Thursday, June 24, 2010

Budget is not progressive, declares IFS.

The independent Institute for Fiscal Studies have blown apart George Osborne and Nick Clegg's ridiculous claims that the latest coalition budget was a "progressive" one.

The institute's director, Robert Chote, has noted that the poorest tenth of society will lose 2.5% of their incomes, whilst the richest will suffer a loss of merely 1% of their income.

If you are on £100,000 a year the loss of a grand is still going to leave you able to feed, clothe and house your family with enough left over for luxury goods. For someone on substantially less than that, the loss of 2.5% of your income is potentially devastating.

Cuts in housing benefit and in disability living allowance, again much more likely to affect the most vulnerable, are not taken into account either by the IFS or the Treasury, another reason why the official and IFS figures may underestimate how hard the coalition Government's plans will penalise the poor.
I watched Nick Clegg being interviewed on BBC Breakfast Time this morning and a viewer had emailed in asking how he could now give his support for the rise in Vat given all that he had said about this subject prior to the election.

Clegg came out with the hackneyed answer that the figures were much worse than anyone could have previously predicted, etc, etc. It was a master class in how a politician can justify anything he does and still somehow manage to look feasible.

However, I found it impossible not to wonder what Clegg would be saying about the rise in Vat had Cameron managed to get enough votes to form a government without the aid of the Liberal Democrats. One can be absolutely sure that he would be making the exact opposite argument to the one that he found himself making this morning.

For the Tories this coalition is proving to be a dream. Oh yes, Clegg might have managed to squeeze a thousand pound rise in the point where one begins to pay taxation, but the price for that small concession is that Liberals have to go out and defend one of the most regressive Tory budgets in decades.

It's easy watching Tories defending a rise in Vat because they basically would love to see taxation moved from income to spending, because that way they get to keep much more of their earnings. But watching a Liberal Democrat argue for this switch in how we raise taxation is simply painful.

The journey from Clegg's first TV debate with Brown and Cameron - where he won over the nation through his freshness and his ability to speak freely - to him finding himself sitting on the BBC this morning, arguing for a policy which we all know that he does not believe in, is not comfortable to witness.

His greatest strength then was that he didn't come across as simply another politician. On TV this morning, he did.


The satirists are already having a ball over this:

There's already been one positive outcome of the Budget, which is the pleasure of watching Liberal Democrats squirm as they try to justify the stuff that a few weeks ago they screamed would be a disaster. Tomorrow Clegg will mutter, "Look, when we said the Tories were planning a VAT bombshell, the point we were making was this country needed a VAT bombshell and only the Tories were planning it, but they were too modest in hiding their marvellous bombshell plans, so we were trying to help them. You see."

Then they'll tell us they've ensured the Budget was vicious in a fair way, because now VAT will be at a Liberal Democrat 20 per cent to ensure fairness, rather than the much harsher Tory 20 per cent proposed by George Osborne, a compromise that wouldn't have been possible without the tremendous efforts of Vince Cable.

To their own supporters they'll say, "If we weren't part of the Government it would be even worse", the line always put by liberals in an illiberal government. I bet there were Liberal Democrats in the Spanish Inquisition who said, "Because we're in government, the Queen has included in her bill a pledge to gouge out fingernails first rather than go straight in with the toenails, demonstrating the fairness we are bringing to the new politics."

The Budget has been presented as a necessity, with every measure "unavoidable", backed up by piles of figures that sound apocalyptic but mean nothing by themselves, like "We now owe £800 for every insect in Britain", or "The debt burden is equivalent to 300 years on a premium rate girl-on-girl action chatline" or "The deficit is more than the value of the moon."

But the cuts announced are measures the Tories support anyway, regardless of the state of the economy. For example, Osborne said in his TV speech he would no longer tolerate people who don't work, "Sitting indoors with the blinds pulled down, living on benefits." That's not economic necessity, it's an editorial from the Daily Express.

As I pointed out the other day, The Daily Express are in ecstasy about this budget, which reads like a Tory wet dream. The argument that it would have been worse without Liberal Democrat intervention rings hollow. The Liberal Democrats are giving them the cover they need to dismantle much of the welfare state and ensure that the poor bear the brunt of a crisis caused by the kind of deregulation which the Tories turned into their mantra during the eighties.

I hope Clegg has great difficulty getting his party to back this budget. What he's giving away, compared to the minuscule advantages he's gleaned, is shameful.


A letter writer to The Independent makes the same point I made the other day about just how right wing Clegg actually is.

David Woods implores Nick Clegg to pull out of the coalition (letter, 21 June). But why would he want to? The coalition ideology is in line with The Orange Book, which featured contributions from Liberal Democrats such as Nick Clegg, David Laws, Chris Huhne and Vince Cable.

The Orange Book put forward pro-market policies of privatisation, a reduced public sector and PFI.

This debt crisis is the perfect excuse for the authors of this book to exercise their neo-liberal ideals. In a document called Setting Business Free, Liberal Democrat right stated that party policy should always "start with a bias in favour of the free market".

I know they might find power intoxicating, but the left wing of the Liberal Democratic party are being led down a dreadful road by Clegg. There must surely be some of them who realise that very few progressives will ever trust them again.

And the Labour supporter tactically giving support to the Lib Dems in the hope of keeping the Tories out of power is now officially a thing of the past.

Click here for full article.

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