The “big society”: new doubts emerge

Cameron’s “big society bank” may begin with reserves of as little as £60m.

David Cameron's "big society" wasn't much of a hit with the voters or the Tory party (one MP memorably described it as "complete crap"), but today's the day when he finally launches the project, promising "the biggest, most dramatic redistribution of power" ever seen.

Four "vanguard communities" (and what a peculiarly Leninist phrase that is) will be given the power and the money to run transport services, take over local assets such as pubs and set up broadband internet networks.

All of this will be financed through the creation of a "big society bank", using money raised from dormant bank and building society accounts. Alone among the press, the FT raises a sceptical eyebrow:

The British Banking Association has estimated there is probably £400m sitting in dormant bank accounts, which Mr Cameron wants to use for the bank's reserves. However, his advisers say a combination of foot-dragging by high street banks and the need to track down owners of dormant accounts means only a fraction of that sum will find its way into the new bank's coffers in time for its launch.

The bank is now expected to begin with reserves of as little as £60m, hardly enough to enable the voluntary sector to replace the "dead hand of the state".

On the Labour side, Ed Milband (who has just managed to raise £8,000 in 24 hours after an Obama-style appeal) has attacked the "big society" as a fig leaf for savage spending cuts. "People in the voluntary sector know that, for all the talk of a big society, what is actually on the way is cuts and the abandonment of community projects across Britain," he said. That may be the case, but the most persuasive critique remains a pragmatic one: in this ever more hectic age, who has time for the "big society"?

Cameron's hope that the "big society" will replace Big Government is reminiscent of the old Marxist belief that the state will "wither away" as a result of victorious socialism. We all know how that turned out. Cameron has a long way to go to convince us that his vision is any less utopian.

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George Eaton is political editor of the New Statesman.

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Autumn Statement 2015: George Osborne abandons his target

How will George Osborne close the deficit after his U-Turns? Answer: he won't, of course. 

“Good governments U-Turn, and U-Turn frequently.” That’s Andrew Adonis’ maxim, and George Osborne borrowed heavily from him today, delivering two big U-Turns, on tax credits and on police funding. There will be no cuts to tax credits or to the police.

The Office for Budget Responsibility estimates that, in total, the government gave away £6.2 billion next year, more than half of which is the reverse to tax credits.

Osborne claims that he will still deliver his planned £12bn reduction in welfare. But, as I’ve written before, without cutting tax credits, it’s difficult to see how you can get £12bn out of the welfare bill. Here’s the OBR’s chart of welfare spending:

The government has already promised to protect child benefit and pension spending – in fact, it actually increased pensioner spending today. So all that’s left is tax credits. If the government is not going to cut them, where’s the £12bn come from?

A bit of clever accounting today got Osborne out of his hole. The Universal Credit, once it comes in in full, will replace tax credits anyway, allowing him to describe his U-Turn as a delay, not a full retreat. But the reality – as the Treasury has admitted privately for some time – is that the Universal Credit will never be wholly implemented. The pilot schemes – one of which, in Hammersmith, I have visited myself – are little more than Potemkin set-ups. Iain Duncan Smith’s Universal Credit will never be rolled out in full. The savings from switching from tax credits to Universal Credit will never materialise.

The £12bn is smaller, too, than it was this time last week. Instead of cutting £12bn from the welfare budget by 2017-8, the government will instead cut £12bn by the end of the parliament – a much smaller task.

That’s not to say that the cuts to departmental spending and welfare will be painless – far from it. Employment Support Allowance – what used to be called incapacity benefit and severe disablement benefit – will be cut down to the level of Jobseekers’ Allowance, while the government will erect further hurdles to claimants. Cuts to departmental spending will mean a further reduction in the numbers of public sector workers.  But it will be some way short of the reductions in welfare spending required to hit Osborne’s deficit reduction timetable.

So, where’s the money coming from? The answer is nowhere. What we'll instead get is five more years of the same: increasing household debt, austerity largely concentrated on the poorest, and yet more borrowing. As the last five years proved, the Conservatives don’t need to close the deficit to be re-elected. In fact, it may be that having the need to “finish the job” as a stick to beat Labour with actually helped the Tories in May. They have neither an economic imperative nor a political one to close the deficit. 

Stephen Bush is editor of the Staggers, the New Statesman’s political blog.