Monthly Archives: July 2015

Early implications of the Budget 2015

Posted by Euan Bennet on 09/07/2015

Having read the actual budget document yesterday, I was surprised [not really] to see the front pages of the UK mainstream media proclaiming a “pay rise for all” without the appropriate caveats. Caveats such as “all, except for the young, the low-paid, and the sick”. The way the press have run with the “£9 living wage” announcement represents a very loose interpretation of reality – what was actually announced is next year the minimum wage will be £7.20 an hour, rising to £9 an hour by 2020. As long as you are 25 or over. For comparison, the Living Wage in Scotland is £7.85 an hour right now. Living wage employers in Scotland include the Scottish Government.

Of course, the mainstream media will never report that the only place any of these wages are enough to live on is some parallel universe where food and energy prices haven’t changed for the last seven years. The actual living wage is more like £10 an hour (at least). Until yesterday, this was reflected in tax credits paid to low earners. After yesterday, those tax credits are being cut, and cut hard:

I’m sure this family won’t miss that £1,357.22 a year. After all, it’s not like they need food AND electricity, is it? Image source.

As Wings over Scotland have pointed out today, even when the Daily Mail fudged and sugar-coated the numbers, they couldn’t hide the abominable transfer of wealth directly from the poorest in society to the richest.

Daily Mail says: Fantastic! Everyone is an average of £1,204 per year worse off!!! (Sincere apologies for the source)

The United Kingdom in 2020: economic apartheid

The figure below shows the distribution of income per household per week, in 2011/12. The figures are not adjusted for housing costs, but are adjusted to include social security.

See full ONS report 

Imagine you are towards the lower income end of this range – to the left of the median income line i.e. where most of the population is. We’ve already seen that the changes mean you would gain slightly in wages, but lose out by more than you gain when the changes to welfare are included. What does the Budget statement say about your situation? Let’s find out by cherry-picking some out of context quotes!

“The government believes that those in receipt of tax credits should face the same financial choices about having children as those supporting themselves solely through work.”

Sounds promising, so they’re appreciating that family social security is about making sure the children get the best possible start in life first and foremost then, right?

Wrong:

“The Budget will therefore limit support provided to families through tax credits to 2 children, so that any subsequent children born after April 2017 will not be eligible for further support. An equivalent change will be made in Housing Benefit to ensure consistency between both benefits. This will also apply in Universal Credit to families who make a new claim from April 2017.”

“The Department for Work and Pensions and HMRC will develop protections for women who have a third child as the result of rape, or other exceptional circumstances.“

But it’s ok, they’re not completely heartless. Already have two children, and happen to become pregnant after getting raped? Simply prove it some bureaucrat and everything will be fine!

Ok, so they didn’t really mean that everyone should have the same choices for their children, in terms of welfare. Maybe they meant everyone should have the same choices if one parent would like to give up work to raise their children?

“Extending parent conditionality – From April 2017 parents claiming Universal Credit, including lone parents, will be expected to prepare for work from when their youngest child turns 2, and to look for work when their youngest child turns 3”

Oh. Well at least they’ll continue to support disabled children whose parents need to provide full time care, right?

“The disabled child premia in tax credits and UC will also continue to be paid to all children with a disability.”

That’s good. Except, as we’ve already seen, a family with one adult working at the minimum wage will be £1,357.22 a year worse off because their tax credits are being cut…

If you’re well off, you’ll be fine

“Combined with the increases the government has made to the personal allowance and the introduction of the Personal Savings Allowance, from April 2016 individuals will be able to receive up to £17,000 of income per annum tax-free, and separately invest up to £15,240 per annum through an ISA tax-free.”

“The government will achieve this by taking the family home out of inheritance tax for all but the wealthiest with a new transferable nil-rate band, introduced from April 2017.”

“First time buyers will be able to deposit £200 per month into their Help to Buy: ISA at participating banks and building societies. First time buyers will be able to open their Help to Buy: ISA accounts with an additional one off deposit of £1000 so that they can start saving now.”

I wonder how much of their £20,448.79 a year a family with 2 children will be putting in an ISA to make the most of the limit being increased. Or maybe they should be putting their money in a help to buy account so they have something to pass on to their children. All nice considerations to add in to the annual “heat or eat” decision!

But what about the welfare parasites?

Corporate welfare – £93 billion per year .

Image source.

Get this collected and the national debt will be gone in no time. Let’s see what the budget has to say about it:

“The government has asked HMRC to start a dialogue with business on how to improve the effectiveness of existing IR35 [tax avoidance] legislation. “

“The government will consult on the technical details of introducing tougher measures for those who persistently enter into tax avoidance schemes”

“The corporation tax rate will be cut to 19% in 2017 and 18% in 2020.”

The change in language when discussing tax collection is very apparent when compared to how welfare is discussed in the document. Now it’s all about “dialogue” and “consulting” instead of making sure the super-rich pay their fair share. Though at least the Government are doing their bit to reduce corporation tax avoidance, by reducing the amount of tax to be paid.

Conclusion

It’ll take some time for a more detailed analysis to emerge, but it would be reasonable to expect that inequality in the UK has just taken a step change increase. The Budget was a direct transfer of wealth from the poorest in society to the wealthiest. Aspects of inequality are now going to become more firmly ingrained, and far from work being the route out of poverty, the changes to the welfare system are likely to mean more people become trapped in working poverty. Then there are the under-25s – a generation who are in danger of being left behind.

And the truly sickening thing? This Budget was announced to cheers and celebrations by our colonial masters.

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Reverse Robin hood – the first true blue Tory budget in nearly two decades

Posted by Euan Bennet on 08/07/2015

While reading today’s UK Government budget statement I couldn’t help but be reminded of my final article before the Independence Referendum. I wrote it late on the evening of the 17th of September, and in it I tried to imagine realistic best- and worst-case scenarios following a (then hypothetical) Yes or No vote.

