The Chancellor’s latest Autumn Statement was littered as ever with grandiose promises and a declaration that the Conservatives are the builders of a ‘better future’.
But are they?
The Chancellor’s latest Autumn Statement was littered as ever with grandiose promises and a declaration that the Conservatives are the builders of a ‘better future’.
But are they?
There are a number of areas in the spending review that demonstrate how far the rhetoric is from the reality : welfare, housing and local government. As always with the slippery Mr Osborne the news looks good at first glance. Until you look more closely.
The U-turn on tax credit cuts is a classic example of this. The Chancellor has been under attack from all sides on this issue, and not surprisingly he has bowed to political and public pressure to reverse the policy.
Ekklesia was among the first to point out what a bad idea cutting tax credits was, so we welcome this change of heart. And we also welcome the resurgence of real opposition that helped ensure the Chancellor’s humiliating climbdown. However, as usual with George Osborne there’s a but, and it’s a big one.
Tax credits cuts may be avoided for most people but they will still be in place for people claiming universal credit. Nor is the Chancellor abandoning the limit of child tax credits to two children per family. Furthermore, in order to pay for his U-turn, housing benefit in social housing will be capped at private sector rates. So, whilst some working people on low incomes have escaped the cut, others will not. And as usual, it is poorer people who will lose out, though possibly a slightly different set of poorer people.
There’s a similar story with housing. George Osborne’s declaration that he will build 400,000 more homes sounds wonderful. However, his past track record is not encouraging. According to the Town and Country Planning Association we need 240,000 homes built a year, but in 2014/5 the government only managed to only start building 137,500 of these.
Furthermore, the house building programme is solely for houses to buy or shared ownership schemes. The average cost of a first home is £216,000, whilst the average wage is £26,500 , making house buying unaffordable for many. There is no recognition of the need to build social housing or cap the cost of private rents which are running out of control.
Another idea is to give loans of 40 per cent of the home worth to first time buyers in London. As Generation Rent noted on twitter, this will further inflate the housing market, and have a knock on effect of creating unaffordable rents.
The one positive idea is to increase stamp duty for people on buy to let and second homes, but even that doesn’t deal with overseas investors buying up large scale properties. As a results, Osborne’s plans for housing will do nothing to solve the housing problems of ordinary people.
The final area that needs looking at is local government. As I have pointed out before the last few years have been devastating for local councils. And here, the Chancellor seemed to be recognising he’d created some problems that needed rectifying.
So, he has proposed a two per cent ringfenced council tax social care precept which will raise £2 billion for social care. That’s very welcome indeed, until you reflect that in deprived parts of the country, which have already been hard hit by cuts, council tax receipts will not be able to generate sufficient income to meet the need. And the same goes for business tax. At present councils can keep 50 per cent of the £26 billion raised; now the Chancellor is letting them keep the whole amount, which is again likely to favour richer areas. And there’s another but…
And again the but is a massive one. If councils can raise these taxes (and it’s a big if), they will raise £15 billion. Which is all very well, yet at the same time there are big cuts in the central grant from the government, which means councils will £18 billion resulting in a decrease of £4 billion overall.
We already know that five years of austerity has been devastating for poor, sick and disabled people. The pledges in the Autumn Statement will not do anything to improve their lives, and the cuts to local government are likely to make things even worse. As Lord Porter, chair of the Conservative Local Government Association noted:
“Even if councils stopped filling in potholes, maintaining parks, closed all children’s centres, libraries, museums, leisure centres and turned off every street light, they will not have saved enough money to plug the financial black hole they face by 2020.”
Building a better future? I don’t think so Mr Osborne.
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© Virginia Moffatt is Chief Operating Officer of Ekklesia