New year, new austerity plans

George Osborne this week announced his intention to ‘finish the job’.  I’d just like to be clear about what this means and how it would affect the north west.

Just one month ago the chancellor presented the autumn statement which, for the first time in this parliament, presented the last section of the path to balanced finances and fiscal prudence.  By 2018/19, we will start paying off the national debt.  We will be at a prudent, manageable, crisis-free, point in our national finances.

Yesterday, he said that the goal is to further cut welfare spending and then to cut taxes for ‘hard-working people’ (which was later spun as hardworking low-income families).  In short, funding for the very poorest and most in need will be taken away and will be redistributed to tax payers.

I think there’s two things to note here.

Firstly, it is hard to see how such a tax cut will be targeted in order to particularly benefit low-income families rather than everyone except those that don’t pay enough tax.  Even if we think this is a good model of social responsibility, the continued use of the phrase ‘hard-working low-income families’ needs to be watched and challenged.  This is nearly as misleading and belittling as poverty being equated with benefit scrounging.

Secondly, there are geographical implications to such redistribution.  It’s not as simple as north-south, but it does move money away from families and communities affected by poverty and towards families and communities that are succeeding.  Money will move away from individuals and families where markets work poorly and move it to areas blessed by the markets.  Simply put, the winners win and the losers lose; the bigger the winner the bigger the win, etc.  And this has genuine geographical implications.  Without saying it, we’re being asked to endorse, as part of ‘the job’, a managed-decline-plus plan.

The chancellor went further and essentially described cuts as good in themselves.  A small state – which will be back to 1948 levels by 2018 according to the Institute for Fiscal Studies – is not necessary but desirable.  The chancellor made it clear that fiscal prudence and austerity (previously immovable bedfellows in the national narrative) are not the same thing.

So when the chancellor says, ‘Let’s finish the job’, we need to make sure we understand what job he means.  It’s worth noting that this has even unnerved Iain Duncan-Smith, who today described the plans as ‘unbalanced’; a source close to the DWP secretary of state described the focus on benefit recipients, as ‘hacking at the same people’.

Let’s be clear.  We are being asked to commit to a plan that gives up on those that dip below an ever-rising level of poverty.  No safety net, no ladders, no ropes, sink or swim – neatly summarised by the news that the last vestiges of the social fund (local authority’s hardship fund for families facing emergencies) is to be abolished.  This welfare state lacks the vision of 1948 and is deeply at odds with the British notion of commonwealth that has stood at the heart of our state and national culture for centuries.  This does not reflect my understanding of social responsibility.

In my view, the chancellor’s plan is bad news for struggling families and communities that, despite green shoots elsewhere, may now never recover from the recession should this current economic strategy continue.  Now that austerity does not mean fiscal prudence, the debate about the future role of the state in building good economies, intervening in market failure and tackling poverty, needs to be challenged and seized.  Obviously, this needs to be done in new ways.

For a calmer version about the implications of the autumn statement 2013 for the welfare state and for economic strategy please see VSNW’s Briefing #87.  For a less calm vision of how fiscal prudence and austerity are not necessarily the same thing, you can see the economist Dr. Richard D. Wolff talking about the cynical use of ‘austerity‘ – it’s conspiratorial and simplistic, but a striking analysis of austerity.

For me, this is now the moment when values about the future, about growth, can once again be discussed as part of the mainstream political debate.  And, I think, a renewed conversation about the role of the voluntary and community sector in relation to the welfare state and economic strategy.