The welfare debate is only just warming up

Making out that cutting working-age welfare won’t hurt those in work is so divorced from reality that there was always going to be backlash. None of which is to say that Osborne’s gamble won’t pay off.

Powerful Chancellors often over-reach politically before a fall, or at least a bump. For Gordon Brown, it was the desire to cut the basic rate of tax to 20p which brought with it the abolition of the 10p tax rate and the debacle that ensued. When it comes to George Osborne, the political itch that needs to be scratched is the desire to legitimise cutting support for those on low incomes – working and non-working families alike – through his favoured framing of supporting strivers and hurting scroungers.

Whether this agenda, and its associated parliamentary game-playing, will work to his advantage, or end with a bump, is not just the issue of the month it’s a theme that will run through 2013 all the way to the next election. Expect further ‘welfare savings’ reaching out beyond the Spending Review until 2020, dwarfing those announced in the Autumn Statement, to be announced in the second half of the Parliament (more likely by the Conservatives, than the Coalition) giving rise to an eye-watering grand total that will be the centre-piece of David Cameron’s election campaign. It will be coming to a billboard near you in the form of a poster about ‘Labour’s tax-bombshell’ arising from its need to pay for welfare.

Those rushing to declare how all this will play out with the electorate based on a few uncertain polls should pause: we have not yet reached the end of the beginning of this debate, with the Parliamentary vote on up-rating due in January. There isn’t a settled view among the public. There’s not a well developed awareness of the nature of the hardship that will arise from the scale of the cuts, the great bulk of which are still to come. Nor, conversely, can we gauge the consequences of the political resentment that will continue to swell as real wages fall through next year and into 2014.

But a few early conclusions can be drawn. One is the piercing of the hubristic view that a casual  deployment of the ‘strivers’ narrative is enough on its own to ensure an easy ride for further welfare cuts: there is political risk here for Osborne as well as opportunity. Another is that Labour will have to marry its current opposition, based on fairness, with a forensic fiscal analysis of how its measures could secure lower welfare bills in the future via higher employment. This means saying more about how they will deploy effective job-programmes (which given the successful legacy of the Future Jobs Fund should be possible); more about how their wider strategy for welfare and public services will enable higher employment; and more about how any up-front costs would be paid for. As future welfare cuts mount, and the scale of the impending tax-attack from the Conservatives grows, a fairness argument on its own will leave it highly exposed. A fiscal response is needed too.

In the meantime Labour is resting heavily on the fact that by ramping up the rhetorical stakes Osborne has succeeded in rumbling himself. Up until now the part of his strategy that the Chancellor is most anxious about – that cutting ‘welfare’ actually means hitting the working poor – received scant media attention. Now, for the first time, it’s considered news.   

The hope is that this new spirit of scrutiny results in a closer examination of what has actually been happening to in-work support. Take working tax credit. Osborne’s first budget in 2010 took the decision to freeze a large chunk of it. Next up was the cut in support for childcare going exclusively to working parents. Then in autumn 2011 came the decision to freeze the remaining aspects of working tax credit (at a time when inflation had spiked at 5%) followed in this year’s Budget by deep cuts in support for those working part-time (at a time of mass under-employment). It is an unnoticed irony that the Autumn Statement’s controversial decision to uprate working tax credit by a mere 1% actually represents a more generous offering from the Chancellor than his previous diet of cash freezes and policy cuts.

The Coalition’s retort is, of course, that a combination of increased personal tax allowances and, in time, the Universal Credit will improve the plight up the working poor. To assert that no one in work will be worse off once increased tax allowances are taken into account is manifest nonsense – to see why you only need to consider the example of the person earning less than the personal tax allowance and receiving tax credits. Indeed, on average the losses arising from the Autumn Statement due to cuts to benefits and tax credits outweigh the gains from the increased allowance across the entire bottom half of the income distribution (though bear in mind that hidden within these averages will be many working households who do gain overall: most obviously dual earning households without children).

As for the Universal Credit, it is in the unfortunate position of being over-hyped, under-planned and now eroded by cuts – all prior to implementation. Conceived out of the laudable desire to ensure that the low paid can keep more of their own money, it is actually going to result in increased numbers facing higher effective tax rates. Moreover, the Coalition’s two flagship ‘striver’ policies – personal tax allowance and universal credit - are set to collide in something of a Whitehall car-crash. Those receiving universal credit will lose two thirds of any gains arising from future increases in the personal allowance – gains that other, higher earning, tax payers will receive. As one policy gives, the other simultaneously takes.

The extent to which any of this really impacts on the politics of welfare cuts over the next year is, of course, another matter. The deadening language in which most of the debate is conducted - earnings disregards, uprating systems, and marginal deduction rates – is more likely to result in glazed eyes than raised voices. More visible, and combustible, for the Coalition is likely to be the impending cut to council tax benefit (again aimed at both the working poor and the out of work) which will show up in spring’s council tax bills.

