Chancellor plans further cuts while handful prosper

By Savi Hensman
January 7, 2014

UK chancellor George Osborne is using divide-and-rule tactics to try to push through further cuts of around £25 billion over two years by 2017-18. This includes £12 billion in social security reductions. The poorest will be worst affected but, if he gets his way, many others currently struggling to cope with sharply rising prices and rents will be hit.

However corporation tax for companies making over £1.5 million profit a year, already reduced from 24 per cent to 23 per cent in April 2013, will go down still further in April 2014 to 21 per cent. This will mean more money in dividends for many of the super-rich. Those who will benefit include major investors in a finance sector which played a key part in the wrecking the economy.

“2014 is the year of hard truths,” said the chancellor in a speech. There will be hardship, certainly, for ordinary people. But whether the picture he is painting is anything like the truth is questionable.

At present the social security budget is higher than it need be largely because of the low wages many receive and lack of affordable housing, as well as job shortages in many areas of work, made worse by public sector cuts. Even full-time employees can find they need ‘welfare’ to be able to meet basic needs such as food, heating and shelter.

He intends to “look at housing benefit for the under-25s. There are plenty of people listening to this programme who can’t afford to move out of their home, but there are people on benefits who can get housing benefit under the age of 25,” he told BBC Radio 4’s Today. Also “There are people on incomes of £60,000 or £70,000 living in council homes. I would look at that issue.”

However housing benefit is available to those on low incomes whether or not they are in paid work. Stirring up resentment among sections of the public against their younger neighbours who are even worse off by playing on stereotypes will further divide communities without benefiting the “hardworking people” whom the chancellor supposedly wants to help.

Indeed hardworking young people will be among those who end up on the streets, or back in overcrowded parental homes. Exactly what the government plans to do to young parents in low-paid jobs or with very high rents, and most importantly their children, is not yet clear. But it is obvious that suffering will result. Not every youngster is, like Osborne, an heir to a baronetcy and a wallpaper fortune.

As for council housing, while the government has tried to make out that it is subsidised, in reality tenants tend to pay more than their housing actually costs, though rents do not reach the absurd levels of the private rented sector. In April 2013, the Local Government Chronicle revealed that cash-strapped local authorities were using rent to pay for buildings and services such as libraries, community centres and street lighting, though tenants were paying council tax too.

Housing associations also make a sizeable surplus. When social housing tenants require housing benefit, the cost to the taxpayer is less than when they are in private rented accommodation. And if they are in reasonably paid jobs, they are generally putting in more than they receive.

For instance, if a firefighter were married to a nurse and they lived in a council flat, they would be paying out of their hard-earned income to meet their housing costs and maybe benefit the community rather than enriching a private landlord. But from the government’s view that would be a problem – a money-making opportunity for the ruling class lost.

So the chancellor’s plans might result in the couple feeling pressured, through fear of losing their home, into buying it, at a ‘right to buy’ discount of up to £75,000 (£100,000 in London). If they kept up the mortgage payment, the flat would be theirs. If they failed because one of them was made redundant, a property company might get it. In 2013, the GMB union found that nearly 40 per cent of ‘right to buy’ homes in one London borough were now owned by private landlords who could make huge profits at public expense.

Some people may still be taken in by ministers’ rhetoric, but others will be aware that the chancellor’s plans are unjust, and – like various other government measures – likely to do more harm than good to the economy.

* Background and further links: Cuts of £25bn will deliberately target the poorest, critics say -


© Savitri Hensman is a regular Christian commentator on politics, economics, society, welfare and religion. She is an Ekklesia associate and works in the equality and care sector.

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