So yesterday the House of Lords rejected the Tory’s bill to cut the tax credit system (a system of benefits designed to top-up the income of low-income families). The cuts would leave three million families £1,000 a year worse off, despite Tory claims that the reductions would be offset by other changes. This proved too extreme for the Lords, so they rejected the bill.
I don’t think we can remind ourselves enough of this clip when, in direct response to a voter’s question, David Cameron categorically denied that the Tories would cut tax credits. This was the very week before the election (in May). I think it’s also worth reminding ourselves how regularly the Tories bleat out their catchphrase about them being the party of ‘hard-working families.’
They claim that this is all part of their plan to move the UK away from being a low income/high tax economy to a high income/low tax economy. Until shown to be untrue, they also claimed that the tax credit reductions would be offset by future increases in the minimum wage*. But, if you’re the party of ‘hard-working families’, then obviously you’d want to implement such a transition in the most painless way possible i.e. you would gradually reduce tax credits in line with wage increases so that people wouldn’t be left short. You wouldn’t leave people facing bare cupboards now on the promise of wage increases later. And, after all, these wage increases are promised by the same people who promised not to cut tax credits in the first place.
No, clearly something else is going on. This isn’t simply about restructuring the economy. It’s about continuing the same economic policy that the Tories have been pursuing ever since they came back to power. It’s about their obsession with eradicating the deficit. By cutting the benefits now, before enforcing minimum wage increases, they will immediately start reducing the deficit – to the tune of £15 billion per year from 2016.
But, it’s worth reminding ourselves that back in 2010 George Osborne promised that he would eradicate the deficit by 2015. Most commentators now agree that when the coalition government gained power in 2010 the economy was already undergoing a recovery. It was Osborne’s economic policies that strangled that recovery, snuffed it out and led to the slowest economic recovery in history. It was this same economic incompetence that resulted in him so catastrophically failing to achieve his own goal. He didn’t eradicate the deficit by 2015. He only reduced it by a third. In the process he also racked up more debt in his first three years than Labour did in the previous thirteen (and that includes the debt amassed by Labour bailing out the banks). And the Tories, engaging in a level of extreme arrogance that borders on the farcical, actually celebrated this massive failure. They considered it a clear indication of Osborne’s deft hand as chancellor.
And here’s the nub, low-income, working-families are having their benefits slashed in order to cut costs and eradicate the deficit. But Osborne claimed that he would have eradicated the deficit by now. Therefore, the only reason families are having this hardship thrust upon them is because he’s so incompetent that he failed to fulfil his own promise. And it’s Osborne’s destructive mix of arrogance and myopia that stops him from both recognising his abject failure and having the humility to choose a different path. Instead, he ploughs on with his deficit eradication obsession while heaping the suffering it causes upon the very people that the Tories claim to stand for.
*I refuse to call it the ‘national living wage’. That’s just Tory spin. They’re transparently trying to highjack the growing ‘living wage’ movement (i.e. a wage that’s high enough for people to live on). All the Tories are actually doing is increasing the minimum wage while re-branding it in order to appropriate the movement’s positive image. Their proposed minimum wage increases are still below the living wage levels (and only apply to the over 25s).