Soundbite Labour still signed up for austerity

by John McAllion The reception given to the Coalition’s pre-election budget was universally hostile among what remains of left of centre newspapers in Britain. An Observer editorial described it as “a manifesto for a more divided and less humane Britain”. One leading Guardian columnist called for Labour “outrage” against George Osborne, a Tory politician her employers dismissed as the “chancer Chancellor.”

In response, Labour’s Shadow Chancellor Ed Balls commented that he wouldn’t “change anything very much” in Osborne’s tax and spending proposals except for a few minor changes in the levels of capital spending and tax breaks on offer. Even the re-invented Jim Murphy struggled to sell such a comment as Labour “outrage” against the wicked Tories.

Yet that comment reveals more about the current state of the Labour Party than does the avalanche of press releases and stunts being rolled out under Murphy’s leadership of his party’s Scottish branch.

Despite Tory rhetoric about helping hard working families, savers and first-time house buyers, this was a budget that did nothing for the poorest, little for low earners and lots for better off families on above-average incomes.

The raising of tax free personal allowances to £11,000 over the next two years was hailed in the Tory press as saving “workers” £900 a year on average. In reality, three quarters of the £14billion annual cost of this tax cut will go to better off taxpayers on above average incomes.

The country’s five-million poorest paid workers who earn less than the new threshold will get nothing at all. The biggest winners will be the richest 20 per cent of taxpayers. Labour will not change this tax cut for the rich.

The much hailed “help to buy ISA” that offers a 25 per cent Treasury gift to first time buyers saving for a house deposit through an ISA account will cost another £2billion over the next five years.

Experts predict that this will benefit the wealthier to a greater extent and do nothing for the vast majority of young people living in areas of housing shortage and already crippled with consumer debt.

Outstanding personal debt in Britain now stands at a staggering £1.432trillion. The STUC has denounced these ISAs as “bad” policy with major distributional impacts. Labour isn’t listening.

The Coalition obsession with deficit reduction and reducing the national debt has carried with it enormous social costs for the weakest and most vulnerable among us. Over the lifetime of the next parliament the Tory Chancellor plans to eliminate the present £90billion deficit and to move into surplus in 2017/18.

In addition to cuts already announced, he plans an additional £30billion of public spending cuts to achieve this goal. These cuts will fall overwhelmingly on in work welfare benefits and on public services in the poorest parts of the country.

Not only has Labour committed to matching the Tory cuts planned for the first year of the next Parliament, but in a recent Commons vote they also joined the Tories and the Lib Dems in the lobbies to support a budget responsibility charter that endorsed the additional £30billion of cuts.

Only five Labour MPs voted against in a 515 to 18 majority for the cuts. Ed Balls tried to excuse his party’s betrayal by arguing that Labour would only implement “sensible” cuts and by claiming that a vote against austerity would allow the Tories to characterise Labour as “irresponsible” on deficit reduction.

Balls has repeatedly emphasised that, like the Tories, a Labour Government would cut the deficit every year, get the current budget into surplus and reduce the national debt “as soon as possible in the next Parliament”. These statements commit the next Labour Government to continuing with even more austerity than was inflicted by the Coalition over the past five years.

The Labour leadership is running scared of being portrayed by the Coalition parties as deficit deniers and simply will not contemplate fighting the forthcoming election on an anti-austerity platform.

No one should therefore be surprised by labour’s continuing rightwards drift as the general election looms. Labour’s outright condemnation of the VAT rise to 20 per cent in George Osborne’s first budget in 2010 has now been replaced by a pledge not to raise it any further in the next parliament.

Their claim that a cost of living crisis had been caused by a 20 per cent VAT rate has been conveniently forgotten. That “crisis” rate will stay under a Labour Government.

On taking office Rachel Reeves, rising star and Shadow Minister for Work and Pensions, infamously warned that Labour would be tougher than the Tories in cutting the benefits bill.

She has now followed this up by insisting that Labour is neither the party of the welfare state nor of those out of work and relying on benefits.

Most benefit claimants, of course, are already in work. Those workers will now be targeted by the £30billion cuts she and her party have voted for.

The big three Westminster parties are all committed to deficit reduction and to austerity. A vote for any of these parties is a vote against the interests of the vast majority of working class people.