Cuts of £25bn will deliberately target the poorest, critics say

By staff writers
7 Jan 2014

The UK Chancellor is under fire from all sides following confirmation that the next round of spending cuts are targeted particularly at the most vulnerable.

George Osborne, who is a multi-millionaire, confirmed on 6 January 2014 that half of the £25 billion reductions in government he is planning after the next General Election will come from welfare, and all of it from the public sector.

His statement, which is in line with projections in the Autumn Spending Review, is thin on detail.

Mr Osborne suggested making welfare savings by cutting housing benefit for under-25s irrespective of their circumstances, and by restricting council housing for those families with an income of over £65,000 a year, without regard to the number of children or needs in the household.

But the Institute for Fiscal Studies, a conservatively inclined think tank which has nevertheless been scrutinising coalition economic policies carefully, said that the savings identified by Mr Osborne would not amount to more than around £2-3 billion.

The Department for Work and Pensions’ most recent benefit expenditure tables show how much the government is currently forecast to spend on different elements of social security. Analysis of these expenditure tables by the TUC shows that even if the Chancellor abolished most of the safety net he would still fail to meet the £12 billion of annual welfare cuts promised by 2018/19.

The likelihood, therefore, is that it is the sick, disabled and jobless, as well as the working poor, vulnerable and young, who will be made to suffer most from the removal of public support.

The Chancellor was unapologetic about this, saying that the size of both government and welfare must be reduced "permanently".

In June 2013 a large coalition of ten churches and two major charities from all four nations of the UK wrote to UK Prime Minister David Cameron, asking that stigmatising and untrue statements made by Government ministers about welfare and benefits – highlighted in a churches' report – be corrected. They have not received an adequate reply, and church leaders, along with advocacy group Church Action on Poverty, the Christian think tank Ekklesia and other faith NGOs have strongly criticised the targeting of the poorest in recent policies and cuts.

As well as expected criticism from opposition parties, Mr Osborne is also facing a degree of unrest among some Conservatives, who are reported in the Times newspaper as "rounding" on the Chancellor.

Even allies of Work and Pension Secretary Iain Duncan Smith - who has been seen as a cheerleader for the assault on benefits – are quoted as saying that "you can't go on hacking at the same people" and that the pension-welfare funding allocation is "unbalanced".

Critics say that the Conservatives' decision to ring-fence pensions while attacking welfare is an attempt, alongside the scapegoating of migrants, to divide young and old, the abled and disabled, the sick and well, and the working and non-working poor against each other, in order to quell criticism of austerity economics and to detract attention from beneficiaries of the government's one-sided stripping away of public provision.

They point out, for example, that the Department of Work and Pensions (DWP) has 3,250 investigating benefit fraud of £1.2 billion, while HMRC has just 300 staff investigating tax evasion of at least £120 billion – with the government refusing expenditure on further staff to plug the tax gap.

Meanwhile, Liberal Democrat leader and Deputy Prime Minister Nick Clegg, whose party has voted for £20 billion worth of welfare cuts so far, said of Mr Osborne's speech that targeting the working-age poor was "extreme... unrealistic and unfair".

At a press conference, he continued: "You've got a Conservative party now who are driven, it seems to me, by two very clear ideological impulses. One is to remorselessly pare back the state – for ideological reasons just cut back the state.

"Secondly – and I think they are making a monumental mistake in doing so – they say the only people in society, the only section in society, which will bear the burden of further fiscal consolidation are the working-age poor," he said.

Both Labour and the Liberal Democrats say, in slightly different ways, that they would cut spending, but "more fairly".

Labour say they will match the government's overall spending plans in 2015-6. Shadow chancellor Ed Balls said: "George Osborne is desperate to stop talking about the cost-of-living crisis on his watch. But that won't stop working people from doing so as they are on average £1,600 a year worse off under the Tories and prices are still rising faster than wages.

"Nor will the chancellor admit the reason why he is being forced to make more cuts is because his failure on growth and living standards has led to his failure to balance the books by 2015."

The Greens in England and Wales and in Scotland reject austerity policies and argue for a 'New Deal' approach involving major investment in the sustainable and renewable economy to boost jobs, support welfare and reduce debt.

Trades Union Congress (TUC) General Secretary Frances O’Grady said: “Public spending cuts of the magnitude proposed by George Osborne would cause real pain to hard-working people. Such cuts could not be achieved without getting rid of the vital safety net that people need if they have a baby, lose their job, or have an accident at work. Three-quarters of the welfare cuts already announced have fallen on working people, and further cuts will simply prolong the living standards crisis.”

Scottish National Party (SNP) Treasury spokesperson Stewart Hosie MP declared: "No matter how hard they try to hide it, it is becoming increasingly clear what a No vote means for Scotland. More welfare cuts, more spending cuts and more years of economic mismanagement. Osborne is claiming the economy is recovering well, yet his cuts will continue to hit the most vulnerable in our society.

"And we know Osborne has already threatened to cut the money Scotland receives from Westminster in the Barnett Formula to the tune of £4 billion a year.

“Scotland needs to escape from the financial straight-jacket imposed by Westminster, which is why we need the full financial freedom of independence – a Scottish parliament and government with real economic powers so that we can make the right decisions for Scotland."

* Commentary from Ekklesia associate Savitri Hensman: http://www.ekklesia.co.uk/node/19862

* Reporting and analysis of cuts from Ekklesia: http://www.ekklesia.co.uk/cuts

* Government's Autumn Statement: http://www.ekklesia.co.uk/autumnstatement

* Truth and lies about poverty, benefits and welfare (JPIT): http://www.ekklesia.co.uk/node/18086

* In praise of the Joint Public Issues Team on truth and lies about poverty: http://www.ekklesia.co.uk/node/18277

* TUC expenditure tables analysis: http://www.tuc.org.uk/economic-issues/chancellor%E2%80%99s-welfare-cuts-...

* Analysis by the Institute for Fiscal Studies on the scale of public spending cuts implied by the Chancellor’s current fiscal plans (*.PDF Adobe Acrobat document): http://www.ifs.org.uk/budgets/as2013/openingremarks_AS13.pdf

[Ekk/3]

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