We’re all in the Roller together

The royal family seemed keen earlier this week to emphasise that the car in which Kate Middleton will travel to her wedding is the same Rolls Royce that was attacked in student protests.

No doubt this was intended as a heartwarming “good news” story, but something about it left me feeling uneasy, though I couldn’t quite put my finger on what at the time:

Thinking about it further today, I think it’s the “Britain Can Take It!” tone of the coverage. We’re invited to think “Isn’t it great that those ghastly students haven’t succeeded in spoiling Kate’s special day?” At the very least, it’s hard not to see this as the royal family in some small way taking sides in a political issue.

(Not that I’m defending the students who attacked Charles and Camilla’s car. It was worse than a crime – it was a blunder, because it gave the media another excuse to focus on “violent students” rather than “violent police officers”.)

This particular story is only a straw in the wind, and I’ll cheerfully admit that I may be “over-reading” it. However, we do seem to be moving back towards a rhetoric of “the enemy within”: students, public sector workers (a.k.a. “enemies or enterprise”), lead-swinging benefit cheats, and so on.

In the light of that, it’ll be interesting to see how the phrase “we’re all in this together” develops over the next year or two. As coined by George Osborne, its avowed intent is to express how we are all one country, rich and poor, united against the common enemies of financial, economic and fiscal crisis, sharing its burdens fairly.

However, it won’t take much for it to become a slogan, not of a country united against external enemies, but of the middle and upper classes – “decent, respectable people” – united against internal enemies.

Which would at least have the benefit being more honest and accurate, given how this government has been acting to date.

Over the cliff-edge

“Look and learn from across the Irish Sea.” – George Osborne, February 2006.

I wasn’t planning to add to the deluge of comment on the Comprehensive Spending Review, but I thought it worth linking to Johann Hari’s superb assault on the ideologically-driven cruelty and irrationality of Cameron’s and Osborne’s plans for this country.

The whole article deserves to be read, but here is a summary of some of the key ways in which “beneath the statistics, there was a swathe of human tragedies that will now unnecessarily unfold across Britain”:

• PricewaterhouseCoopers – “nobody’s idea of a Trotskyite cell” – predicts that a million people will now lose their jobs as a direct result of the cuts.
• The poorest 16-year olds lose the £30 a week intended to help them afford to stay in school.
• Care services for the elderly cut by 30 per cent.
• Every family living on benefits set to lose an average of £1,000 a year.
• One of the most jaw-dropping stats in Haris’ article: “There will be on average one new home built per week in the whole of London and the south-east.” (This when 4.5m people are on housing waiting lists, and the average age of a first-time buyer is 37 – and their deposit, as a colleague told me last week, needs to be £70,000.)
• Housing benefit changes will drive 83,000 Londoners from their homes, with 1.3 million ending up in more debt. (That’s just Londoners, never mind elsewhere in the country.)

Meanwhile Vodafone is let off £6bn in tax, the bankers who caused the crash help themselves to another £7bn in bonuses (the same as the amount of cuts in welfare announced yesterday) – and the whole country is forced to follow the Tories as they drive “a disproven ideology over a cliff”, quite possibly taking the economy with it.

In all this, we shouldn’t just focus our ire on Osborne or Clegg (who tend to get the most invective directed towards them from opposition supporters). Opinion polls are already highlighting the risk that Cameron is being seen as a “presidential” figure, above the political fray and insulated from the effects of unpopular decisions taken by those below him. But these are Cameron’s plans as much as Osborne’s, and we shouldn’t forget how he lied about them before the election:

On the eve of the general election, Cameron told us: “There’ll be no cuts to frontline services,” “we’re not talking about swingeing cuts,” and “all cuts will be fair”.

Well, now we know.

The end of universal benefits?

“Services for the poor will always be poor services” – Richard Titmuss, quoted at Left Foot Forward.

The announcement that child benefit is to be scrapped for the families of higher-rate taxpayers (i.e. those earning over £44,000) has caused predictable anger. Heck, I’m pretty angry about it, on the purely selfish grounds that it’ll make a significant dent in our family finances.

Among the arguments being directed against the change are:

• If you earn £44,000 a year, you lose your child benefit. However, if one parent earns £30,000 and the other earns £15,000, they keep their child benefit. Indeed, if both parents earn £43,000 – total household income £86,000 – then they keep their child benefit, too.  As such it penalises households where one partner is in paid employment and the other looks after the children full-time: a group the Tories were supposedly planning to encourage.
• The disincentive effect to people earning just under £44,000. Why go for that promotion when you’ll be worse off after it if it takes you over the £44,000 threshold? Whatever happened to encouraging aspiration? (Or is “aspiration” only for those earning over £100,000 a year?)
• The Tories and Lib Dems had both promised not to do this. Yeah, yeah, I know: that was before “Greece”, blah blah blah. Promises, schmomises.

