Osborne’s latest Budget was proclaimed to be “stealing Labour’s clothes”, with the announcement by the Chancellor of a new “national living wage”. But make no mistake about it: this was a typical Tory budget, announced by a government of the rich, for the rich, by the rich; a budget intended to make workers, the youth and the poor pay for a crisis they did not cause.
The BBC proclaimed that Osborne’s latest Budget was “stealing Labour’s clothes”, with the announcement by the Chancellor of a new “national living wage”. But make no mistake about it: this was a typical Tory budget, announced by a government of the rich, for the rich, by the rich. Behind the smiling mask – with promises of higher pay – lies the same old ugly face of capitalism. In reality, the Living Wage is nothing but a fig leaf designed to obscure the facts: this is yet another attack on ordinary people; a budget intended to make workers, the youth and the poor pay for the crisis.
At the same time as slashing taxes for corporations and the wealthy, Osborne, delivering the first wholly Conservative budget for 19 years, unleashed a devastating assault on benefits for working people. The so-called “national living wage” was merely demagogic smoke and mirrors used to distract from this otherwise naked class attack.
“Living” wage? What planet are you living on?!
It must be made absolutely clear that the National Living Wage announced by Osborne is, in reality, no such thing. The Living Wage is calculated by the Living Wage Foundation as the minimum wage necessary for a basic living standard; the rate is currently set at £7.85, with a higher rate of £9.15 in London, reflecting the higher cost of living in the capital. The Tories however are proposing to introduce a compulsory ‘living wage’ rate of £7.20, rising to £9 by 2020 – but only for workers over 25, as if the cost of living is suddenly lower for 24 year olds!
Not only does the Tory ‘living wage’ fail to match the actual living wage necessary for a decent standard of living, but the cuts to benefits actually means it will fall far short. The current living wage rate is calculated on the basis that low income workers are entitled to tax credits and housing benefit, which top up those on lower wage incomes. But the Tories have now announced a devastating £4.5bn of cuts to tax credits alongside further cuts to housing benefit. Once these cuts are taken into account a real living wage would have to be far higher than the measly £7.20 being offered by the Tories.
Some analysts are predicting that for every £1 extra earned from the wage rise, many families will actually lose £2 in benefits. The Institute for Fiscal Studies has predicted that families reliant on tax credits currently will actually be £1000-a-year worse off as a result of Osborne’s budget announcements. So the reality is that the cuts to tax credits mean that despite a small wage increase for minimum wage workers over 25, the vast majority of low wage workers will actually be much worse off!
Tax credits: a subsidy for big business
Tax credits were introduced by the Blair government in 2003 and, alongside the Minimum Wage, represented one of the few progressive reforms introduced by New Labour. Both workers and employers have come to rely on them, with the bosses knowing they can pay their workers a paltry minimum wage, safe in the knowledge that state top ups will keep them above the breadline.
So while tax credits were indeed a welcome lifeline for workers, they actually enabled companies to keep their wages low and ramp up exploitation. In effect, tax credits mean the government is subsidising the profits of Britain’s decrepit bourgeoisie. But to cut tax credits without imposing a considerable rise in wages is clearly an attack on the living standards of low income workers, which must be bitterly opposed.
The degenerate commentators of the bourgeois press have made much of Osbourne’s apparent political ‘genius’ by introducing a Labour policy. But the fact that the stridently pro-business Tories can implement a Labour policy without offending their bourgeois backers in fact reflects just how far to the right the Labour leadership have moved. If anyone has been stealing policies, it has been Labour taking them from the Tories, with Labour’s current stance on the deficit, benefits and immigration barely distinguishable from that of the Conservatives. Indeed, comments have been made about how comfortable the three Blairite candidates in the Labour leadership contest would be inside the Tory Party, with some even suggesting that Liz Kendall should run for leader of the Conservatives!
An assault on the poor
Prior to the election, the Tories had repeatedly refused to spell out what exactly their £12bn in welfare cuts would entail. After yesterday’s budget the reason is abundantly clear: if working people had known what was coming, it is doubtful the Tories would have been able to win. Aside from the cuts to tax credits the Tories also confirmed that they would be lowering the benefit cap to £23,000 per year in London (with a surprise further reduction to £20,000 per year everywhere else); freezing working age benefits for four years; and slashing benefits for some sick and disabled claimants.
