This article is from the source 'guardian' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.

You can find the current article at its original source at http://www.theguardian.com/commentisfree/2014/jan/12/george-osborne-cuts-young-poor

The article has changed 2 times. There is an RSS feed of changes available.

Version 0 Version 1
George Osborne's hard choices will only hurt the young and poor George Osborne's hard choices will only hurt the young and poor
(4 days later)
George Osborne spoke last Monday before an audience that must have taken his aides weeks to find: the workers and managers of a manufacturing firm, which had ignored Britain's £9.4bn trade deficit and succeeded in becoming a thriving exporter of car components. His face was grave. His language grim.George Osborne spoke last Monday before an audience that must have taken his aides weeks to find: the workers and managers of a manufacturing firm, which had ignored Britain's £9.4bn trade deficit and succeeded in becoming a thriving exporter of car components. His face was grave. His language grim.
He had "never promised it was going to be easy". He had always said there would be "difficult sacrifices". The pain was not over or even half over and 2014 would be "the year of hard truths". Harshness was all he could promise until 2017 and perhaps beyond. The years to come would bring more cuts of £12bn to welfare and £13bn to local government and centrally administered services. "There are no easy options here," he warned. No alternatives. Voters must not believe the false promises of other politicians. His hard way was the only way "to fix our country's problems".He had "never promised it was going to be easy". He had always said there would be "difficult sacrifices". The pain was not over or even half over and 2014 would be "the year of hard truths". Harshness was all he could promise until 2017 and perhaps beyond. The years to come would bring more cuts of £12bn to welfare and £13bn to local government and centrally administered services. "There are no easy options here," he warned. No alternatives. Voters must not believe the false promises of other politicians. His hard way was the only way "to fix our country's problems".
The Churchillian language of offering nothing but blood, toil, tears and sweat, implies – I would say, demands – that you and your supporters make sacrifices yourselves. You must accept that the sweat will be on your brow; that the tears will roll down your cheeks.The Churchillian language of offering nothing but blood, toil, tears and sweat, implies – I would say, demands – that you and your supporters make sacrifices yourselves. You must accept that the sweat will be on your brow; that the tears will roll down your cheeks.
In George Osborne's Britain, however, tears are always in other people's eyes. None of his hard choices threatens the economic interests of most of the Conservative party's supporters. Not one. There's no hit on inheritance and capital gains of the very comfortable; little will to ensure corporations pay more taxes; and no blows to the rentier class that exploits our housing shortage. Through his double standards, we are learning much about Britain's future and much about Osborne, too.In George Osborne's Britain, however, tears are always in other people's eyes. None of his hard choices threatens the economic interests of most of the Conservative party's supporters. Not one. There's no hit on inheritance and capital gains of the very comfortable; little will to ensure corporations pay more taxes; and no blows to the rentier class that exploits our housing shortage. Through his double standards, we are learning much about Britain's future and much about Osborne, too.
His admirers say he is the best political pro in Westminster. He controls who goes up and goes down in the Tory party. With a few honourable exceptions – Fraser Nelson of the Spectator, Iain Martin of the Telegraph – almost every rightwing commentator in the Tory press bends the knee and parrots his briefings.His admirers say he is the best political pro in Westminster. He controls who goes up and goes down in the Tory party. With a few honourable exceptions – Fraser Nelson of the Spectator, Iain Martin of the Telegraph – almost every rightwing commentator in the Tory press bends the knee and parrots his briefings.
So great is his influence at the Times, where Conservative party activists police the Comment section, that the newspaper named Osborne its "2013 Briton of the year". Osborne was the man who will dominate "the whole of this parliament", the paper argued, and by extension, the whole of Britain as well.So great is his influence at the Times, where Conservative party activists police the Comment section, that the newspaper named Osborne its "2013 Briton of the year". Osborne was the man who will dominate "the whole of this parliament", the paper argued, and by extension, the whole of Britain as well.
