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18 November 2017updated 19 Nov 2017 9:08am

How tax cuts for the rich have cost the country dear

George Osborne's reduction in the top rate of tax from 50p to 45p has left an £8.6bn black hole. 

By Dave Prentis

When it comes to austerity, the Conservatives have often argued that “there is no alternative”. When he was Chancellor, George Osborne inflicted painful spending cuts on our country, our communities and our public services.

Now, of course, Osborne has sought to reinvent himself as a small ‘l’ liberal and a newspaper editor. Yet the choices he made – and they were choices – still have a lasting impact. The prime advocate of the “no alternative” doctrine may have left Parliament, but the effect of his cuts will be felt for generations.

Yet the brutal approach to public spending of the Conservative years needn’t have happened, and it needn’t continue. As many of us have been saying in the decade since the global financial crisis, there is an alternative. One that values public services and those who provide them, and that places the biggest burden on the shoulders of those who can bear it most.

One of the best examples of this is on taxation. While hospital porters, school support staff and care workers have been forced to pay – in lost jobs and slashed wages – for the mistakes of the financial sector, the wealthiest in our society got a tax cut. The government claimed that reducing the top rate of income tax from 50p to 45p in 2013 wouldn’t cost the government money. In fact, analysis carried out by UNISON shows that between 2013/14 and 2017/18 the income tax cuts for those earning over a million pounds a year alone have saved the nation’s super-wealthy on average £554,000 each. Those tax cuts have also cost the British taxpayer £8.6bn over those five years.

That’s £8.6bn that could have been spent avoiding the harshest of cuts to the NHS, schools and local government. And £8.6bn that could have been spent raising wages for those dedicated public servants who work for our communities. Put another way, tax cuts for the richest 15,000 taxpayers in the country could have bought them a couple of top of the range sports cars, a big house in the country or perhaps even a helicopter. Yet at the same time, the same government has cut wages in real terms for those who teach our children, care for our loved ones and empty our bins.

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The money lost could have paid for an extra 20,000 nurses, 10,000 extra police community support officers (PCSOs), 10,000 extra police officers, and 20,000 newly qualified teachers – every year for the whole five years. Or it could have paid for 60,000 bursaries for nurses, midwives and other health professionals, 10,000 extra nurses, 10,000 extra PCSOs and 10,000 newly qualified teachers – every year for five years. Or it could have helped solved our nation’s social care crisis, by putting £1.7bn a year into social care. Instead, that money was squandered on those who need it least, including – shamefully – those who caused the financial crisis in the first place.

The income tax cut for the wealthy is one of the most emblematic budget changes of recent years, but it’s far from the only tax giveaway. The government has also slashed corporation tax while consistently failing to act on large-scale industrial levels of tax avoidance, which has once again been brought to our nation’s attention, this time by the Paradise Papers.

The truth is, we were never “all in it together”. There was an alternative that was avoided in favour of austerity, which was a political choice serving one group in society over another. Now, Chancellor Philip Hammond says the government has heard the calls for change, heeded the lessons of the recent general election, and plans to change course. The acknowledgement that another way is possible is to be welcomed, but only if the government makes the unlikely but necessary decision to walk that other road.

The age of austerity has devastated our country at a time when we need to be ready for the challenges of a future defined by automation and rapid technological advancement. Investment in public services – and most importantly of all, in those who provide them, is needed more now than ever. The way to better services comes not through more cuts but through real investment.

Governments should not be afraid to make the case for higher taxes to pay for the investment in pay, services and infrastructure our country needs. A higher rate of income tax for those who can most afford it would be a sensible and rational start.

Dave Prentis is the general secretary of UNISON

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