Lowering the cap will have a devastating effect on the most vulnerable families, with even the government’s own leaked impact assessment showing it will push 40,000 more children into poverty. The Tories like to claim it’s all about encouraging lazy people to work, but their own figures confirm that two-thirds of those capped are either lone parents with children under five or are too sick or disabled to work. If even the government’s punitive welfare system recognises these people are currently unable to work, why should their benefits be slashed to below breadline levels with the apparent purpose of ‘incentivising’ them to work? The inevitable result will be families made homeless as their benefits are no longer enough to cover their rent. Scandalously, the current Labour leadership – including the three right-wing leadership hopefuls – apparently support the ‘principle’ of the policy.
Although it may not grab as much attention, the four year freeze to benefits will also cause misery and pain. Benefits are already insufficient for meeting basic needs, so freezing them while food and energy prices continue to soar is just going to leave claimants hungry. The freeze in housing benefit is particularly pernicious, as the freeze of the last three years, combined with the housing benefit caps, has already made vast swathes of the country unaffordable for benefit claimants to rent in the private sector – unemployed and working alike. Another four years of freezes at a time when rents continue to increase at unprecedented rates will make it almost impossible to find somewhere affordable for claimants to live.
Even some people deemed too sick or disabled to work are not immune from the Tories continued crusade against benefit claimants. Employment and Support Allowance claimants in the ‘Work Related Acitvity Group’ will see their benefits slashed, meaning they will lose more than £1,500 a year. So, far from being ‘all in this together’, the budget demonstrates that the poorest and most vulnerable are continuing to pay for a crisis they did not cause.
Attacking education; defending “defence”
The naked class interest of the budget is all too clear when you look at the tax cuts being proffered to the rich. Corporation tax is being cut to 18%, a full 2% below even the lowest of any advanced economy and the lowest rate in Europe. The threshold for the 40p tax rate is being raised to £45,020 at an estimated cost of £1.68bn, and the inheritance tax threshold is being changed so that the rich will be able to pass on estates worth up to £1m free of inheritance tax.
The most hard-line Tories will also be pleased by Osborne’s promise to increase military spending ever year, with a commitment to meet the NATO target of spending 2% of GDP on so-called “defence”. No matter that over a million people in the UK now rely on food banks – “Great” Britain must not be embarrassed on the international stage! We must have more tanks and missiles and aircraft carriers!
Alongside eliminating the housing benefit for under-21s and keeping even the semblance of a decent wage out of reach for under-25s, Osborne stuck the knife in even further for young people by abolishing student maintenance grants for those from the lowest-income households. Now, the poorest students in England and Wales will find themselves saddled with the same massive debts as their peers.
OXI to Osborne! OXI to austerity! OXI to capitalism!
Spurred on by the attacks on education, welfare, and public sector pay, students, youth, and trade unionists were out in force yesterday in demonstrations across the country. In London, hundreds of young people were accompanied on Parliament Square by left-wing politicians such as Jeremy Corbyn, the Labour leadership candidate, and Natalie Bennett, the Green Party leader. Police attempted to quell the protest by taking away the speakers’ megaphone, but spirits could not be dampened by such state intervention.
In all the protests yesterday, one common theme seen was the inspiration provided by the militancy of the Greek masses. Blue-and-white Greek flags and banners were on display everywhere, all plastered with the same defiant word: OXI! Just as Greek workers and youth have said “OXI” to austerity, so too yesterday did many people on the demonstrations hold up placards saying “OXI to Osborne!” In this respect, not only have the results of the referendum emboldened the movement in Greece, but they have struck a chord with ordinary people fighting back everywhere across Europe.
Despite the inspiring defiance of the Greece masses, the reality now is that Tsipras – the leader of SYRIZA and Greek Prime Minister – is facing a stark choice: either go on the offensive and take control of the economy; or capitulate, accept the demands of the Troika, and carry out austerity. There are no other options available.
This Greek tragedy provides a valuable lesson to those seeking to fight austerity back here in Britain: the fact is, the cuts are not ideological; they are not merely the product of Osborne and the nasty Tories, but flow directly from the needs of the crisis-ridden capitalist system. If we are to put an end to austerity, we need to put an end to capitalism. The fight for a decent standard of living – for jobs, pensions, public services, and a real “living wage” – is the fight for socialism.