In a backhanded way, there was truth behind its fawning. George Osborne does dominate. And like a true political pro, he uses his power to pursue the Conservatives' narrow interest, rather than the national interest, during a period of rolling economic and constitutional crises.In a backhanded way, there was truth behind its fawning. George Osborne does dominate. And like a true political pro, he uses his power to pursue the Conservatives' narrow interest, rather than the national interest, during a period of rolling economic and constitutional crises.
At least a few of his cabinet colleagues find his obsessiveness frightening. One told me that I and other opponents of the coalition did not understand the Conservative party's leading figures. Cameron had a human face. He may be tetchy and rude in private, but if he saw that a government policy was causing avoidable harm, there was a faint chance he would change it. Iain Duncan Smith had a Christian conscience and did not like seeing suffering. He was a "decent" man, despite everything. If you showed him he was hurting people, he was hurt in turn.At least a few of his cabinet colleagues find his obsessiveness frightening. One told me that I and other opponents of the coalition did not understand the Conservative party's leading figures. Cameron had a human face. He may be tetchy and rude in private, but if he saw that a government policy was causing avoidable harm, there was a faint chance he would change it. Iain Duncan Smith had a Christian conscience and did not like seeing suffering. He was a "decent" man, despite everything. If you showed him he was hurting people, he was hurt in turn.
But George Osborne… well, Osborne was another matter. He was like a computer programme. You couldn't appeal to his better nature, or to any notion of the public good. He thinks: "If a policy plays well and it is good for the Tories, you just go ahead and do it. What comes across is a very deep cynicism, a cold cynicism – and he is turning us into a harder and more cynical country." But George Osborne… well, Osborne was another matter. He was like a computer program. You couldn't appeal to his better nature, or to any notion of the public good. He thinks: "If a policy plays well and it is good for the Tories, you just go ahead and do it. What comes across is a very deep cynicism, a cold cynicism – and he is turning us into a harder and more cynical country."
The results of Osborne's cynicism are all around us. We can already see the housing bubble he is pumping with taxpayers' money and with the disgraceful acquiescence of his remarkably well-paid appointee, Mark Carney, the "independent" governor of the Bank of England. Homeowners are watching the value of their assets rise and Osborne hopes they will be grateful on election day. Who cares if young people and young families face inflated rents and prices? They are not his problem.The results of Osborne's cynicism are all around us. We can already see the housing bubble he is pumping with taxpayers' money and with the disgraceful acquiescence of his remarkably well-paid appointee, Mark Carney, the "independent" governor of the Bank of England. Homeowners are watching the value of their assets rise and Osborne hopes they will be grateful on election day. Who cares if young people and young families face inflated rents and prices? They are not his problem.
Last week, we learned more. Osborne will not insist that the rich, the tax dodging and the old make sacrifices, because they are likely to vote Conservative. The choice to excuse them from meeting the additional costs of a national debt that is heading towards £1.5tn isn't a "hard choice" for Osborne but no choice at all. Of course they must be spared. Instead, he demands sacrifices from the poor, a section of the struggling working and lower middle classes and, most of all, from the young, who are having to cope with a society without precedent.Last week, we learned more. Osborne will not insist that the rich, the tax dodging and the old make sacrifices, because they are likely to vote Conservative. The choice to excuse them from meeting the additional costs of a national debt that is heading towards £1.5tn isn't a "hard choice" for Osborne but no choice at all. Of course they must be spared. Instead, he demands sacrifices from the poor, a section of the struggling working and lower middle classes and, most of all, from the young, who are having to cope with a society without precedent.
