Wednesday 22 November 2023

Jeremy Hunt's Pre-Election Give Aways

At first glance Jeremy Hunt's second and, in all likelihood, last Autumn statement is unexpectedly good news. A cut to National Insurance, giving back £450/year to those on average salaries. This is due to come into force in January. Pensioners can look forward to a big hike in the state pension, with it increasing by 8.5% April. Social security up to match inflation. Local housing allowance was also put up, alcohol frozen, and the minimum wage cranked up to £11.44/hour, translating into a pay rise of £1,800/year for the lowest paid full time workers. Where has this Conservative Party been? Isn't Hunt trying to outflank a Labour Party who have said nothing and promised nothing on any of these issues?

Not in the slightest. These are measures designed to dazzle and bedazzle. The Tories know full well that their press allies are going to be effusive with praise. I can almost see The Sun's front page now, leading with the pension and wage increases superimposed onto a frozen bottle of booze. And this is exactly what any Tory chancellor would do. In an election year, it's the done thing for hitherto tight-pursed, penny-pinching occupants of Number 11 to shower the electorate with a generous helping of goodies. And the more mean spirited they usually are, the greater their largesse is talked up. Indeed, the fact the NI decrease is coming in imminently instead of waiting for the start of the new financial year suggests that election is coming sooner rather than later.

But this is smoke and mirrors stuff, and does not depart from Rishi Sunak's political strategy to manage expectations by dampening down belief in the capacity of the state to do anything. In Hunt's statement, this intent manifests in two ways. With £27bn more than expected to play with, rather than plugging gaps in eroding public services the Tories elected to give it away. The second is his announcement that state spending should never exceed economic growth, virtually guaranteeing even more cuts if the economy heads south. And his expectation that the public sector should strive to be more productive, with bureaucracy - that old Tory favourite - singled out as the barrier to efficiency. Never mind they're dropping to bits because the Tories have starved them of funds for nearly 14 years.

And consider who benefits from thse measures. Increasing benefits after holding them down so long still leaves this country the meanest in Western Europe where supporting the poorest are concerned. The big increase in the minimum wage is not before time, but only partially addresses the real terms erosion of wages that has characterised the sunset years of this Tory government. The state pension reaffirms their fidelity to the triple lock, hoping a generous bung to the pensioner base will turn them out at the next election and deliver them from a deserved drubbing. And that National Insurance cut? This applies to the 27 million workers who pay 12% on their salaries between £12,571 and £50,270. Higher paid employees pay two per cent on monies over the £50k mark. What that means is the higher the salary, the bigger the cut. Someone on an average salary will keep £450/year, but those at the top and beyond can look forward to pocketing a £750 saving. A subsidy for the wealthiest paid for by crumbling public services. Still, that's nothing compared to the billions handed to business. They will permanently enjoy a tax cut of 25p for every pound they invest in their firms.

The "good news" around benefits is tempered by a renewed assault on disabled people. As trailed last month, the Tories have now decided the flexible working that usually irks them offers a new excuse to tighten the screws. Their so-called back to work plan comes with more conditionalities, a more brutalising range of sanctions, and a new campaign of demonisation. As Hunt puts it, "Anyone choosing to coast on the hard work of taxpayers will lose their benefits." Red meat, they hope, for the crueller sections of the Tory base who might be Reform UK-curious.

In all, this is a short term budget designed to get the Tories over the electoral finishing line. There's nothing to address the anaemic growth forecast by the OBR. And no, reducing business taxes won't magically cut it. The headline grabbers are designed to bamboozle and hoodwink. But for most people, particularly working age people, they can see how even with higher benefits and/or NI cuts that they're worse off than before the pandemic. The prices have gone up and they keep going up, and the extra money can't stretch far enough. And that's why the Tory fates are sealed. They could have made other choices, but they didn't. Therefore, come the Spring it is their turn to suffer as the British electorate turns out and chooses to bury them. Possibly permanently.

1 comment:

Duncan said...

I hope the last lines turn out to be right, as sadly there are still so many gullible and ignorant people who fall for the Tories 'goodies'.
This is especially so with regard to the ongoing 'promotion' of Nigel Farage on 'I'm a Celebrity' (in the same vein as HIGNFY unwittingly promoted Boris Johnson). The media like the 'colourul characters' of right wing nutters.
Expect after this, Fararge to burnish his credentials as potential Tory leader (after his inevitable readmittance). David Seymour from NZ ACT party had a big boost in the NZ polls after his apearance on Dancing with the Stars.