However, let’s face it: this change only affects 15% of families, and better-off families at that. Cry us a river, white wine socialists. After all, plenty of people earning less than £44,000 are going to suffer far more from other changes planned by the government.

Which brings us to the most important argument against this change: what it presages for the rest of the benefit system. As someone observed recently, the NHS has survived the past 30 years because it is a universal service. By contrast, legal aid (originally seen as another cornerstone of the universal welfare state) has been whittled away progressively over recent years – because too few people, and in particular too few people with political clout and influence, benefit from it. Legal aid is widely portrayed as a racket in which “fat cat lawyers”* and their scrounging, criminal and/or immigrant clients profit at “our” expense.

(* The average salary of a legal aid solicitor is £25,000. So they at least will get to keep their child benefit. Spongers!)

Once child benefit is perceived as a “residual” benefit paid only to low earners, it’ll become a softer target for politicians looking to save a few quid: an extended freeze on payment levels here, a further tightening of eligibility there. Before we know it, child benefit will be just another welfare payment that only “scroungers” get. As Chris Williamson MP points out, it is the poorest who will suffer most once social security is marginalised and limited only to Britain’s poorest people.

So there is an opportunity for Ed Miliband and for Labour here. Here is a chance to show how universality in public provision benefits everyone: to draw the lines that connect families on Sunderland council estates (who may not be suffering from this cut, now – but there’s still another £9 billion of benefit cuts to be announced) with middle class families in the south east (for whom this may be the only direct consequence of the benefit reforms).

We need to do this, not only because of the immediate issue of child benefit, but because the same lines preserve a universal health service, universal access to education and so on. Ultimately the choice is between universal services to which everyone contributes and from which everyone benefits, and a “safety net” approach in which those who can pay for good services, and everyone else makes do with underfunded and marginalised state provision.

Update: Left Foot Forward has an excellent analysis here, including details of how the new 65p in the pound “taper” under the Universal Credit will hit low-income families currently in receipt of tax credits. I’ve added the Richard Titmuss quote from LFF’s post to the start of this.

Oh no! It’s a links post!

I don’t make a habit of “links posts”, but here are a few responses to the budget that have caught my eye today, until I have time to write anything myself:

• David Byrne at Compass: the budget is “completely and utterly wrong in macro-economic terms” and “will be regressive”; but Labour is “flailing about” in the absence of a credible alternative to the deflationary orthodoxy. Byrne also links this article by Tory peer Lord Skidelsky warning of the need to keep pumping money into the economy – a warning the chancellor has chosen to ignore.
• Shelter on how the reforms to housing benefit could “push many households over the edge, triggering a spiral of debt, eviction and homelessness”.
• The FT on one of the “real little horrors” buried in the fine print: the proposal to cut housing benefit by 10% for those who’ve been on the dole for a year: “It basically delivers an ultimatum to hundreds of thousands of long term unemployed: find a job or move house. This is the Cameroon version of ‘on yer bike'”.
• David Osler on a budget “purposely designed to bring about the withering away of the welfare state”, going far beyond anything attempted by Margaret Thatcher: “This is a move for which no obvious parallel in twentieth century British history comes to mind. Cuts of this magnitude can only have wideranging impact on the fabric of the life of this country.”
• A personal perspective from someone whose employment and financial prospects have been devastated by the budget: multiply this story by hundreds of thousands to get the real picture of what this government is already doing to people.

Though the last word has to go to the inestimable Infobunny, who chose the medium of sculpture in which to give her response to Osborne’s debut:

I commend this post to the house.

All in this together?

I don’t propose to blog in detail today on George Osborne’s budget and its likely effects. There’ll be plenty of analysis and discussion going on elsewhere over the next few days.

But while all the discussion is going on, here’s a chart to keep in mind, from p.67 of the Red Book (PDF), showing the percentage impact on net income for different levels of income:

You’ll notice two things. First, those at the very bottom are hit harder than almost anyone else. Only the top two deciles – who can well afford it – suffer a bigger impact.

Second, even the Treasury is acknowledging that the VAT rise is deeply regressive. VAT makes up the bulk of the “indirect tax” impact shown in the chart, and the impact of such rises is -1.5% for those at the bottom of the income range and less than 1% for those at the top. And for those in the bottom deciles, 1.5% or 1.25% is a significant amount of money.

Talk of “lifting 880,000 people out of income tax” by raising personal allowances sounds good, and may mollify the consciences of some Lib Dem supporters, but in reality the benefits of this are far outweighed by the impact of the VAT rise.

In short, the Budget is as many predicted: a re-run of this celebrated Labour election poster from the 1930s:

The only differences are that the guy at the top is arguably being asked to step down two rungs – and the guy at the bottom to step down one and a half.