Autumn Statement: The End of the World As We Know IT . (That's if you're on benefits)

 Sunday Herald 9/12/12

   According to the Mayan calendar, the world will end on the 21^st of December, but reading the commentary on the Chancellor's autumn financial statement last week, you could be forgiven for thinking that apocalypse had come early this year. George Osborne's admission that his austerity policies will last at least until 2018 has led to much anguish and soul-searching as the Great Recession, as it has been called, slides into a Great Depression.

It's bad. No point denying it. Britain's slump has already lasted longer than in the 1930s,though the impact has been disguised by falling unemployment figures. However, this is largely because millions of people are now working part time in dead end jobs with no security and no future. The problem of public and private debt remains as serious as ever. British households owe more than annual GDP and government borrowing has actually been increasing – though this was disguised by Treasury jiggery pokery in the autumn statement, adding one-offs like the sale of 4G mobile phone licences. The Bank of England has been printing money like there's no tomorrow and British exports have been falling despite the low pound.

All we hear is doom and gloom, as Sir Mick Jagger puts it (though at £400 a ticket he's never had it so good). Some are saying that this is a structural change in post-industrial economies and that we can no longer rely on growth naturally returning after recessions; that we are turning Japanese and face a lost decade or two. But we should beware economic defeatism, however seductive. Doing nothing is not an option, and the government's refusal to act is not entirely because it has run out of things to do. There are other agendas at work here – like cutting welfare and the public sector. The Tories don't want to let a good crisis go to waste. 

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.