The coming gerontocracyThe coming gerontocracy
When historians talk of gerontocracies, they mean dictatorial governments of old men: the council of Sparta; the wheezing geriatrics, who oversaw the decline and fall of the Soviet empire; the fanatical old ayatollahs, who ran, and may still run, Iran. All presided over populations whose average age was well below the age of their masters. Europe, North America and Japan are experiencing something novel: a gerontocracy, imposed by the democratic wishes of the majority of the population.When historians talk of gerontocracies, they mean dictatorial governments of old men: the council of Sparta; the wheezing geriatrics, who oversaw the decline and fall of the Soviet empire; the fanatical old ayatollahs, who ran, and may still run, Iran. All presided over populations whose average age was well below the age of their masters. Europe, North America and Japan are experiencing something novel: a gerontocracy, imposed by the democratic wishes of the majority of the population.
In 2009, almost without anyone noticing, Britain made a momentous transition. The Office for National Statistics reported the 24.5 million 16- to 44-year-olds had been overtaken by the 25.7 million aged 45 years and above. We had become a land of the old. The political consequences of the transformation would be big enough on their own. But they are accentuated by the vast disparities between the willingness of different age groups to vote. The pollsters at Ipsos Mori estimated that only 44% of 18- to 24-year-olds and only 55% of 25- to 30-year-olds voted in the 2010 election. By contrast, 73% of 55- to 64-year-olds and 76% of those aged 65 or over turned out. Russell Brand's call on the young not to vote was the pseudo-leftism of a dumb dilettante precisely because politicians can ignore the interests of the young when the young do not threaten them at the polling booths.In 2009, almost without anyone noticing, Britain made a momentous transition. The Office for National Statistics reported the 24.5 million 16- to 44-year-olds had been overtaken by the 25.7 million aged 45 years and above. We had become a land of the old. The political consequences of the transformation would be big enough on their own. But they are accentuated by the vast disparities between the willingness of different age groups to vote. The pollsters at Ipsos Mori estimated that only 44% of 18- to 24-year-olds and only 55% of 25- to 30-year-olds voted in the 2010 election. By contrast, 73% of 55- to 64-year-olds and 76% of those aged 65 or over turned out. Russell Brand's call on the young not to vote was the pseudo-leftism of a dumb dilettante precisely because politicians can ignore the interests of the young when the young do not threaten them at the polling booths.
Voting strength and weight of numbers ensure that my generation of baby-boomers has the power to hang on to its toys as we stumble towards our second childhood. Our hold on right-of-centre governments is especially tight. Ipsos Mori told me last week that when it aggregated its polls, it found that Labour led in all age groups except the over-65s. Ukip supporters, whose votes Osborne needs, are on average older still.Voting strength and weight of numbers ensure that my generation of baby-boomers has the power to hang on to its toys as we stumble towards our second childhood. Our hold on right-of-centre governments is especially tight. Ipsos Mori told me last week that when it aggregated its polls, it found that Labour led in all age groups except the over-65s. Ukip supporters, whose votes Osborne needs, are on average older still.
A brave politician, a speaker of "hard truths", would tell older voters that the young weren't their enemies but their children and grandchildren. He would say that a country that neglected its youth was neglecting its future and would soon become a sluggish backwater, suspicious of change and without the ability to compete in the modern world. Osborne is doing nothing of the sort. Quantitative easing, it is true, helps debtors, who tend to be young, and harms savers, who tend to be old.A brave politician, a speaker of "hard truths", would tell older voters that the young weren't their enemies but their children and grandchildren. He would say that a country that neglected its youth was neglecting its future and would soon become a sluggish backwater, suspicious of change and without the ability to compete in the modern world. Osborne is doing nothing of the sort. Quantitative easing, it is true, helps debtors, who tend to be young, and harms savers, who tend to be old.
But even in this instance, the vast increase in asset values cheap money brings has helped make richer and invariably older homeowners and shareholders richer still. The fact remains that the weight of austerity has fallen on the young and young middle-aged with attacks on student grants, educational maintenance allowances and child tax credits. Tellingly, the one benefit for the wealthy Osborne has cut is child benefit.But even in this instance, the vast increase in asset values cheap money brings has helped make richer and invariably older homeowners and shareholders richer still. The fact remains that the weight of austerity has fallen on the young and young middle-aged with attacks on student grants, educational maintenance allowances and child tax credits. Tellingly, the one benefit for the wealthy Osborne has cut is child benefit.
