Sunday, 18 October 2015

Tory ideological attack on the poor.

With the storm raging over the cuts in tax credits it appears some Conservative MPs are getting a little nervous of this being Cameron's Poll Tax debacle.  It probably isn't but it has some similar trade marks: the government doggedly carrying on regardless of the consequences.  Their argument is that the tax credit system is cumbersome and expensive and 'out of control'.  This simply means that the cost is big.  Yes, it is, but it is the result of promoting a low pay economy.

The tax credits help lift people out of poverty but they are also a massive subsidy to business. The reason the cost is getting 'out of control' is because millions have been forced into low paying and insecure jobs. The real reform needed is to move to 'living wage' economy.

The real idiocy of the government's approach is that they are putting the cart before the horse.  First you should introduce a living wage and ensure that it is implemented and only then should they start cutting tax credits. Indeed they would have little need to cut them because fewer will need them. But instead they insist on cutting the tax credits first pushing millions into difficulty.  It is rather crazy.

So the Prime Minister will have to justify the case after case of those adversely affected.  He flies in the face of the independent Institute of Fiscal Studies who show that on average those on tax credits will lose £1,300 per year from their income.  The Prime Minister generalises in response by saying what you lose on the swings will be gained on the roundabouts.  The problem with that is that those on the swings are not necessarily on the roundabouts - so they lose, lose, lose.  The Prime Minister is using the trick of averages. On average, the average person will gain on average. But Mr or Mrs average doesn't really exist.

Those who do exist are like the lady referred to in Jeremy Corbyn's question to the Prime Minister: a nursery manager on £14,500 per year who is set to lose £1,800 per year. She is a hard working mother with a disabled child. No amount of averaging will help her plight.

The Tory tactic has been a strategy of creating a stereotype of the undeserving poor. First paint them as workshy and responsible for their own poverty. Then point to the heavy cost of the benefits system and start hacking away at it.  Voters they hope will not care too much that the 'undeserving' poor are pushed deeper into poverty. Sadly it is a trick that has worked.  They say it is to cut the deficit. It isn't. It is an ideological position against welfare.

But Labour would be wrong now to say it would reverse the changes.  It shouldn't simply reverse Tory policies. It needs its own clear strategy on welfare and the economy.  This should involve a clear commitment to a true living wage.  Jeremy Corbyn is right to lead Labour away from supporting austerity.  Austerity doesn't work.  The national debt has grown not fallen.

There is nothing inherently contradictory between welfare and a sound economy, but it must be welfare that doesn't support inefficient business and exploitation. It must not simply support a low wage economy.  During the years after 1945 with the development of the welfare state, unemployment fell with reasonably sustainable growth, and the national debt fell.  There are lessons to be learned from that.  You don't set your target aa cutting the deficit, you set your target on sustainable growth from which all can benefit. You set your targets on creating a fairer and more healthy society and a fitter workforce.

Austerity cannot do that. It simply pushes people down when they should be lifted up. It is not surprising that the education debate under the Tories turns to how you can promote privilege in schools through selection rather than how to provide support and opportunities for all children. Time and again the debate turns backwards to 'Grammar schools'.

All around us there is growing poverty and inequality.  A one percentage point increase in taxes would do more to cut the current account deficit than the attacks on the poorest.  If the government were really focused on getting the deficit down, then that is what they would do because the reason they are failing in deficit reduction is due to falling tax revenues.  More people may now be in work but their low pay means less tax revenue.  That is the problem with a low pay economy. And meanwhile the major companies exploiting that low wage are not paying their share of tax in the UK.

This is why it is disingenuous for the Tories to continue with the mythology of 'deficit reduction'.  The truth is more sinister.


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