Osborne– who was chancellor under David Cameron’s government and was instrumental in bringing about austerity – said that the cuts announced by Reeves on Monday were “almost identical in structure and form” to those he made in 2010, when he announced £6.2bn worth of cuts.
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“I don’t think there was anything she announced that I would have violently disagreed with or not done myself.
“In fact, it was almost identical in structure and form to what I did in the first couple of months that I was Chancellor of the Exchequer.
“So, you know, ‘Continuity Osborne.”
Sharing a clip from the podcast on social media, SNP Westminster leader Stephen Flynn said: “No comment.”
AFTER months in which Labour argued that such is the dire state of the economy that Tory spending limits must be maintained, the Chancellor of the Exchequer now says that further cuts in public expenditure are needed.
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The question raised by any talk about varying the structure of taxation is where taxes fall. The richest 10 per cent of families hold 43 per cent of all wealth. The bottom 50 per cent — and be sure that this includes the greater proportion of people who see themselves as working class — possess less than 10 per cent of wealth.
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When the overwhelming majority of voters, including Tory voters, see public ownership of rail, mail, water and energy as desirable this is not simply a yearning for the more efficient delivery of these services and utilities than private ownership is able to provide. More, it is an expression of a clear understanding that revenues from these myriad transactions should not be privately appropriated but applied to the common good.
The present Labour administration has, with rare exceptions, ruled out the recovery into public ownership of privatised sectors and, less performatively than Gordon Brown in his day but no less systematically, has assured the corporate world that not only are the foundations of private ownership safe but that Labour, even more than its Tory predecessors, holds appeasing the bond markets a central part of its economic strategy. Hence the cuts announced today.
Reeves’s dilemma is highlighted by the necessity to find £1 billion to fund the juniors doctors’ pay increase; something similar for the teachers and a backlog of other public-sector pay claims.
Under this system spending is always about priorities. But there is money about. She is already committed by Starmer’s diktat to find £57.1bn in defence spending in 2024-25 which is a 4.5 per cent increase in real terms. No cuts there!
A bigger source of revenue would result from taxing wealth at the same level as income by raising the capital gains and dividend tax rates to the level at which workers pay on their wages.
An even bigger windfall would result from a socialist economy in which all rents, interest and profits arising from human economic activity were held in common rather than being privately acquired.
Zionist Keir Starmes is quoted “I support Zionism without qualification.” He’s asked whether that means that he supports Zionism under all circumstances, whatever Zionists do.
“Stability is Change!” This seemingly paradoxical, almost Orwellian statement is the principal slogan of the Labour Party’s current parliamentary election campaign. Labour leader Keir Starmer used the slogan at the party’s manifesto launch, and it provides a key prism for understanding the manifesto and its weaknesses.
There is little doubt that the UK electorate is in the mood for change. The widespread, off-stated consensus in the country is that nothing works. The National Health Service is so chronically underfunded that doctor’s appointments are difficult to get and long waiting lists proliferate. The trains are shockingly expensive but utterly unreliable.
The list could go on and on, but the image most frequently used to sum up the situation comes from the failure of the privatized water services. A lack of investment in infrastructure accompanied by the looting of those companies for huge shareholder dividend payouts has led to the near constant release of untreated sewage into the UK’s river system. It flows from there onto our beaches. The British are quite literally swimming in shit!
These problems are identified quite clearly in the Labour Party manifesto, but the diagnosis of their causes and therefore their solutions proves much less convincing. Labour may have a plan to win in July, but how it will govern in the interests of its voters is anybody’s guess.
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The totality of Labour’s spending pledges amounts to just 0.2 percent of GDP, smaller even than the Conservative pledges of 0.8 percent and dwarfed by the previous two Labour manifestos, which promised 2.1 percent and 3.2 percent respectively. Even the pro-market Institute for Fiscal Studies called Labour’s plans “tiny, going on trivial”.
These policies do not point to stability, not least because they do not address the 18 billion pounds of government spending cuts that the Conservatives have already baked into the government budget going forward. The effects of implementing such cuts on government services — which have already suffered so badly under 14 years of severe austerity — makes it hard to imagine that Labour will stick to this commitment. It seems likely that money will be found to prevent the worst of these cuts through technical changes in accounting between the government and the notionally independent Bank of England.
Beyond this paddling, however, the need for investment in the UK is huge. Both public and private investment in the country has collapsed since 2008. It hasthe lowest business investment in the G7 and ranks just twenty-eighthout of the 31 OECD countries. In the face of this, Labour, hamstrung by self-imposed fiscal rules on bringing down government debt and pledges not to raise the main forms of taxation, are promising so little investment that their plans seem unbelievable.
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Until last February, Labour was promising to immediately strengthen workers’ rights through a New Deal for Workers, and to spend 28 billion pounds per year to decarbonize the economy through its Green Prosperity Plan. The Labour Party’s current openness to corporate funding and lobbying, including the imposition of over30 parliamentary candidates with corporate lobbying backgrounds, has led to a dramatic watering down of these pledges. The Green Prosperity Plan has been reduced to just 3.5 billion pounds, but the form that spending will take reveals another logic or worldview which may come to the fore as crises mount.
