03/04/2013 18 Comments
Yesterday, George Osborne became the latest Tory politician to be sent out to demonise the poor and made, I think, one of the worst speeches I have ever heard. You can read the full transcript here if you like.
All done? Well then – allow me to retort.
Let’s look at what George said:
For too long, we’ve had a system where people who did the right thing – who get up in the morning and work hard – felt penalised for it, while people who did the wrong thing got rewarded for it.
Ok, so let’s get this out of the way quickly. If this were the case then why would people ever have had any incentive to work at all? If people were penalised for working and rewarded for avoiding work, people would not work. Something doesn’t add up and we can see that the statement from the chancellor is purely wrong by comparing how the value of job seeker’s allowance has faired relative to wages over the past 30 years. Jonathan Portes does just that here. As you can see, with JSA being pegged to inflation, and earnings increasing on average significantly quicker, that JSA has steadily fallen from 22% of average earnings in 1979 to 15% today. Work is more attractive relative to JSA today than at any time in the past.
Now, those who defend the current benefit system are going to complain loudly. These vested interests always complain, with depressingly predictable outrage, about every change to a system which is failing. I want to take the argument to them. Because defending every line item of welfare spending isn’t credible in the current economic environment. Because defending benefits that trap people in poverty and penalise work is defending the indefensible. The benefit system is broken; it penalises those who try to do the right thing; and the British people badly want it fixed. We agree – and those who don’t are on the wrong side of the British public.
I think this intentionally misrepresents what those of us who oppose benefit cuts are actually saying. I am not defending every line item of welfare. I don’t even know every line item. I’m sure it is not perfect and could be improved. I do dispute though that the benefit system is a significant factor in the reason that we have high unemployment. I don’t believe the reason that we do is that people who would otherwise be working are trapped, for the reasons I gave above.
But! I have vested interests!
Well let me divest them now.
I don’t receive any benefits. I am lucky enough to have a job. I “get up in the morning and work hard” and have never felt that the welfare system penalises me for doing so. My interests are:
- I would like to live in a society that looks after the poor and the vulnerable
- I believe that something as important as welfare should not be reformed based on misrepresentations and lies
- I believe that pushing the poor and vulnerable further and further into poverty is more likely to trap them there than the alternative
But I’m on the wrong side of the British public!
Well, as FiatPanda points out here – the government’s way of measuring this is to say the least, underhand, misleading and dishonest. But should we be surprised that a large section of the public believes that benefits are evil? We have a government and a right-wing press who have mounted a huge campaign to convince the public that people on benefits are lazy scroungers. You’ve probably all seen the Daily Mail today right?
We’re facing more and more competition from vast new economies like China and India. There are quite literally billions of people who are joining the world economy. That’s human progress. If we’re not careful, Britain risks being out-worked, out-competed and out-smarted by those hungry for a better life.
Oh no! Jonny Foreigner is going to take all our jobs again! Except they won’t. When developing countries become developed countries we all benefit through increased trade and more jobs are created and we are all better off. China and India’s development is a huge opportunity for us to increase exports to those markets and boost growth. Well it would be if we had a government who could understand that, rather than thinking of these countries as foreign rivals who must be beaten at all costs.
By taking hard decisions in the last few years to save money, this Government has cut that deficit by a third.
Some politicians seem to think we can just wish away Britain’s debt problem. They want to take the cowardly way out, let the debt rise and rise and just dump the costs onto our children to pay off. I don’t think that would be fair. And I don’t think we’d get away with it. The interest charges would soar. Interest rates would rocket. People with mortgages would struggle. Businesses with loans would go bust. Jobs would be lost.
Again, George is intentionally misrepresenting his critics. There are countless people who have made very strong economic arguments as to why the government’s economic policy is flawed and have described sensible alternatives. Paul Krugman, Joseph Stiglitz, Jonathan Portes, David Blanchflower, Brad de Long, Martin Wolf etc. etc. are not “wishing debt away” when they use the discipline of economics to analyse the mess the government has created.
Oh, and interest rates would not soar – I covered that here and there is absolutely no economic basis for such a claim. Until recently we were told interest rates would soar if we were to lose our AAA credit rating. What happened when we did?
…one in every six pounds of tax that working people like you pay was going on working age benefits. To put that into perspective – that’s more than we spend on our schools. That’s one reason why we’ve got such a big deficit.
No it isn’t. The Labour government was running a surplus between 1997 and 2003 with the same benefits system. The reason we have such a big deficit is because the banks caused a huge financial crisis. Still, can’t blame the rich can we? Not when the poor are such easy targets.
So our reforms have one simple principle at their heart – making sure people are better off in work than on benefits.
But they already were! Just look at the figures! A million people didn’t decide when the financial crisis hit that unemployment benefit suddenly looked good and therefore quit their jobs.