There's more in that vein to come if the Tories retain power. Osborne and Cameron have promised to "triple lock" the state pension so that it will increase by whichever is higher – inflation, wages or 2.5%. They will not touch additional benefits for all pensioners, including the wealthiest pensioners. Osborne's "hard choice" of cutting welfare even further by 2017 needs to be put in context. Half the £200bn welfare budget goes on pensioners. Spending on pensions will be ringfenced, as will spending on the NHS, which we depend on more the older we get. All the further £12bn cuts in welfare Osborne envisages will come from the £100bn spent on the working-age poor – including the poor who work and their children.There's more in that vein to come if the Tories retain power. Osborne and Cameron have promised to "triple lock" the state pension so that it will increase by whichever is higher – inflation, wages or 2.5%. They will not touch additional benefits for all pensioners, including the wealthiest pensioners. Osborne's "hard choice" of cutting welfare even further by 2017 needs to be put in context. Half the £200bn welfare budget goes on pensioners. Spending on pensions will be ringfenced, as will spending on the NHS, which we depend on more the older we get. All the further £12bn cuts in welfare Osborne envisages will come from the £100bn spent on the working-age poor – including the poor who work and their children.
The pampered plutocracyThe pampered plutocracy
Last year, the Institute for Fiscal Studies looked at an ever-worsening financial crisis, which will see the amount of public debt owed per person rise from its 2010 level of £15,000 to £23,000 in 2017. I should say that the institute is hardly a nest of leftwing agitators. Those who understand the public finances think it is more respectable than the Queen. As Britain is a country where the top fifth own 60% of the wealth, it considered asking the wealthy to pay more. The "most obvious way" to raise "significant sums of money" would be to "increase the higher rate of income tax or the additional rate of national insurance" on the top 10%. Osborne, the hard man, will not even talk about that choice.Last year, the Institute for Fiscal Studies looked at an ever-worsening financial crisis, which will see the amount of public debt owed per person rise from its 2010 level of £15,000 to £23,000 in 2017. I should say that the institute is hardly a nest of leftwing agitators. Those who understand the public finances think it is more respectable than the Queen. As Britain is a country where the top fifth own 60% of the wealth, it considered asking the wealthy to pay more. The "most obvious way" to raise "significant sums of money" would be to "increase the higher rate of income tax or the additional rate of national insurance" on the top 10%. Osborne, the hard man, will not even talk about that choice.
Alternatively, the institute continued, Osborne could embrace the Liberal Democrats' idea of a mansion tax on the fabulously expensive homes foreign and native oligarchs are buying in the south-east. The idea had a "sensible logic underpinning it". No, again, Osborne says.Alternatively, the institute continued, Osborne could embrace the Liberal Democrats' idea of a mansion tax on the fabulously expensive homes foreign and native oligarchs are buying in the south-east. The idea had a "sensible logic underpinning it". No, again, Osborne says.
The institute then raised inheritance tax, and with good reason. You can only take arguments about the struggles between the young and the old so far because class trumps all else. As Neal Ascherson said on these pages 20 years ago, the explosion in inequality will lead to an explosion of inherited wealth and the children of the rich buying up the country. His column caused a controversy at the time, but everyone accepts he was right now. In his acclaimed Capital in the Twenty-First Century, out in English in May, the French economist Thomas Piketty shows how even in supposedly "socialist" France the flow of inherited money has returned to 19th-century levels.The institute then raised inheritance tax, and with good reason. You can only take arguments about the struggles between the young and the old so far because class trumps all else. As Neal Ascherson said on these pages 20 years ago, the explosion in inequality will lead to an explosion of inherited wealth and the children of the rich buying up the country. His column caused a controversy at the time, but everyone accepts he was right now. In his acclaimed Capital in the Twenty-First Century, out in English in May, the French economist Thomas Piketty shows how even in supposedly "socialist" France the flow of inherited money has returned to 19th-century levels.