The word “securonomics”, an ugly portmanteau favoured by shadow chancellor Rachel Reeves, makes an appearance in the manifesto, introducing the idea that public investment should support and de-risk private investment in strategically key sectors. The chief vehicle for this will be a National Wealth Fund “capitalised with £7.3 billion over the course of the next parliament”. What precisely this will look like has yet to be determined, but The National Wealth Fund “will have a target of attracting three pounds of private investment for every one pound of public investment”. This is an explicit return to and acceleration of the kind of public-private partnerships that lost legitimacy in the UK during the fallout from the disastrous Public Finance Initiative under New Labour.
The cost of living is the most important issue for many voters this election. It’s no surprise why. In 2022, nearly 4 million people in the UK experienced destitution, meaning they could not meet their basic physical needs such as having enough to eat and staying warm.
The UK’s social security system is failing in its core purpose to prevent poverty. And yet the Conservatives have promised more crackdowns on welfare, with the prime minister linking this with his pledge to lower taxes.
When the Conservative-Liberal Democrat coalition government came to power in 2010, they inherited a social security system in radically better shape than it is now. What happened?
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People received working-age benefit payments for different needs: jobseeker’s allowance, income support for single parents and incapacity benefit for long-term illness and disability. Housing benefit went directly to landlords to cover claimants’ rent.
Enter the global financial crisis. The Conservative-led government’s response was austerity cuts: cutting back on welfare to tackle the budget deficit.
Lowering the value of benefits is the biggest austerity cut to have affected incomes. In 2010, the government switched from uprating the value of benefits each year in line with the retail price index to using a different measure of inflation, the consumer price index, instead. This is usually lower and effectively makes payments worth less.
In 2012, the government introduced a new system of tougher rules and sanctions on people receiving benefits. Conservative politicians said this would end “the ‘something for nothing’ culture”, but the change has had lasting negative effects.
Benefit sanctions were always part of the system, but became extreme in 2012. If, for example, someone misses one Jobcentre appointment their benefit could be reduced or removed for 28 days.
Many people receiving benefits have been penalised with sanctions. Bricolage/Shutterstock
Other cuts to incomes followed the Welfare Reform Act 2012. The “bedroom tax” penalised social housing tenants who had “extra” bedrooms. The idea was to reduce renters’ housing benefit so they would downsize to a smaller home. However long-term housing shortages mean that smaller properties are rarely available.
In 2013, the household benefit cap was introduced to limit the maximum amount a family could receive in benefits payments. It had the most impact on families with children and those with high rents.
Universal credit
Universal credit, introduced in 2013, was billed as the biggest shake-up of benefits in 70 years. It promised to make work pay and simplify the system. It replaced separate tax credit, unemployment, lone parent, disability and housing payments with a single payment.
Research from think tank the Resolution Foundation suggests that universal credit provides more support for working people who rent their homes than the previous system. But disabled people who cannot work are likely to be much worse off than under the old system.
There are other problems with universal credit. Unlike under the previous system that gave housing benefit straight to landlords, claimants have to pay their rent from a pot of money provided by the government that is almost certainly too small to cover all their costs.
The first universal credit payment takes around five weeks to arrive, meaning people may fall into rent arrears. A result is that some landlords take legal action to evict those receiving universal credit.
The two-child limit was applied to tax credits and universal credit in 2017 to remove income for third or subsequent children. Large families faced increased poverty as a result.
In 2020, the pandemic hit. Universal credit and tax credits were raised by £20 per week, but this ended in late 2021. The cost of living crisis has since widened the gap between benefits and prices.
Today, the value of universal credit falls £890 per month short of the cost of living for single people over 25. This is because of the changes to uprating and the benefit freeze.
In Feburary 2024, charity the Trussell Trust published research showing that over half of people on universal credit had run out of money for food in the previous month.
What can the next government do?
The next UK government must make emergency repairs to social security to halt harrowing declines in health and lifeexpectancy. This should ensure a minimum acceptable standard of living, including restoring the value of benefits such as universal credit to cover the costs of living.
Since 71% of children living in poverty are in working families, employers should be required to pay the real living wage. In-work universal credit also needs to top up wages enough to make work pay.
Repairing the social safety net is an enormous challenge, but public support for it has been on the rise for years. In 2010, many people thought benefit claimants didn’t deserve any help. But from 2015 there has been a growing preference to help people receiving benefits.
Analysis by leading experts the Nuffield Trust reveals that main parties’ manifestos would squeeze health spending
Labour and the Conservatives would both leave the NHS with lower spending increases than during the years of Tory austerity, according to an independent analysis of their manifestos by a leading health thinktank.
The assessment by the respected Nuffield Trust of the costed NHS policies of both parties, announced in their manifestos last week, says the level of funding increases would leave them struggling to pay existing staff costs, let alone the bill for massive planned increases in doctors, nurses and other staff in the long-term workforce plan agreed last year.
The Nuffield Trust said that “the manifestos imply increases [in annual funding for the NHS] between 2024-25 and 2028-29 of 1.5% each year for the Liberal Democrats, 0.9% for the Conservatives and 1.1% for Labour.
“Both Conservative and Labour proposals would represent a lower level of funding increase than the period of ‘austerity’ between 2010-11 and 2014-15.
“This would be an unprecedented slowdown in NHS finances and it is inconceivable that it would accompany the dramatic recovery all are promising. This slowdown follows three years of particularly constrained finances.”
The trust added that the planned funding increases “would make the next few years the tightest period of funding in NHS history”.
Sally Gainsbury, senior policy analyst at the Nuffield Trust and a leading authority on NHS funding, said: “They will struggle to be able to pay the existing staff, let alone the additional staff set out in the workforce plan. It’s completely unrealistic.”
