A budget for hard-working families from a Tory government that is now the party of the working class; that was how Osborne described his budget. This is a budget that does nothing to discourage private debt, which far outstrips public debt; in fact it encourages it. It is not a budget for industrial investment and development. It is a budget to fuel another boom in consumption at a time when Britain imports far more than it exports – in the region of £1 billion a day. It is a budget for the 1%; the bankers, hedge fund managers and other assorted spivs of finance.
A derisory 1% wage increase for public sector workers means continued cuts to wages for the next 4 years. Limiting tax credits and universal credits to two children is another piece of cynicism and social engineering from the party of ‘small government’. Osborne’s much vaunted compulsory national living wage is nothing of the sort. It will not compensate for the massive cuts to tax credits. A couple in low paid work with 2 children will not get any extra child tax credit after 2017. If they were each on £9.35 an hour the credit changes would make them £850 a year worse off.
Youngsters on low incomes will no longer get a maintenance grant if they go to university after 2016/17. The Resolution Foundation says the cuts to universal credit and other changes will lower the number of hours it is worth working, from 16 hours a week to 7. The Tory version of the ‘living wage’ disguises what is really happening to the poor. The ‘new living wage’ only applies to the over 25s. This government wears its attacks on the young and vulnerable as a badge of honour. Welfare cuts are expected to raise £35bn. £8bn of cuts will come from other areas, including funding for the BBC. Pension contributions from public sector workers are expected to rise. Over the next 2 years there will be deeper cuts in welfare, more tax rises and more borrowing.
Osborne is trying to outdo Thatcher’s £21bn sell-offs in 1987 by raising £31bn this year through privatisations such as the piecemeal sell-off of RBS, Lloyds Banking Group shares, Northern Rock and Bradford and Bingley assets, the remaining 14% of Royal Mail, prime land in North London, the student loan book and a third share in nuclear fuel company Urenco.
Despite Osborne’s self-congratulatory budget, the British economy is structurally very weak and dangerously unbalanced. Another global financial crisis will wreak havoc and it would be the working class that would suffer the most – again.