The equivalent of a kick to the balls.
Never before have the battle lines been drawn quite so distinctly between those who claim any benefit from the state and those who don't. Osborne focused, as the Tories repeatedly have, on the mythical striver going out to work early in the morning and coming back late at night, only to notice that some of the other families on his street aren't doing the same, their lights not on when he goes out and their lights still on when he goes to bed. How can it be fair that he works hard while others fail to take any responsibility whatsoever? It doesn't matter whether these other individuals are feckless scroungers (extremely unlikely) or they can't get a job as there aren't any, whether they're too disabled or sick to work, or even if they do go out to work and claim tax credits, under Osborne's new uprating regime all are equal. First he tried changed the method of uprating benefits from the retail prices index to the consumer prices index to save money, only for inflation to be so high that the impact was minimal, so now he's simply fixed the increase at 1% for the next three years.
Remember the outcry when Gordon Brown raised the state pension by 75p a week? Well, Osborne's gone one better. Those over 25 on Jobseeker's Allowance, or on the lowest rung of Employment and Support Allowance can look forward to an increase of 71p a week come next April, or in total an extra £36.92 over a whole year. As we saw last week, thousands of those on JSA are being failed by the work programme, the government having abandoned a scheme that both worked and paid at least the minimum wage. They will doubly suffer due to the incompetence of the coalition. As for those who've managed against all the odds to be recognised as unable to work by ATOS, well, you've had rises in previous years so stop complaining. And frankly, as for those of you on tax credits, they were invented by Labour and we'd really like to abolish them altogether but can't quite yet, so count yourselves lucky.
As it was with Gordon Brown, everything with George Osborne is about screwing the other side as much as it is about the economy. His change to the benefits uprating will require legislation, therefore challenging Labour to either side with the government against the most vulnerable and poorest in society or to stand up for those the Tories have characterised and will continue to smear as the undeserving. It is base, disreputable and vile politics, but it works. Polls show we still want a welfare state, we just don't want welfare claimants, and the Tories are determined to milk that sentiment down to the very last drop.
Something else half-inched from Brown was Osborne's almost magical finding of extra money, which allowed him to claim that he wouldn't despite speculation be borrowing more this year than he had previously announced. Similarly to how PFI debts were kept off balance sheet by Brown, allowing him to claim up until the crash that he was keeping debt to 40% of GDP, Osborne today counted money that hasn't even been raised yet. By including the £3.5bn expected to be raised from the auction of the 4G spectrum, as well as £5bn meant to be coming from the deal with the Swiss over tax avoidance, along with the £11.5bn of interest created through the Bank of England's quantitative easing programme, Osborne somehow managed not to give Ed Balls an open goal.
Not that Balls would have scored anyway, as he had an off day. Quite how he managed to be so awful is unclear, such was the incongruity of much of Osborne's statement: only a politician with his level of smugness could describe the economy as "healing" when the OBR predicted growth this year of -0.1%. Osborne also claimed that the OBR had absolved the government's austerity programme of responsibility for the double-dip, all the blame being heaped again on outside factors, something not wholly backed up by the facts, as Chris points out. The big winner was, once again, large businesses, with those unable to manage their affairs so they don't pay any corporation tax able to console themselves with a further cut of 1%. This puts the onus further on the individual, and so more of those on higher middle income can look forward to falling into the 40% tax band. I think we've dealt with the continuing rises in the personal allowance more than adequately before, and how they fail to help the poorest, almost to the point where it can be disregarded.
While the Institute for Fiscal Studies will no doubt confirm it tomorrow, this table from the Resolution Foundation sums up Osborne's approach. Stripping out the measures inherited from Labour which are still having an impact, today's changes are remarkable in how regressive they are, with the supposed squeezed middle and hard-working families we hear so much about taking a battering. The richest meanwhile, while affected, will barely notice their losses.
Just as remarkable is how little dissent there's been at the extension of austerity right up until 2018. The coalition was formed with the main aim of eliminating the structural deficit by 2015. Half-way through the the parliament, the economy has stagnated, the public sector has been severely cut, welfare has been slashed close to the bone and still more is being demanded. Politicians have probably never been as unpopular, yet apathy rather than anger or resistance is the mood. This more than anything is why Osborne can get away with claiming that the real disaster would be to alter his plan, even as the OBR itself recognises the problem isn't with the supply-side, it's with the lack of demand. Even the spectre of an unprecedented triple-dip recession seems unlikely to make the coalition budge. We don't just face a lost decade, as that doesn't anywhere near adequately describe the situation; what we're going through isn't just unnecessary, it's counter-productive, ideological and downright nasty. If we can't get these bastards out come 2015, then frankly we've deserved all of this.