Lib-Dems make a lot of noise about a £10,000 income tax threshold. But this is a very expensive and inefficient way of helping the less well off. The poorest, including many pensioners don’t pay tax, so they don’t benefit and raising tax thresholds benefits all tax payers, not just the low paid. A more effective a fairer way of relieving the pressure on modest and low earners would be cutting VAT, including fuel prices and or reversing the cuts in support for families with children. In the longer term we need to look much more radically about how to shift the burden of taxation from work to unearned wealth and socially or environmentally damaging behaviour.

In the week that the disastrous NHS Bill finally staggered onto the statute book we learned that Richard Branson might soon be running Children’s Services in Devon. I have nothing against Mr Branson. He is a brilliant businessman. But is it really sensible to have businesses which are run for profit in charge of services for our most vulnerable and at risk children? I fear this is the sign of things to come under the Government’s upheaval of the NHS. I hope those in both the NHS and local government in Devon who will make this decision ask some very searching questions before contemplating such a move.

I was amused when David Cameron drew on the “great success” of water privatisation to defend his plans for selling off the road network and introducing tolls. Water privatisation doesn’t feel so great from a South West perspective, nor if you live in the South East and face a hosepipe ban because of the industry’s dismal failure to invest in infrastructure.  “