Sunday, 14 June 2015


In June 2010 the Coalition government announced its intentions for the following five years in their first emergency budget. Against a hastily sketched backdrop featuring the fantasy economics of a 'budget deficit' for an institution that can create its own money, it was the cuts to welfare that, quite deliberately, were given centre stage. Nearly all the £17 billion a year cuts to working age benefits that have been implemented to date were announced in that one budget, or in the spending review a few months later.

This frontal assault on welfare was, it is important to register, an outstanding political success for the Tories. They won the debate. Their principal, if entirely nominal, opponents on the Labour front bench were left making goldfish gawps, then flopping around trying to move in the same direction - as they still are. The irregulars of the (not very) hard left were bemused, since welfare fell outside their stylised and outdated account of what class struggle was supposed to look like. The terms of public debate and understanding - already debased by New Labour - were shifted decisively to the right, to open hatred of the poor. The controlling mind behind the attack - the sadistic thug Osborne not the ineffectual Duncan Smith - learned the value of striking swiftly and early.

Since then the class struggle - which is what we are talking about here - has seen a few victories on our side, like the dispatch of ATOS, but the political impetus has stayed with the Tories. They have cemented their alliance of the relatively affluent - people in stable employment, home owners, many pensioners - in opposition to the threatening hordes of foreigners, disabled people and the dispossessed.

So, on the 8th July, Osborne is going to try the same trick again. His budget will have as its centrepiece the pre-announced but unspecified, additional £12 billion in welfare cuts. The austerity narrative may be falling apart, the figures may be utterly arbitrary, the inevitable effect a further shift of resources to the rich; the key aim however will be to claim more political ground for reaction by creating a new popular consensus. They want not just acquiescence but class hatred and daytime TV shows. They want to be sure of silencing their victims with self loathing.

The main features of Osborne's package of welfare cuts will be determined by these political imperatives. Pensioner benefits will be as far as possible untouched - enough in itself to show that saving money is not the real objective here. Child Benefit is popular and universal so Cameron has reserved that as well. Many of the 2010 cuts did not take effect until 2013; they were still a little nervous of any opposition. This time the entire package has to be effective within two years. The cuts will be relatively larger than before - about one eighth of working age expenditure on my estimate. And they need by their very operation and targeting to establish the worthlessness of their victims

Divination is a hopeless pastime but if we on the left are to meet the renewed political assault on welfare more effectively this time around some haruspicy - inspection of George Osborne's coke spiced entrails - may help us prepare our defensive lines. There are other technical analyses of the problem - I rely mainly on that from the IFS - but the main intention here is to sketch an outline of the political arguments most likely to be used by our enemies in the hope that we will not be completely silenced on July 8th.

So here are some of the horrors we can expect, roughly in descending order of probability:
  • Housing Benefit. Big cuts in the £25 billion HB budget are a certainty, all the larger because the pensioner portion will likely be exempted. There are various means they could adopt to do this but the simplest, easiest and most probable - because most politically effective - is to restrict maximum HB to 80 - 90 percent of eligible rent. "Co-payment" is the key phrase  - everyone has to pay a portion of their rent, regardless of income. No-one gets a free ride. Claimants have to be incentivised to find cheaper accommodation. Working HB claimants will be hit as much as non-working, private tenants who already pay a shortfall in their rent as much as social sector tenants; but the emphasis will be on putting a stop to 'free' accommodation. This brings rent into line with council tax, in most areas, and lines up with the emphasis on enforcing behavioural change in Universal Credit, the benefit of choice for neo-liberals. The effects will include a huge increase in the number of evictions, the complete conversion of the social housing sector to a neo-liberal enforcement agency, and a further explosion in long term foodbank usage as the available cash income of poor people has to be devoted to rent, fuel, council tax and other state or quasi-state charges. The political response needs to centre on an absolute right to secure, decent housing, regardless of ability to pay.
  • taxation of DLA and PIP. But probably not Attendance Allowance (for people aged 65+) and DLA for pensioners. Why should better off disabled people not pay some tax? - except that 'better off' here just means living slightly above subsistence levels. There are very few rich disabled people, for some reason.
  • abolition of contributory ESA and JSA. The Tories will take the chance to eliminate the last two remnants of the Beveridge model of welfare, and its contributory principle, at the same time that they are replacing state Retirement Pension with a flat rate version with, effectively, a 35 year residence condition. Contributory JSA is so restricted in scope that it is virtually useless and its abolition will arouse little opposition. Contributory ESA has already been restricted to 12 months payment, except for people in the support group. But there are a lot more people being put into the support group than Duncan Smith expected or intended, because of opposition to ATOS and the work capability assessment, internal and external; and more radical surgery is needed. Plus it simplifies the operation of Universal Credit
  • restriction of Child Tax Credit to two children. This, I am predicting, will be the outcome of the debate on cutting back the Tax Credit system - perhaps not the only one because there are a number of other parameters they could adjust, but the biggest. It is a solution that lends itself to reactionary ends. It can be used to promote, and in turn be reinforced by, racist and sexist attitudes towards people with large families. The continued payment of Child Benefit for third and subsequent children can be used to obfuscate the issue, ignoring the difference between £53.31 per week CTC and £13.70 CHB. The alternative is a generalised cut in Tax Credits which is possible but awkward politically - difficult to dress up as anything but an attack on the working poor. Even the Labour Party could manage some degree of opposition to this. But present Labour with this poisonous mix of racism and sexism and they won't know how to react at all. Either way, expect to see a lot more hungry and homeless children, and a lot more fragmented families and children in care. And remember the Tories have long promoted adoption as a solution for the excess poor.
  • abolition, complete or effective, of the work related activity component in ESA. To a large extent this is happening anyway. People in the work related activity group, supposedly accepted as having limited capability for work, are increasingly being placed in Work Programme schemes and sanctioned, like regular unemployed folk. Many are struggling to get that far because of delays in assessment and never get out of the "assessment phase". Those who do are all trying to get into the support group which has more money and no WP placements. And again abolition simplifies Universal Credit.
  • abolition of Carers Allowance. A possibility if they are desperate enough to reach their £12 billion but I would guess one they would prefer to avoid. It was mentioned February's leaked civil service briefing on possible cuts
  • abolition of Industrial Injuries Benefit and transfer to employers. Again a possibility but it would require major legislative surgery and would not be ready in two years. Plus employers would hate it
  • restrictions on SSP and SMP. For instance restricting SSP to three months, SMP to six months. A distinct possibility. Employers would like this and it fits well with an increasingly casualised workforce.
  • a generalised cut in benefit rates. If they can't get to £12 billion any other way they could always go back to 1931 try a straight cash cut. It split the Labour Party asunder then and guaranteed a National government for a few elections
But that's enough speculation - the inventive fecundity of neo-liberal dungeon masters like Osborne necessarily outruns the imaginative powers of his victims. What matters is that he meets a response in the days and weeks after July 8th and not a stunned silence.