Can we afford the middle classes?
June 20, 2010 4 Comments
In 1974, Edward Heath asked: “Who governs – government or trade unions?” Speculate as you will on whether you think the re-election of Thatcher five years later answers that question, but the relevant answer today is neither. The third choice is the complexity of the political situation, it is this which has done the most to engender the system more than the above.
For example, it is not for nothing that a repeat of Peter Griffiths‘ campaign, which featured the infamous 10-word slogan: “If you want a nigger for a neighbour, vote Labour,” is unlikely. Politics in this country has changed, and in many ways converged, particularly on issues such as race, culture, religion, gender and sexuality (though there are exceptions to this rule, of course).
In recent times, when austerity measures were not on the menu, harmony could be found between the Tories and Labour on the economy as well. Michael Gove spoke kind words (bordering on sickly) about Tony Blair’s academies, private capital in schools and what a business agenda in schools could bring to the country in the future. David Cameron, too, was derided for not being angry enough with Blair, on economic and other matters, across the room, frankly because Cameron admired Blair, as did most of the shadow cabinet at the time, which can be shown by the waves and cheers by them during his leaving ceremony. Many on the right complained that there was no real or effective opposition, whereas many on left moaned that both parties had merged as one.
Today’s political situation might have realised the conditions for proper political opposition, between the values which both parties were founded upon.
Earlier this week, a report by the thinktank Reform, which is close to the Conservatives, called for a curb on “middle-class welfare”. It proposed reducing spending on child benefit, child tax credit, the winter fuel allowance for pensioners and more. Overall, it called for a £13bn reduction in state benefits.
Meanwhile, Policy Exchange, another thinktank close to the Tories, claimed that billions paid by better-off families in taxation is handed straight back to them in benefits. It found that last year £53.5bn – 32% of all benefits – were paid to families with a higher than average income.
These benefits were based on universal citizenship gifts. The NHS is not a gift afforded only to those who can’t afford it, and private healthcare to those who can, but is universal and free to all users. The child trust fund was another such example; an entitlement initiated by the Labour government free for all and free from means testing. But now it has been decided that perks such as this cannot be afforded any longer.
This will be the thing that properly sets the mainstream parties against each other again and restore them both to their foundations: Labour universalism verus Conservative cuts. And it has to do with the political situation, not political will. Who governs? It’s the economy, stupid.
George Osborne has chosen now to cut heavily and not over time steadily. He has chosen this course to deficit reduction over tax rises as well. But in his intellectual toolbox he has peculiar justifications for doing so.
Alistair Darling, also in the Observer today, noted that:
The government is fond of referring to the experience of Canada in the 1990s, where a public sector retrenchment was matched by a private sector boom. Osborne’s seesaw in action. But that experience does not offer a route map for the UK today. It provides a warning. In Canada in the mid-1990s their major export market, the US, was growing strongly. The demand a booming neighbour provided could take the place of government spending, and did so quickly. That is far from the case in the UK today. Our main export market is Europe. Growth there is sluggish. There is a new fiscal austerity across the continent. And that is exactly the problem. Governments, even with relatively modest deficits, are taking demand out of their economies.
In a piece called Budget Blunders the BBC noted in 1999:
Philip Snowden … introduced an “orthodox” budget that cut unemployment benefit and public sector pay at the height of the Depression.
The results were riots in the streets by the unemployed, and a mutiny among sailors in the Royal Navy at Invergordon in Scotland, which virtually crippled the Fleet.
Just as it doesn’t follow that Canada could do it, nor does it follow that just because Snowdon failed that Osborne will. But the question is just how much have his calculations been born of ideology. The debate between cuts and no cuts is a non-question now, but cuts as far as possible should not affect the destitute and low paid.
If Osborne has a Snowden moment, it won’t just ruin his political career, it will ruin the lives of many undeserved people in Britain.