When I took this job, I discovered there were some people who got £100,000 a year in Housing Benefit.
No evidence is given for this claim. No figures to show who they were, what their circumstances were or if they even really existed. But even if we take that claim at face value, it is hardly a reason to cut benefits for every single person who receives them. This again, is a thinly-veiled attempt to demonise the poor by taking the Daily Mail line that every one of them is a rich scrounger.
Some have said it’s the end of the welfare state. That is shrill, headline-seeking nonsense. I will tell you what is true. Taxpayers don’t think the welfare state works properly anymore. When did this start to happen? When we created a system that encouraged people to stay out of work rather than find a job.
Another gross misrepresentation of the facts. As we know, the system has over time seen unemployment benefit falling further and further behind working wages. The line about taxpayers not thinking it works is just more rhetoric designed to divide the country. I am a taxpayer and I don’t believe that the system encourages people to be out of work. If it did I would have chosen to be out of work.
Our reforms are returning welfare to its most fundamental principles – always helping the most vulnerable, but giving people ladders out of poverty.
So pay the vulnerable less money and they’ll just see the error of their ways and go out and get one of those freely available jobs? If you want to help people get back to work, fix the economy so there are some jobs for them to go to. The idea that people are just choosing to be unemployed at the moment is plainly stupid. There are no jobs because of a financial crisis caused in the banking sector but George seems to think it’s “fair” that the poor and vulnerable should foot the bill.
And here’s another change we’re making. On Saturday, the top rate of tax will be reduced from 50p to 45p… In a modern global economy, where people can move anywhere in the world, we cannot have a top rate of tax that discourages people from living here, setting up businesses here, investing here, creating jobs here. If you don’t believe me, ask France. They’re planning to whack up their top rate of tax – and you know what’s happening? Job creation is down as people are leaving the country. The opposite is happening here because we are welcoming entrepreneurs and wealth creators – and the jobs they bring with them.
So let me get this right. With income tax for rich people at 50%, the rich all go and live in Monaco but with income tax at 45% lots of rich people are all moving to the UK? That sounds suspicious. Perhaps we could have some evidence to back that claim up? Err…. no.
So this all seems like smoke and mirrors for something more sinister. Fortunately George went on to explain exactly what that was.
I’m a low tax Conservative. I believe what you earn is your money, not the Government’s money. So I want to take away less of it in tax, and leave you to spend it how you wish. Give me the choice between people choosing how to spend their own money, or a politician choosing how to spend it, and I know who I would pick. That’s good for the economy. That’s good for society – the more people get to keep from what they earn, the more likely they are to work, the more independent and responsible they will be.
As much as George would have you believe it, tax is not a fundamentally bad thing. It’s true we could do away with it and just pay for everything directly but where would that leave us?
A couple of months ago there was a massive pot-hole in my road. The council came along and filled it in, (paid for by taxes). Now we could say that we won’t pay taxes to cover road maintenance and when a pot-hole opens up in my road the residents will all club together and pay to repair it….
Oh, but wait a minute, I don’t have a car – I don’t care. I’m not going to pay for it. And actually most of the traffic coming down my road probably isn’t from people that live on it anyway. I receive the tiniest share of the pain from the pot-hole in my road, so why am I going to put money towards it? But then everyone will have this attitude and the pot-hole won’t get fixed and over time my road will fall to bits without anyone doing anything about it.
At the moment the council collects my rubbish, (paid for by taxes). We can pay for it individually ourselves but I suspect a lot of people, rather than pay individually to arrange to have it transported to the local landfill are just going to go out in the middle of the night and wang it in each other’s hedges.
Or how about the armed forces, (paid for by taxes)? The next time that there is a need for a peace-keeping force to protect citizens in a third world country beset by civil war, are we all going to have a whip round and see what kind of private army we can muster?
This is, of course, all nonsensical government spin. While it is easy to make it sound good that I should get my wages and then choose how it is spent, I don’t want to spend 100 hours a day deciding on how much I should be spending on the armed forces and how much I should spend on a hole in my road. Taxes have an absolutely essential place in any society and they are not just something that we can do without.
Taxes have another important benefit though, and it is this one that I think the chancellor was hoping to curb. The overall tax system is set so that someone who is rich pays more than someone who is poor. This allows redistribution of wealth within our society. Although through taxes we all paid for the pot-hole repair, or the peace keeping mission, or the NHS, or the police, the richest amongst us did contribute more and the the poorest amongst us did contribute less.
After a big speech on why we should cut benefits for the poor and vulnerable and why we should cut income tax on the richest few, (neither of which, as we’ve seen, had any factual basis), this point is really what it came down to:
The multi-millionaire George Osborne would like to prevent redistribution of wealth from the rich to the poor.
And this man has the gall to say that I have a vested interest.