Savage Budget Cuts Threaten Fabric of British Society

Tuesday, June 22, 2010
By Paul Martin

Budget 2010: The very fabric of society will be put at risk by this unfair Budget

Directing savage spending cuts at the young is a dangerous course for any government to pursue.

By Mary Riddell
TelegraphUK

Britain would be on the road to ruin but for the diversion signs to be laid down in the most vicious Budget in memory. That warning will, George Osborne hopes, be enough to convince the public that there is no other track to recovery. Forget the less barren pathways selected by Labour or the scenic routes once mapped by the Lib Dems. The only chance, the Chancellor will tell us, is to ride the fairness freeway to salvation. He is wrong.

The promised land to which Mr Osborne points would be neither fair, nor free. On the contrary, this Budget risks tearing society apart. Economic interests and human instincts alike decree that we must create a secure destiny for our children and their children. And yet, bizarrely, the chief targets of the Coalition’s economic policy are the young. Already, 500,000 needy children have been denied free school lunches and child trust funds have gone. The Future Jobs Fund, created to get 150,000 young people into work, has been ditched and free swimming sunk.

The Budget is likely to cut deeper, with Mr Osborne eroding child tax credits and, later if not now, child benefit for all. Forget the argument that middle-class handouts represent a couple of bottles of chardonnay. As the Child Poverty Action Group points out, families on £30,000 a year find it hard to make ends meet, and reintroducing a means-tested system would impose stigma, expensive bureaucracy and the severing of a universal principle that binds citizens together.

Keeping children in poverty, which already costs £25 billion a year, benefits no one. Nor are Mr Osborne’s likely measures aimed only at the poor. Despite youth unemployment at a 17-year high and rising, 10,000 university places have been cut. The loan-burdened students on whose education the future prosperity of Britain will rest have been called a burden on the taxpayer by David Willetts, the universities minister.

That tag is almost inexplicable since Mr Willetts argued powerfully in his book The Pinch that the obligation of one generation to the next is the compact underpinning how we live. Traditionally, we expected that our children, to whom we bequeathed greater chances than we enjoyed, would care in turn for an ageing population. As the old get older and richer, while the young struggle to survive, a cornerstone of society begins to crack.

Mr Osborne has listened to the fiscal Methuselahs. Which of the hoary ex-chancellors with whom he had lunch last week will have told him that he risks fostering resentment between young and old? Will Lord Lamont, airbrushed into a budgetary Muse, have warned of the perils of generational inequality? I doubt it.

Yet this Budget risks entrenching an unfairness, the effects of which will last long after economic upturn. The signs are that it will penalise the young both directly and indirectly, through raising VAT, throwing people out of work and punishing families on modest incomes. Poverty, however you define it, is mainly miserable for the poor. Unfairness tarnishes the affluent and the destitute alike.

As the historian Tony Judt writes in Ill Fares The Land, inequality corresponds to pathological social problems that will never be solved unless the underlying cause is tackled. Unemployment, obesity, teenage pregnancy, drug use, personal debt, anxiety, depression, criminality, and almost any other social ill you could name are more embedded in the US and the UK because the gap between the richest and poorest is much greater than in continental Europe.

“Inequality is corrosive,” Judt writes. “It eats societies from within.” If you asked George Osborne, he might well agree, promising that his austerity Budget is dedicated to enhancing fairness. True, there will be a bank levy and a move to make the richest pay more capital gains tax. Even so, the measures trailed so far suggest that those at the middle and the bottom will be the objects of a fiscal witch-hunt.

You might imagine, from government preamble, that the financial crisis was incubated not in bank boardrooms but in benefit offices, or that the instruments of economic destruction were dreamed up in Sure Start centres and youth clubs rather than over Krug on financiers’ yachts.

Launching the Coalition commission on childhood, Nick Clegg promised that children’s interests would be directed “from the heart of government”. Other such commissions have tut-tutted over nasty computer games, sugary snacks, rapacious marketers, crisp manufacturers and squandered innocence. If Mr Clegg’s pledge is not to prove so much guff, he will have to realise that the pupil premium and a move towards making the first £10,000 of income tax-free, useful as they may be, will not slay the ogres of modern childhood.

Mr Clegg’s party is getting nervous. One MP, Bob Russell, has said that the Tory pact does not mean that his “conscience and principles can be parked elsewhere”. Others, according to a senior Lib Dem figure, had no compunction in “venting their spleen” to Mr Clegg at a meeting last week, telling him they had not come into politics to shrink the state and impoverish its youngest citizens.

While there is “no sharp point of rebellion yet”, the unbearable lightness of being Mr Clegg has not proved contagious, either. “The further away from the leadership you get, the heavier the hearts,” says one Lib Dem source. “Obviously it’s going to impact on Lib Dem support,” says another. “The bitterness of office is having to compromise.”

Gordon Brown has not yet spoken of the bitterness of Opposition. Though it might not realise or admit it, Labour is missing his voice for the first time. Alistair Darling, free at last of Mr Brown’s budgetary meddling, is almost a lone defender of his party’s economic legacy (which is not as grim as Mr Osborne pretends). While the leadership contenders have done some Osborne-bashing, none offers a coherent vision of how capitalism can be reconnected to the public good.

Of course the deficit must be slashed, as Labour acknowledged in office, but not at a speed that has alarmed President Obama and not in a way that makes the poorest, and the youngest, pay for the follies of those who will not have to sacrifice a Porsche or Rolex to this “fairness” Budget.

Mr Osborne could take another path. As the Institute for Public Policy Research suggests, a staged 3p increase in the basic and higher rates of income tax would raise £15 billion and rebalance the planned 80:20 split between cuts and tax rises that makes it virtually impossible to shield the less well-off. He could also impose a tougher levy on bankers and financial institutions. All would produce howls of pain, but anything would be better than a fate that threatens all citizens, irrespective of age or wealth.

In the name of averting ruin, Mr Osborne risks rounding up the generation on whom the future of this nation depends and forcing it down the long road to perdition.

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