When the deficit's "under control", will the Conservatives be able to resist deficit-funded tax cuts?

There's no reason why they should even try.

Matt Yglesias asks what could be an existential question for conservatives on both sides of the Atlantic:

This is the question for John Boehner and Paul Ryan whenever they do unveil their balanced-budget plan: Why not make taxes lower instead of balancing the budget? The budget will, presumably, cut spending down to a level that conservatives think is appropriate. Say that sums up to 18 percent of GDP. Well if you're spending 18 percent of GDP and 18 percent of GDP is the right amount to spend, then why is it better to raise 18 percent of GDP in taxes rather than raise 16 percent and borrow the rest?

For the time being, in Britain and America, rhetoric about "getting the deficit under control" and about "shrinking the size of the state" are pointing in the same direction. Both are reasons for the massive spending cuts which the Conservatives and Republicans have attempted to enact.

Most of the attacks on the false connection between those two arguments have been focused on the "shrinking the state" part of the equation. That is, questions like "if we're trying to reduce the deficit, why aren't we raising taxes on the rich/on bankers/on financial transactions" are appropriate for exposing the drive for deficit reduction as a sham, driven largely by ideology.

But what if, instead, we accept — hypothetically — that the size of the state had to be shrunk. Eventually, spending would be "under control", whatever that means for them, and the choice would become whether taxes ought to be at the same level. Why, all things considered, would it be bad if they weren't? Yglesias asks:

Is it because a 2 percent of GDP budget deficit would be inflationary? Is it because an inflation-targeting central bank faced with a 2 percent of GDP budget deficit would be forced to peg short-term interest rates at a high level? What's the problem, exactly, that the budget balancing solves once we've stipulated that spending has been cut to an appropriate level?

Of course, in the political world, we would be unlikely to get such a clear answer to that question. Rhetoric about a "maxed-out credit card", "paying off the country's mortgage" or "unsustainable budget deficits" — where "sustainable" is never defined — dodges the fact that the macroeconomics of small persistent budget deficits in a country which controls its own currency are relatively settled: it's fine. And chances are that if the Conservatives do manage to get the deficit down, and cling on to power through 2015, then they will do the obvious thing, and enact deficit-funded tax cuts.

But getting a straight answer to that question from the economically minded people who call for swingeing spending cuts now would be interesting indeed.

Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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How tribunal fees silenced low-paid workers: “it was more than I earned in a month”

The government was forced to scrap them after losing a Supreme Court case.

How much of a barrier were employment tribunal fees to low-paid workers? Ask Elaine Janes. “Bringing up six children, I didn’t have £20 spare. Every penny was spent on my children – £250 to me would have been a lot of money. My priorities would have been keeping a roof over my head.”

That fee – £250 – is what the government has been charging a woman who wants to challenge their employer, as Janes did, to pay them the same as men of a similar skills category. As for the £950 to pay for the actual hearing? “That’s probably more than I earned a month.”

Janes did go to a tribunal, but only because she was supported by Unison, her trade union. She has won her claim, although the final compensation is still being worked out. But it’s not just about the money. “It’s about justice, really,” she says. “I think everybody should be paid equally. I don’t see why a man who is doing the equivalent job to what I was doing should earn two to three times more than I was.” She believes that by setting a fee of £950, the government “wouldn’t have even begun to understand” how much it disempowered low-paid workers.

She has a point. The Taylor Review on working practices noted the sharp decline in tribunal cases after fees were introduced in 2013, and that the claimant could pay £1,200 upfront in fees, only to have their case dismissed on a technical point of their employment status. “We believe that this is unfair,” the report said. It added: "There can be no doubt that the introduction of fees has resulted in a significant reduction in the number of cases brought."

Now, the government has been forced to concede. On Wednesday, the Supreme Court ruled in favour of Unison’s argument that the government acted unlawfully in introducing the fees. The judges said fees were set so high, they had “a deterrent effect upon discrimination claims” and put off more genuine cases than the flimsy claims the government was trying to deter.

Shortly after the judgement, the Ministry of Justice said it would stop charging employment tribunal fees immediately and refund those who had paid. This bill could amount to £27m, according to Unison estimates. 

As for Janes, she hopes low-paid workers will feel more confident to challenge unfair work practices. “For people in the future it is good news,” she says. “It gives everybody the chance to make that claim.” 

Julia Rampen is the digital news editor of the New Statesman (previously editor of The Staggers, The New Statesman's online rolling politics blog). She has also been deputy editor at Mirror Money Online and has worked as a financial journalist for several trade magazines.