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Would a Rachel Reeves budget yesterday have been much different?

ReevesAhead of yesterday’s budget, in which George Osborne laid out £12bn of welfare cuts, a continued squeeze on public sector pay, the abolition of student maintenance grants and higher tuition fees, Labour’s ‘opposition’ front benchers went out of their way to agree with Osborne’s narrative of austerity.

Still reeling from the General Election, or now simply given psephological cover for her views, Reeves said that Labour should set a date for getting national debt back to 40% of GDP, the level it was at before the 2007 financial crisis. It is currently double that amount, meaning the Shadow Work and Pensions Secretary is advocating huge cuts, and fast. Given that she is being touted as a potential Shadow Chancellor should Andy Burnham win, this should worry those of us in the party concerned with austerity and poverty. 

Reeves has also gone out of her way to back the Tories’ most egregious policy announcement yesterday, that the welfare cap will be reduced from £26,000 to £20,000 outside of London, and £23,000 inside. She told the Independent, “Labour supports a lower benefit cap to ensure our welfare system is fair, affordable and rewards hard work”.

The MP for Leeds West, who before the election said Labour should not be seen to represent people out of work, has now backed a policy which will hammer those people. Save the Children said that the original £26,000 welfare cap was going to push 345,000 children into poverty. We can only guess at what a further reduction of almost a quarter for those outside the capital will do.

George Eaton of the New Statesman has outlined the problems with the welfare cap. Firstly, an out-of-work family can never be better of than one in work, while Eric Pickles has conceded the policy will cost more than it saves – it is purely rhetoric and ideology, and Rachel Reeves must know this. Secondly, the government’s own Impact Assessment found that most of the families hit have at least four children, and that it has increased homelessness.

Clearly, either Save the Children are lying, or Reeves thinks Labour must become the party of pushing children into poverty in order to win in 2020. Which is it?

Reeves’ call for Labour to make huge cuts if we were to win power in 2020 would mean many of George Osborne’s policies announced today would have to stay. Abolition of student maintenance grants, abolition of child benefit for more than two children, cuts in the Employment and Support Allowance (a benefit designed for the sick or disabled), and the abolition of housing benefit for under 21s are all vicious policies. Given that Labour was already prepared to scrap Jobseekers’ Allowance for under-21s before the election, more cuts as deficit reduction would likely mean preserving everything Osborne announced yesterday.

Labour has already shifted away from the mansion tax and 50p tax rate under the Harman regency. If Burnham is elected leader and Reeves is made Shadow Chancellor, will there by anything to separate us from the Tories when it comes to welfare spending?

3 Comments

  1. swatantra says:

    Its a Budget that any Labour Chancellor worth their salt would have been proud to have brought in apart from the Corp Tax bit, because Labour still doesn’t understand what business is all about. The clincher was the ‘Living Wage’ ; if I had been Chancellor that’s exactly the gesture I would have made. The Tories bribed the voters with Right to Buy; now they are buying the voters with the Living Wage and Inheritance Tax.
    The section that always loses out are the ‘squeezed middle’, who as usual end up with b****r all in their pockets apart from the credit for being hard working people, fine words but no substitute for cash. Maybe an opportunity fior Labour to work on these and win them round and give them the justice they deserve..

    1. John P Reid says:

      Harriet Harman,and Steohen Byers both suggested scrapping inheritance tax in 2007′ didn’t Tony Benn get around it too.

    2. Robert says:

      Dear god she is not the Shadow Chancellor as far as I know, she may be if Kendall wins or Cooper or Burnham.

      The mess sorry Budget which the Tories have made is now falling to bits and the facts come out, and it is as we all thought massive cuts to the people at the bottom.

      You are going to have a living wage next April , but it does not go up to a living wage until 2020 but the cuts to credits are coming in before that so people are going to lose.

      Labour lost the last election because the people did not see Miliband as a leader able to lead this country, they do not need Kendall or Reeves or any of the other right wingers any more the Tories have returned .

      But now the working class or what is left of it, will need to wait until the Tories mess up, or Blair tells us what we needto do to win like the third way.

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