Today, what Osborne prided himself was a smart move will be launched to put Labour on the back foot by challenging it to vote against his bill cutting benefits and tax credits by 4% in real terms over the next 3 years and thus be portrayed as the scroungers’ friend. He misjudged.
Labour will rightly vote against the bill which is deeply unfair, but it has also given the party a perfect opportunity to argue the profound injustice of making the poorest sections of the population bear the overwhelming burden of cutting the deficit caused by the bankers’ recklessness whilst the rich who did cause it get off virtually scot-free. And Labour has also devised an alternative proposal to rebut any charge that it’s soft on the workshy.
This proposal is a variant on a DWP scheme which is aimed to get the long-term unemployed claiming JSA for more than 2 years back to work. Either they should accept 6 months’ intensive support from a dedicated Jobcentre Plus adviser, or they should take a place on a community action programme involving work for 30 hours a week for 6 months.
Labour is proposing that all persons over 25 who have been without a job for at least 2 years (about 130,000 persons) should be required to take up a government-provided job for 6 months or lose benefits (for 3 months after the first refusal and for 6 months after the second). The £1bn cost of subsidising these jobs would be paid for by cutting the tax relief on pension contributions from 45% to 20% for those earning over £3,000 a week. This scheme would supplement the already announced new jobs fund programme offering work to 18-24 year olds unemployed for at least a year, to be funded by a tax on bankers’ bonuses.
Labour’s scheme not only offers an effective political rebuttal to the mischievous propaganda of Osborne and IDS, but points to a much better way of resolving the deficit – by reducing benefit expenditure and providing opportunities for work. Some might think the 3-6 month suspension of benefits unduly draconian, but the scheme should allow for suitability of the work, intensive support where necessary to assist the return to work, and some training to ensure that participants are not permanently stuck in dead-end jobs.
The Tory plan however falls foul on at least two counts: two-thirds of those on tax credits are in work already, and cutting both benefits and tax credits undermines aggregate demand which the economy needs now like a hole in the head.
But the real case against Osborne is that the super-rich should be made to pay, not the poor. The poor are being hit not only bu 4% real terms benefit cuts, but also by severe cuts in housing benefit, disability cuts, council tax benefit cuts, and the VAT increase to 20%. The super-rich by contrast have been protected by Osborne from bearing any responsibility whatsoever and have even been cosseted by a 5% income tax cut – despite having made huge wealth gains since the crash in 2008-9 (£155bn for the richest thousand persons in the UK according to the Sunday Times).