Simon Barrow

Osbornomics punishes those with least the most

By Simon Barrow
December 7, 2012

Predictably, Chancellor George Osborne’s Autumn statement this past week brought little pre-Christmas cheer. Even fiscal conservatives in the IMF think that Britain’s austerity path is too steep and too fast, but the government’s message remains “not a penny more and not a penny less” on belt-tightening.

The other popular budgetary mantra is “sharing the burden”. At present, points out BBC business editor Robert Peston, the “squeezed middle” who make up the largest proportion of the votes the three big Westminster parties all crave, are doing comparatively better than the top 10 per centand the bottom 20 per cent of household income holders – despite a sense of foreboding in median England fed regularly by the Daily Mail and its ilk.

In the real world most people live in (as distinct from the notional world of econometric modelling), the assertion that “those at the top and those at the bottom are being hit hardest” suggests a misleading equivalence between these groups.

The reason why it is misleading is well summarised in a famous post-war election poster showing three men standing on a ladder. The one at the bottom was chest high in rising water. The one at the top was well clear. The message was “let’s all take a step down together.” It does not take much imagination to figure out why the impact on those who are most vulnerable to calamity far outweighs the marginal sacrifice of those who are nowhere near it.

Yet a swathe of comfortable Britain finds this difficult to understand this, preferring to believe that those on low incomes or no incomes are the real burden on the rest of us, rather than those squirreling away billions in unpaid tax, bonuses and bailouts.

In the recent spending review, tax changes hit those at the top by around £1 billion. But this is a drop in an ocean of wealth. By contrast, nearly four times as much money, some £3.8 billion, was cut from the incomes of the poorest, increasing inequality and social division yet further.

The government says these are hard economic choices. Its critics say they are political ones premised on a different coalition of interests, and upon the idea that the wealthy need carrots while the un-wealthy need sticks to get them to behave.

On welfare, the government has introduced measures that will force sick and seriously ill people to do unpaid work or lose support. The sum slashed from the welfare bill is the equivalent of a £3 billion underspend the chief secretary to the treasury, Danny Alexander, has just discovered in Whitehall budgets.

Though the Chancellor has made positive concurrent moves on tackling tax dodging, the measures he has adopted so far will claw back only £2 billion of the estimated £35 billion lost this way.

Meanwhile, Starbucks has announced that, having exported large profits so that it has paid just £8.5 million UK tax on a £3 billion turnover over 14 years, it will ‘gift’ £20 million to HMRC. It is also cutting paid lunchtime and sick pay for its low-income workers.

Still, “we’re all in it together” apparently.


© Simon Barrow is co-director of Ekklesia. This article is adapted slightly from his December 2012 politics column in Third Way, the magazine of Christian comment on culture and society.

Although the views expressed in this article do not necessarily represent the views of Ekklesia, the article may reflect Ekklesia's values. If you use Ekklesia's news briefings please consider making a donation to sponsor Ekklesia's work here.