How Osborne's benefit cuts could hurt the Tories in marginal seats

Labour releases data showing that thousands of working families in Conservative marginals will be hit by the cuts.

Labour is increasingly confident that it is not just right in principle to oppose George Osborne's 1 per cent cap on benefit increases but also right politically. While Osborne, the Conservatives' chief election strategist, believes that the measure will increase support for the Tories among those voters who considered the last government too soft on welfare claimants, Labour argues that he has miscalculated by hitting the very "strivers" he claims to support. Sixty per cent of the real-terms cut to benefits will fall on working households and, according to the Institute for Fiscal Studies, the average one earner couple will be £534 a year worse off by 2015.

Overnight, Labour released some fascinating HMRC data showing how the cuts to tax credits will hit voters in Conservative marginals. In the Tories' 60 most vulnerable seats, there are an average of 15 working families receiving tax credits for every one marginal voter. For instance, in North Warwickshire, the party's most marginal seat (held by 54 votes at the last election), there are 6,800 families receiving working tax credits. In Broxtowe, the 10th most marginal (held by 389 votes), the figure is 5,700, in St Albans, the 40th most marginal (held by 2,243 votes), it is 6,700.

A Labour spokesman said: "Everyone knows the next election will be a living standards election. George Osborne's strivers' tax is going to hit working families in Tory-held seats. He thought he was playing a clever political game, but instead he is likely to find he has cost the seats of dozens of his colleagues."

If this sounds a lot like wishful thinking, the thesis that austerity will cost the Tories votes at the next election remains a plausible one. A frequent complaint heard by Conservative candidates on the doorstep in 2010 was that the party planned to take away their tax credits. Now it has done so, the electoral fallout is hard to predict. But the belief that in-work voters deprived of their benefits will be assuaged by the knowledge that others are suffering more is no more convincing than the belief that they will fall into the arms of Labour.

Chancellor George Osborne is seen during a visit to the offices of HM Revenue & Customs. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

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In your 30s? You missed out on £26,000 and you're not even protesting

The 1980s kids seem resigned to their fate - for now. 

Imagine you’re in your thirties, and you’re renting in a shared house, on roughly the same pay you earned five years ago. Now imagine you have a friend, also in their thirties. This friend owns their own home, gets pay rises every year and has a more generous pension to beat. In fact, they are twice as rich as you. 

When you try to talk about how worried you are about your financial situation, the friend shrugs and says: “I was in that situation too.”

Un-friend, right? But this is, in fact, reality. A study from the Institute for Fiscal Studies found that Brits in their early thirties have a median wealth of £27,000. But ten years ago, a thirty something had £53,000. In other words, that unbearable friend is just someone exactly the same as you, who is now in their forties. 

Not only do Brits born in the early 1980s have half the wealth they would have had if they were born in the 1970s, but they are the first generation to be in this position since World War II.  According to the IFS study, each cohort has got progressively richer. But then, just as the 1980s kids were reaching adulthood, a couple of things happened at once.

House prices raced ahead of wages. Employers made pensions less generous. And, at the crucial point that the 1980s kids were finding their feet in the jobs market, the recession struck. The 1980s kids didn’t manage to buy homes in time to take advantage of low mortgage rates. Instead, they are stuck paying increasing amounts of rent. 

If the wealth distribution between someone in their 30s and someone in their 40s is stark, this is only the starting point in intergenerational inequality. The IFS expects pensioners’ incomes to race ahead of workers in the coming decade. 

So why, given this unprecedented reversal in fortunes, are Brits in their early thirties not marching in the streets? Why are they not burning tyres outside the Treasury while shouting: “Give us out £26k back?” 

The obvious fact that no one is going to be protesting their granny’s good fortune aside, it seems one reason for the 1980s kids’ resignation is they are still in denial. One thirty something wrote to The Staggers that the idea of being able to buy a house had become too abstract to worry about. Instead:

“You just try and get through this month and then worry about next month, which is probably self-defeating, but I think it's quite tough to get in the mindset that you're going to put something by so maybe in 10 years you can buy a shoebox a two-hour train ride from where you actually want to be.”

Another reflected that “people keep saying ‘something will turn up’”.

The Staggers turned to our resident thirty something, Yo Zushi, for his thoughts. He agreed with the IFS analysis that the recession mattered:

"We were spoiled by an artificially inflated balloon of cheap credit and growing up was something you did… later. Then the crash came in 2007-2008, and it became something we couldn’t afford to do. 

I would have got round to becoming comfortably off, I tell myself, had I been given another ten years of amoral capitalist boom to do so. Many of those who were born in the early 1970s drifted along, took a nap and woke up in possession of a house, all mod cons and a decent-paying job. But we slightly younger Gen X-ers followed in their slipstream and somehow fell off the edge. Oh well. "

Will the inertia of the1980s kids last? Perhaps – but Zushi sees in the support for Jeremy Corbyn, a swell of feeling at last. “Our lack of access to the life we were promised in our teens has woken many of us up to why things suck. That’s a good thing. 

“And now we have Corbyn to help sort it all out. That’s not meant sarcastically – I really think he’ll do it.”