Sitting in the Observer offices in London, it is easy to say the same about Britain. I see young middle-class people, who look as if they are in the same position I was in the late 1980s. Unlike me, however, they have no chance of doing what I did and buying a flat unless their parents give them money or die and leave them an inheritance, assuming they get on with the business of dying, that is, and don't blow it all in old people's homes. As for what we used to call the working class, the council flats of my youth have gone. In just one London borough, Tower Hamlets, as James Meek said in a recent essay, there are 22,000 people on the "social housing" waiting list, 10,000 waiting for a one-bedroom flat. In 2012-13, a mere 840 one-bed homes were available.Sitting in the Observer offices in London, it is easy to say the same about Britain. I see young middle-class people, who look as if they are in the same position I was in the late 1980s. Unlike me, however, they have no chance of doing what I did and buying a flat unless their parents give them money or die and leave them an inheritance, assuming they get on with the business of dying, that is, and don't blow it all in old people's homes. As for what we used to call the working class, the council flats of my youth have gone. In just one London borough, Tower Hamlets, as James Meek said in a recent essay, there are 22,000 people on the "social housing" waiting list, 10,000 waiting for a one-bedroom flat. In 2012-13, a mere 840 one-bed homes were available.
Osborne could end anomalies in inheritance and capital gains, the Institute for Fiscal Studies said, and make wealthy parents pay tax on the gifts to their children. Can you imagine Osborne taking that hard choice? Can you hear him saying he wants higher inheritance taxes because he believes Britain should be a meritocracy rather than a plutocracy? Strangely enough, nor can I.Osborne could end anomalies in inheritance and capital gains, the Institute for Fiscal Studies said, and make wealthy parents pay tax on the gifts to their children. Can you imagine Osborne taking that hard choice? Can you hear him saying he wants higher inheritance taxes because he believes Britain should be a meritocracy rather than a plutocracy? Strangely enough, nor can I.
Sitting in the Observer's offices, I notice something else. Across the road, Google is laying the foundations for its £300m British headquarters behind King's Cross station. Google has not decided on the final design. But on one point we can be certain: Google will make hundreds of millions of pounds in Britain. It will have a HQ in Britain. But, if current practices hold, it will pay next to no tax in Britain. .Sitting in the Observer's offices, I notice something else. Across the road, Google is laying the foundations for its £300m British headquarters behind King's Cross station. Google has not decided on the final design. But on one point we can be certain: Google will make hundreds of millions of pounds in Britain. It will have a HQ in Britain. But, if current practices hold, it will pay next to no tax in Britain. .
Osborne says he wants international agreement to make corporations pay more. His assertions are provably false, replies Richard Brooks, a tax inspector, who was so ashamed of working for a Revenue that cut sweetheart deals for multinationals he resigned to become Private Eye's star reporter.Osborne says he wants international agreement to make corporations pay more. His assertions are provably false, replies Richard Brooks, a tax inspector, who was so ashamed of working for a Revenue that cut sweetheart deals for multinationals he resigned to become Private Eye's star reporter.
One of Osborne's first acts in government was to cut British multinationals' tax bills by at least £7bn by granting them exemptions when they moved money into tax havens. "Nobody in the private sector could believe what [Osborne] did," Brooks quotes a city account as saying in his book The Great Tax Robbery. "It was just so stupid."One of Osborne's first acts in government was to cut British multinationals' tax bills by at least £7bn by granting them exemptions when they moved money into tax havens. "Nobody in the private sector could believe what [Osborne] did," Brooks quotes a city account as saying in his book The Great Tax Robbery. "It was just so stupid."
