Tuesday, October 05, 2010

Benefits feel the squeeze – but the City doesn't.

The Tories have always been in favour of a smaller state, and that is reflected in the cuts which they are making. However, the Tories are determined that the cuts they wish to impose must never be seen as ideological, which is why they are now insisting that the cuts are the result of financial necessity, and that Osborne has no choice other than to indulge in the kind of brutal austerity which he is doling out.

It strikes me as odd that fate has been kind enough to hand the Tories the type of task that they have always relished carrying out, and made it a matter of necessity to boot. So, according to their script, they get to do what they have always wanted to do, but - Heaven forfend - it's not their fault.

Oh, that life would be so kind to the rest of us.

Yesterday, Osborne scrapped child benefit for families where one member earns more than £43,875 and put a cap on the amount any family can claim in benefits at £26,000. I don't think anyone could argue against high income families losing a child benefit which they don't really need, especially at a time of recession, but there is a slapdash manner to the way Osborne has done this which is troubling.

It admits the shake-up will create anomalies: a two-earner couple both on £40,000 a year will keep their child benefit, while a family with a single earner on £45,000 will lose theirs. The benefit is worth £20.30 a week for the first child and £13.40 for each subsequent child. So one-child families who lose out will be £1,055 a year worse off and those with three children £2,500 worse off.
Of course, Osborne will, once again, claim that necessity has tied his hands. And it is certainly true that it is many of his own supporters who will pay the price of this cut. However, what Osborne is really attacking here is the principle at the heart of Britain's welfare system; that some benefits, especially benefits for children, are universal and not subjected to means testing.

Osborne will willingly take the wrath of his own party in order to tear down that Labour ideal.

I expect there to be some discontent amongst the Liberal Democrats in the coalition, but Clegg will, of course, support anything which is fiscally right of centre.

Critics said it undermines the principle of universal benefits locking the middle classes into the welfare state. It also contradicts pledges made by David Cameron, Mr Osborne, Nick Clegg and Vince Cable in the run-up to the May election.

Mr Clegg endorsed yesterday's change but there are signs of a backlash from the Liberal Democrats, whose conference two weeks ago voted to retain child benefit as a universal payment. Bob Russell, MP for Colchester, told The Independent: "If I have an opportunity to vote against it, I will. I support universal child benefit. It is a guarantee for the child because it is paid to the mother."

This is all happening at a time when the banks - the section of the populace who created this financial disaster - are, according to the Centre for Economics and Business Research, enjoying bonuses this year in excess of £7 billion.

Which sort of renders Osborne's words to the conference as empty rhetoric:
"We will not allow money to flow unimpeded out of those banks into huge bonuses, if that means money is not flowing out in credit to the small businesses who did nothing to cause this crash and suffered most in it."
But the money is flowing out. £7 billion of it.

Which brings me back to my original point. This isn't about financial necessity, although a necessity exists, this is purely ideological.

There are billions of pounds flowing into the arms of the people who caused this mess whilst Osborne attacks the middle class - his own supporters - in order to destroy a principle which Osborne vehemently disagrees with.

He's entitled to loathe the principle of universal benefits, and he's entitled to attempt to destroy that principle. I just can't bear the fact that he is being so dishonest about what he is doing. He is hiding behind the claim of necessity, when the riches flowing around the city show that there are other places he could raise money if that was his true priority.

He wants to attack and reduce the welfare state but lacks the courage of his convictions to make an argument for doing so. Instead, he hides behind the claim of necessity.

Thatcher would never have displayed such cowardice. She would have told us what she was doing and why she was doing it. And she would have loved the fact that we loathed her for it.

Osborne lacks her courage and honesty. He's dismantling the state, and hiding behind the flimsy excuse that he has no other choice. When it's clear to all that there are lots of other choices.

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