George's Christmas message to the poor: abandon hope.

From Herald 5/12/12

  

   In 1931, when the Labour government of Ramsay MacDonald cut unemployment benefit in an economic depression, the Labour party split and was almost destroyed as a political force for the next decade. But the cuts in welfare made in the Chancellor, George Osborne's autumn statement have not only failed to cause a split the Liberal-Tory coalition, they've won the support of the Labour opposition. In his bumbling Commons response yesterday, the one thing that the shadow chancellor, Ed Balls had no difficulty saying clearly was that “Labour supports the cap on benefits”.

Except, of course that it isn't a cap, but a cut in real terms, since benefits like Job Seekers Allowance will rise at only 1% per year while inflation has been running at 2.5-5%. This represents a significant slice of a very meagre income. The current maximum rate for Job Seekers Allowance is £71 per week. I had to double-check that figure because at first I didn't believe anyone could possibly be live on it.   Of course, those receiving JSA will also be entitled to housing benefit and council tax relief, but that still leaves them with very little for the bare necessities of food, clothing, heat. Living on that kind of level for any length of time would not just be soul-destroying, for many of us it would be life-destroying.

The Chancellor justified the cut, which will take nearly £4bn out of the pockets of welfare claimants over three years, on the grounds that he was taking an equivalent amount from the rich by capping tax free pension pots, ending Swiss tax havens and altering changes to tax thresholds. But this is hardly comparing like with like. Losing tax relief on the top quarter million of a £1.5 million pound pension fund is hardly going to hit as hard as losing £5 out of a £71 allowance, and that is what the poor sod on JSA is looking at over the next three years. And since there is all party support for this squeeze, there isn't much hope of a reversal.

One of the remarkable achievements of this Coalition has been to fundamentally change the terms of the debate over welfare during this recession. There seems to very little public sympathy now for those on benefits. I hesitated before writing this column about welfare because I'm aware that, for many people, the issue is simply a turn off: heard it all before, country's run out of money, we've all had to tighten our belts. Labour focusses relentlessly on “hard working” middle income families – who, it is claimed, lost £1,000 a year through yesterday's jiggling with tax thresholds and entitlements. The Liberal Democrats used to be the party of conscience, but they are now signed up to the austerity programme and seem to have lost their voice.

Does Ed have the balls?

 Politicians in trouble traditionally say that they are resigning to spend more time with their families.  Alan Johnson’s resignation last week over ‘personal issues’ was unusual in that it seemed for once to be genuine.  That’s not to say that there weren’t political reasons also for his departure.  Had the shadow chancellor been performing supremely well in his post, one suspects he might have persuaded himself that his country and his party needed him, and that he had a serious job to do whatever his wife was up to. 

   But either way, it looks like another lucky break for Ed Miliband, following his victory in the Oldham East and Saddleworth by-election, and the resignation of David Cameron’s communications director, Andy Coulson, over the phone-hacking scandal.  Johnson’s departure gets Miliband out of the hole he had dug for himself by failing to appoint the right man for the treasury job in the first place. That man was, of course, Gordon Brown’s protégé, Ed Balls, the best economic thinker in the shadow cabinet by far.   Miliband minor was left looking faintly ridiculous as Alan Johnson stumbled from gaffe to gaffe, celebrating his own ignorance of economics and stumbling over the rate of employers national insurance.  It was obvious that Miliband had made the wrong call.

   Sending Balls off to the home office was not only a waste of his talents, it showed the new Labour leader to be weak.   Surely, the only reason for sidelining Balls was to prevent him dominating the cabinet on the economy.   Now Miliband has had to accept Ed Balls as his shadow chancellor anyway, and the question everyone’s asking is: has Miliband minor got the balls to handle him?   He has a very dangerous rival now, at his side - arguably a more dangerous rival than Gordon Brown was to Tony Blair.  There may have been no Granita pact, but Balls is now immovable and owes his leader nothing.  If Ed Miliband fails to raise his game as leader, and so far he has been pretty unimpressive, then the ‘other Ed’ will be watching for the main chance.