Running down those on state support, whether in or out of work, and implying that they are somehow undeserving is nasty politics. And making out that cutting working-age welfare won’t hurt those in work is so divorced from reality that there was always going to be backlash. None of which is to say that Osborne’s gamble won’t pay off. It’s still all to play for. Either way, the heavy handed manner in which this political trap was set doesn’t reflect well. Over the longer term Chancellors fare best when they leave the political tricksiness to others.

Passengers travel on a London bus. Photo: Getty

Gavin Kelly is a former adviser to Downing Street and the Treasury. He tweets @GavinJKelly1.

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25 times people used Brexit to attack Muslims since the EU referendum

Some voters appear more interested in expelling Muslims than EU red tape.

In theory, voting for Brexit because you were worried about immigration has nothing to do with Islamophobia. It’s about migrant workers from Eastern Europe undercutting wages. Or worries about border controls. Or the housing crisis. 

The reports collected by an anti-Muslim attack monitor tell a different story. 

Every week, the researchers at Tell Mama receive roughly 40-50 reports of Islamophobic incidences.

But after the EU referendum, they recorded 30 such incidents in three days alone. And many were directly related to Brexit. 

Founder Fiyaz Mughal said there had been a cluster of hate crimes since the vote:

“The Brexit vote seems to have given courage to some with deeply prejudicial and bigoted views that they can air them and target them at predominantly Muslim women and visibly different settled communities.”

Politicians have appeared concerned. On Monday, as MPs grappled with the aftermath of the referendum, the Prime Minister David Cameron stated “loud and clear” that: “Just because we are leaving the European Union, it will not make us a less tolerant, less diverse nation.”

But condemning single racist incidents is easier than taking a political position that appeases the majority and protects the minority at the same time. 

As the incidents recorded make clear, the aggressors made direct links between their vote and the racial abuse they were now publicly shouting.

The way they told it, they had voted for Muslims to “leave”. 
 
Chair of Tell Mama and former Labour Justice and Communities Minister, Shahid Malik, said:

“With the backdrop of the Brexit vote and the spike in racist incidents that seems to be emerging, the government should be under no illusions, things could quickly become
extremely unpleasant for Britain’s minorities.

“So today more than ever, we need our government, our political parties and of course our media to act with the utmost responsibility and help steer us towards a post-Brexit Britain where xenophobia and hatred are utterly rejected.”

Here are the 25 events that were recorded between 24 and 27 June that directly related to Brexit. Please be aware that some of the language is offensive:

  1. A Welsh Muslim councillor was told to pack her bags and leave.
  2. A man in a petrol station shouted: "You're an Arabic c**t, you're a terrorist" at an Arab driver and stated he “voted them out”. 
  3. A Barnsley man was told to leave and that the aggressor’s parents had voted for people like him to be kicked out.
  4. A woman witnessed a man making victory signs at families at a school where a majority of students are Muslim.
  5. A man shouted, “you f**king Muslim, f**king EU out,” to a woman in Kingston, London. 
  6. An Indian man was called “p**i c**t in a suit” and told to “leave”.
  7. Men circled a Muslim woman in Birmingham and shouted: “Get out - we voted Leave.”
  8. A British Asian mother and her two children were told: "Today is the day we get rid of the likes of you!" by a man who then spat at her. 
  9. A man tweeted that his 13-year-old brother received chants of “bye, bye, you’re going home”.
  10. A van driver chanted “out, out, out”, at a Muslim woman in Broxley, Luton
  11. Muslims in Nottingham were abused in the street with chants of: “Leave Europe. Kick out the Muslims.”
  12. A Muslim woman at King’s Cross, London, had “BREXIT” yelled in her face.
  13. A man in London called a South Asian woman “foreigner” and commented about UKIP.
  14. A man shouted “p**i” and “leave now” at individuals in a London street.
  15. A taxi driver in the West Midlands told a woman his reason for voting Leave was to “get rid of people like you”.
  16. An Indian cyclist was verbally abused and told to “leave now”. 
  17. A man on a bike swore at a Muslim family and muttered something about voting.
  18. In Newport, a Muslim family who had not experienced any trouble before had their front door kicked in.
  19. A South Asian woman in Manchester was told to “speak clearly” and then told “Brexit”. 
  20. A Sikh doctor was told by a patient: “Shouldn’t you be on a plane back to Pakistan? We voted you out.”
  21. An abusive tweet read: “Thousands of raped little White girls by Muslims mean nothing to Z….#Brexit”.
  22. A group of men abused a South Asian man by calling him a “p**i c**t” and telling him to go home after Brexit.
  23. A man shouted at a taxi driver in Derby: "Brexit, you p**i.”
  24. Two men shouted at a Muslim woman walking towards a mosque “muzzies out” and “we voted for you being out.”
  25. A journalist was called a “p**i” in racial abuse apparently linked to Brexit.