Dr Danny Rye, Liverpool Hope University @dannyrye
If there were ever any doubts about George Osborne’s credentials as a political operator (and I confess to being one who has questioned this wisdom in the past), following his recent Summer budget they should be dispelled. There is no question that the budget was regressive in its effect, hitting the budgets of low income households more than others, as the Institute for Fiscal Studies has pointed out and that it cemented the Conservative agenda to reduce the responsibility of the state for welfare and what used to be called social security and shift it to individuals. Whilst reducing welfare payments to working-age families by £12 billion, tax thresholds would be raised, relieving the tax burden of many lower and medium income people and families, and taking many of the lowest paid out of taxation altogether. Businesses would have to play their role in this too by paying a so-called ‘national living wage’ (in fact a rebranded and increased minimum wage). In addition, banks would have to pay a ‘super tax’ on profits, and ‘non-doms’ would no longer have the same rights to maintain and pass on their status.
Whilst some of these measures were clearly in line with Osborne’s declared vision for a ‘high wage, low tax, lower welfare’ economy, and contained a distinctly Thatcherite tinge (abolishing maintenance grants for poorer students for instance, limiting benefits to only two children), some could easily have been measures being delivered in an alternative universe by a Labour Chancellor (and in fact, according to the same IFS report the budget raised far more in taxes than it gave away). The result of all this is that Osborne has made it difficult to respond and laid a trap for the opposition. The trap for Labour is that in attacking a government for reducing working age benefits which has at the same time introduced a ‘living wage’ and increased tax thresholds makes it very difficult for it to be seen as anything other than the ‘party of welfare’. This is a position which, given the almost endless talk of ‘aspiration’ in the leadership contest, an incoming Labour leader will not relish. The first task of the new leadership come September will be to formulate a coherent strategy in response and attempt to outmanoeuvre Osborne. I cannot say I envy them.
This post was written for the Liverpool Hope University Expert Comment webpage
e-mail: ryed at hope dot co dot uk