Looking beneath and beyond Mr Osborne's rhetoric

By Simon Barrow
June 22, 2010

Amid the welter of statistics and analysis which is pouring forth around Chancellor George Osborne's emergency budget, those who care for social justice should not let their eyes stray from the sleights of hand that rest at its core.

First, as political economist Ann Pettifor has pointed out on Ekklesia (http://www.ekklesia.co.uk/content/digging-ourselves-further-recession), and on her regular website Debtonation (http://www.debtonation.org/), the 'logic' of enforced austerity and drastic public sector cuts is derived from applying microeconomic logic to a differently structured macroeconomic situation of global as well as national proportions - and is in danger of institutionalising recession in the guise of debt management.

Second, this is a political budget. It is about 'rolling back the frontiers of the state' (in a way that Thatcherite former chancellor Norman Lamont has been licking his lips over) - not instituting tax justice, levying on speculative finance for readjustment, protecting the vulnerable, redistributing wealth, instituting a 'green new deal', shifting towards a low carbon future, detoxifying failed market mechanisms, regulating the banks, and democratising and improving social provision.

Lib Dem leader Nick Clegg knows this all too well, and business secretary Vince Cable has been powerless to prevent the most serious damage we are about to witness - which is why the Deputy Prime Minister has reined back his 'progressive cuts' rhetoric and was yesterday (21 June 2010) warning colleagues and allies to expect the worst, in the face of likely rebellion in parliament and beyond.

Third, although there will be more claims that the vulnerable are being shielded as the axe is wielded, the way the budget is being presented will make it difficult to reach a meaningful short-term assessment of its true impact in this regard. The taking of 800,000 low income earners out of the tax bracket and increases in taxes elsewhere will be used to claim that "the pain is being shared", of course. But if a thoroughly regressive VAT hike is used as part of the armoury of austerity this will in fact push the balance in a very different direction.

The most important factor, however, is that it is the totals for public spending cuts in different areas that will be announced by Mr Osborne, not their roll-out effects and specific targets over the coming months. This will have the effect of disguising, in the immediate term, just how much of the burden of the readjustment of public finances and investment is being pushed on those at the lower rather than higher end of the (growing) rich-poor divide in the UK.

It will be important to challenge the Coalition Government on the structure, presuppositions and goals of its economic and fiscal policies from herein, not just the details. And it is bodies such as the New Economics Foundation (http://www.neweconomics.org/) to which we will need to look for a true estimate of the costs of current assumptions - shared, let it be said, by many of the lions of New Labour, too - and for a set of measures and trajectories towards a different, zero-carbon future.

Perhaps we need a 'civil society shadow cabinet', not just a parliamentary game of box and cox after the dust around Red Box settles.

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