The coalition’s benefit cuts: the pain to come

Benefit cuts will hit families far harder than the abolition of the 10p tax rate.

In this week's magazine, Gavin Kelly, chief executive of the Resolution Foundation and the former deputy chief of staff at No 10, has a piece on why a combination of rising prices, falling wages, higher taxes and lower benefits will lead to "the biggest squeeze on living standards since the 1970s".

Of particular interest is an accompanying graphic that compares the losses families will suffer as a result of the coalition's benefit cuts to those they suffered as a result of the abolition of the 10p income-tax rate. The results speak for themselves.

P

Few of these cuts have received significant media attention but the scale of the losses could soon change that. The removal of the 10p tax band cost the average family £232, but the cut in support for childcare means half a million mothers on low to middle incomes will lose almost £500 a year on average, with the hardest hit losing a remarkable £1,300. The abolition of the Education Maintenance Allowance, which paid up to £30 a week to 16-to-18-year-olds from low- and modest-income families, will cost families up to £1,200.

The coalition's plan to raise the income-tax threshold by £1,000 to £7,475 will benefit low-to-middle-income earners by around £170. But, as Kelly notes, this is not enough "to offset the rise in VAT, let alone the far larger tax credit cuts". A study by Grant Thornton suggests that the VAT increasese will cost each household £517 a year on average.

The problem with the abolition of the 10p tax, of course, wasn't the losses per se, but rather Gordon Brown's insistence against all evidence to the contrary that there were "no losers". This government hasn't made a similar claim. But it has disguised the scale of the losses to come.

So, rather than any single "10p tax moment", I expect a slow-burning rage as voters are overwhelmed by successive tax rises and benefit cuts.

George Osborne has consistently emphasised those meaures that target workless families – an attempt to marginalise Labour as the party of the "undeserving poor". But many of these cuts will fall hardest on working families, those Nick Clegg today described as "alarm-clock Britons". Indeed, a TUC study found that working households will suffer a loss of about £9.4bn, nearly twice the level of losses for non-working households.

For too many people, as Kelly writes, the next few years will be a "tale of growth without gain". The government will need a better response than "There is no alternative" if it is to avoid permanently alienating these voters.

George Eaton is political editor of the New Statesman.

Getty
Show Hide image

Donald Trump vs Barack Obama: How the inauguration speeches compared

We compared the two presidents on trade, foreign affairs and climate change – so you (really, really) don't have to.

After watching Donald Trump's inaugural address, what better way to get rid of the last few dregs of hope than by comparing what he said with Barack Obama's address from 2009? 

Both thanked the previous President, with Trump calling the Obamas "magnificent", and pledged to reform Washington, but the comparison ended there. 

Here is what each of them said: 

On American jobs

Obama:

The state of our economy calls for action, bold and swift.  And we will act, not only to create new jobs, but to lay a new foundation for growth.  We will build the roads and bridges, the electric grids and digital lines that feed our commerce and bind us together.  We'll restore science to its rightful place, and wield technology's wonders to raise health care's quality and lower its cost.  We will harness the sun and the winds and the soil to fuel our cars and run our factories.  And we will transform our schools and colleges and universities to meet the demands of a new age.

Trump:

For many decades we've enriched foreign industry at the expense of American industry, subsidized the armies of other countries while allowing for the very sad depletion of our military.

One by one, the factories shuttered and left our shores with not even a thought about the millions and millions of American workers that were left behind.

Obama had a plan for growth. Trump just blames the rest of the world...

On global warming

Obama:

With old friends and former foes, we'll work tirelessly to lessen the nuclear threat, and roll back the specter of a warming planet.

Trump:

On the Middle East:

Obama:

To the Muslim world, we seek a new way forward, based on mutual interest and mutual respect. To those leaders around the globe who seek to sow conflict, or blame their society's ills on the West, know that your people will judge you on what you can build, not what you destroy. 

Trump:

We will re-enforce old alliances and form new ones and unite the civilized world against radical Islamic terrorism, which we will eradicate completely from the face of the earth.

On “greatness”

Obama:

In reaffirming the greatness of our nation we understand that greatness is never a given. It must be earned.

Trump:

America will start winning again, winning like never before.

 

On trade

Obama:

This is the journey we continue today.  We remain the most prosperous, powerful nation on Earth.  Our workers are no less productive than when this crisis began.  Our minds are no less inventive, our goods and services no less needed than they were last week, or last month, or last year.  Our capacity remains undiminished.  

Trump:

We must protect our borders from the ravages of other countries making our product, stealing our companies and destroying our jobs.

Protection will lead to great prosperity and strength. I will fight for you with every breath in my body, and I will never ever let you down.

Stephanie Boland is digital assistant at the New Statesman. She tweets at @stephanieboland