As we are living in a time of sacrifice, Osborne might make amends for his stupidity and reverse his policy. He might say, as the Americans do, that wealthy foreigners living in Britain must pay taxes on their foreign earnings, like the rest of us. He might even end the obscene situation in which wealthy Britons can escape taxes by pretending to be foreigners, most notably, the noble Lord Rothermere, proprietor of the patriotic Daily Mail.As we are living in a time of sacrifice, Osborne might make amends for his stupidity and reverse his policy. He might say, as the Americans do, that wealthy foreigners living in Britain must pay taxes on their foreign earnings, like the rest of us. He might even end the obscene situation in which wealthy Britons can escape taxes by pretending to be foreigners, most notably, the noble Lord Rothermere, proprietor of the patriotic Daily Mail.
More hard choices for Osborne? More sacrifices he will not shrink from demanding? Don't be a fool. With the exception of a tiny proposal to make foreigners pay capital gains tax on their British homes, he won't consider passing the burden to those best able to carry it.More hard choices for Osborne? More sacrifices he will not shrink from demanding? Don't be a fool. With the exception of a tiny proposal to make foreigners pay capital gains tax on their British homes, he won't consider passing the burden to those best able to carry it.
Britain (if it is still here) in 2017Britain (if it is still here) in 2017
Ed Miliband's advisers are urging him to warn of a dangerous future by breaking with Labour's past, a disgraceful past to some of us. They want him to say that George Osborne is the Tory Gordon Brown. Like Brown, Osborne puts political advantage above the common good. Like Brown's phantom boom, Osborne's recovery is not built on private sector investment or exports, but on consumers borrowing and eating into their savings .Ed Miliband's advisers are urging him to warn of a dangerous future by breaking with Labour's past, a disgraceful past to some of us. They want him to say that George Osborne is the Tory Gordon Brown. Like Brown, Osborne puts political advantage above the common good. Like Brown's phantom boom, Osborne's recovery is not built on private sector investment or exports, but on consumers borrowing and eating into their savings .
It is reasonable to suppose Osborne's Britain will end up in as great a mess as its Brownian predecessor. Any further predictions must be based on looking at what is happening now and imagining it getting worse. Transport, law and order and the military will have to live with cuts of a third of their budgets by 2017, if they can.It is reasonable to suppose Osborne's Britain will end up in as great a mess as its Brownian predecessor. Any further predictions must be based on looking at what is happening now and imagining it getting worse. Transport, law and order and the military will have to live with cuts of a third of their budgets by 2017, if they can.
And local government? There won't be much of it left in the poorer parts of England that depend on vanishing Whitehall subsidies. Meanwhile the millions who move between insecure jobs and unemployment will find their support gone too. They will need to juggle two or more part-time jobs to save them from penury.And local government? There won't be much of it left in the poorer parts of England that depend on vanishing Whitehall subsidies. Meanwhile the millions who move between insecure jobs and unemployment will find their support gone too. They will need to juggle two or more part-time jobs to save them from penury.
As for housing, you can already see in the south-east what happens when there aren't enough social or private houses and flats. A secure home becomes like a secure job: a blessing you can hope for but not expect. Social policy is determined by the rentier class of buy-to-let landlords, who bought up much of the council stock Margaret Thatcher sold. They are already deciding that they do not want British tenants on state benefits.As for housing, you can already see in the south-east what happens when there aren't enough social or private houses and flats. A secure home becomes like a secure job: a blessing you can hope for but not expect. Social policy is determined by the rentier class of buy-to-let landlords, who bought up much of the council stock Margaret Thatcher sold. They are already deciding that they do not want British tenants on state benefits.
In 2017, what you do, where you live and how you manage will not depend on who you are but who your parents were. You and all around you should have learned by then what you ought to know now. When Conservatives say "we are all in this together," their "we" does not include them.In 2017, what you do, where you live and how you manage will not depend on who you are but who your parents were. You and all around you should have learned by then what you ought to know now. When Conservatives say "we are all in this together," their "we" does not include them.
Our editors' picks for the day's top news and commentary delivered to your inbox each morning.Our editors' picks for the day's top news and commentary delivered to your inbox each morning.