As it turns out, today I have to hold my hands up and admit that I was wrong. My worst case scenario predictions have already been surpassed. Here is what I said on 17/09/2014:

The realistic worst-case scenario: No

There is the temptation here to construct an unrealistic scenario. One such extreme example would be the Scottish Parliament being abolished, which would be within Westminster’s gift to do at any point. The realistic worst-case scenario is, in roughly chronological order:

  • No new powers for the Scottish Parliament. Or worse, the Labour proposals for further devolution are brought in, featuring no new powers, but new responsibilities without the means to fund them.

  • A Tory Government or a Labour Government at Westminster come 2015. Both have pledged that they will continue planned public spending cuts, austerity measures, punitive welfare reform, and confrontational foreign and immigration policy. Add UKIP to a coalition with the Tories for extra racism, sexism, and every other ‘-ism’ in your worst-case scenario!

  • An EU exit following the proposed referendum in 2017.

  • The TTIP opens up the NHS in Scotland to marketisation just like it already is in England.

  • 100,000 more children in poverty by 2020.

  • Another banking crash fuelled by the housing bubble that economic policy is currently reinflating.

  • More austerity, forever.

  • BUT enough money to build a new generation of nuclear weapons stored 30 miles from our biggest city

  • Scotland’s renewable energy potential left to one side while fracking poisons our soil and water.

Nine bullet points. Six of them (no new powers for Scotland, a Tory government, an EU referendum, permanent austerity, Trident replacement, and difficulties for the Scottish renewable energy industry) have already come to pass. Of those, it could be plausibly argued that the following surpasses my “predictions”:

  • “no new powers” has been surpassed by EVEL (and every amendment to Scotland Bill blocked by MPs for England)
  • Tory government, while not backed up by UKIP, is unconstrained by whatever meagre conscience the Lib Dems provided as part of the coalition, and today it looks like their assault on the poor has really been stepped up.
  • a 2016 EU referendum.
  • permanent austerity with added £12 billion cuts in welfare announced today.
  • Scotland’s renewable industry can barely be described as being on life support, following cuts to wave power research late last year, and cuts to wind subsidies this year. Meanwhile, licences for fracking are being handed out like free sweeties.

By my count, that’s five of the nine points in the worst case scenario that have been surpassed. Already. TTIP is still on the horizon but I’m sure we’ll hear more about that shortly. 100,000 more children in poverty by 2020 was the SCVO estimate based on cuts between 2008 and 2015. Given the cuts today, it’s probably safe to say that number will be getting revised sharply upwards once the dust settles from the demolition of the social security safety net.

Now what?

In my pre-referendum article I also suggested how we might go about preventing the worst. Here were my suggestions:

What we can do to prevent the worst-case scenario

  • Hope that it doesn’t happen.

  • Remember that day in 2014 when we held absolute sovereign power for 15 hours, and chose to give it away?

  • Regret voting No.

I had expected a feeling of powerlessness to grip the Yes movement had the vote been for No. Thankfully this was only true for a matter of hours on the 19th of September – I was astonished by the energy and strength shown by those on the losing side, and it certainly helped me recover from the crushing disappointment of the result. The response has been unbelievable, and of course culminated in the unprecedented UK election result on the 7th May. But we’re not done yet.

The way forward

Now we really do need to work together -Yes and No voters alike. If you are alarmed at the UK Government directly transferring wealth from the poorest to the richest in society, assaulting the social security that forms part of the basic function of the state, and generally making bad decisions, what do you plan to do about it? I would hope that everyone is re-examining their decision, whichever way they voted. Continuing the theme from the referendum campaign: what sort of country do you want to live in?

I’m sure the budget today will cause protests and demonstrations in numbers. Another outlet for protest is to join and campaign for a political party that opposes austerity. Coincidentally, in Scotland all of the anti-austerity parties and groups are pro-independence. Here is a list of the most well-known parties:

http://www.snp.org/

http://www.scottishgreens.org.uk/

https://www.scottishsocialistparty.org/

http://www.new.solidarityscotland.org/

Politically, the priority of the anti-austerity movement should be ensuring a majority of MSPs come from these parties after the next Scottish elections in 2016. A related objective is the further extinction of the Labour Party in Scotland. We’ve completed phase 1 – reducing them to one MP this year. Phases 2 and 3 (Holyrood in 2016, and Council election in 2017) should be continued as methodically as Phase 1 – by offering a real alternative to voters and campaigning on a positive basis for anti-austerity policies.

There are also a number of groups who have continued since the referendum. This is by no means a comprehensive list:

Women for Independence: http://www.womenforindependence.org/

The Scottish Left Project: http://leftproject.scot/

Common Weal: http://www.allofusfirst.org/

Become the media

Another welcome development since the referendum has been the scales tipping slightly back towards some sort of plurality in the media. News outlets now include:

Common Space: https://commonspace.scot/

NewsShaft: http://newsshaft.com/

The National (also available in print!): http://www.thenational.scot/

These are a welcome addition to previously unoccupied niches, and offer a slightly different approach to those provided by the established websites:

Wings over Scotland: http://wingsoverscotland.com/

Bella Caledonia: http://bellacaledonia.org.uk/

Newsnet Scotland: http://newsnet.scot/

Another referendum?

I’ve noticed people talking about a second referendum more and more recently. A more detailed look at that is for another day, other than to say that there will be another referendum when the people demand it. Given the surge in party memberships, campaigning groups, and media voices, it’s likely that in any new referendum the Yes campaign would be starting from a much higher baseline than it did last time. Many of the lies and scaremongering employed by the No campaign will no longer work.

Times are going to get very exciting indeed.