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Friday, January 13, 2012

Cutting benefits of doubt

At first glance, George Osbourne's announcement that Child Benefit will be cut for high earning families may seem eminently sensible and even politically digestible and therefore should be welcomed. Mr Osbourne himself said that he was doing this as a "matter of principle", so we should be grateful at his equanimity and generosity as well as infinitely credulous. This gesture has that lovely tint of redistributivism, of punishing and rewarding, a kind of fiscal S&M. It appears to show the rich taking on a reasonable burden and, by dint of them, for once, not being the ones getting clubbed, the poor seem to be benefiting. We didn't used to be so easily pleased, but we take our pleasure where we can these dark days.

Personally, I have issues with Mr Osbourne's stated political principles, so anything marching under their banner needs frisked before I fall in behind. In the short term, it will get up the noses of many instinctive conservatives, which many of us see as self-evidently a good thing. We will laugh at their hypocrisy when the scream about the injustice of having their benefits cut.

As political stunts go, it takes some beating and came right out of Whitehall's top drawer, with a spin John Major tried and failed to master in Thatcherism 2.0. Judging by the Venus flytrap-like reflexes of our political media, Osbourne seems to have landed triumphantly on his feet. At last, he was seen to be wielding the axe directly at those who could afford it for a change. It's a pity he didn't think of this earlier, but no matter.

His consistency cannot be questioned either. Picking on one easily demonised group is always a winner as by doing so he defines a majority by default. It doesn't matter that it is a completely phony one; by mixing and matching like this, everybody feels both vindicated and under siege. Nearly everybody, anyways. And of course, those who are already sharing far more pain than they can reasonably manage aren't going to shed tears at the plight of Tarquin, 29, and Tabatha,26, design consultants from Islington, for whom child benefit was a fraction of the au pair's spending money.

It is probably precisely because of this that we should be suspicious. George Osbourne's philanthropy has, to date, generally come at a considerable price to those who can least afford it. At least with previous attacks on the common weal he had the decency not to seem too pleased about it. He wasn't actually grinning ear to ear anyway, which is always something. Such modesty seems to have escaped him this time.

This has far more profound implications and any superficial beneficence cannot outweigh the threat now posed to other areas we have long concluded are most efficiently served to society as a whole through pooled resources via a democratically accountable state.

A cynic might suggest that such behaviour is completely out of character for Osbourne, free market fundamentalist that he is. As yet, we have not seen his inherent egalitarianism demonstrated in either his budgets or his quarterly denials of figures stapled to his forehead. As a fiscal conservative – whatever that is; this lot are anything but conservative – George quite explicitly does not believe in progressive taxation, which this essentially is in terms of how it affects the balance sheet. Quite the reverse. George likes to reward talent, after all, usually at all and any cost. Why upset a demographic that he can take for granted from now until doomsday? They pay their taxes, after all.

It is at this point that the issue of universality comes to the fore. It is this touchstone of the welfare state that George Osbourne has just wiped his brogues on. The welfare state, especially when it comes to anything to do with children, has to be unconditionally inclusive to mean anything at all. Once limits are set, these will be pushed and queried. By definition, they will have become negotiable. With our fates still very much in the iron grip of social illiterates, they are only going to be negotiated in one direction.

If modern British history offers any useful terms of reference, these probably lie in the privatisation programme of the 80s and 90s which, once started, assumed an unstoppable momentum, helped along by a market free-for-all after deregulation in 1986. The same primitive market chants are being parroted again, whether out of narrow Tory spite at the New Labour years or out of a genuine, unreconstructed belief in market infallibility. Osbourne's assault on the welfare state is as pure-driven as anything Thatcher dreamt up. Thatcher had to argue even if she did just dictate. For a while, most were mesmerised by monetarism, but we are supposed to be wiser now.

The Tories assured us when they returned to office that they, too, had learned from their mistakes. Any tinkering around the edges like this has to be viewed as part of Osbourne's plan – he would demand we do no less; he is after all "on target" which implies direction and purpose, albeit that this target seems to move about. His plan is always, as a matter of principle, the same; to claw back the state where ever possible. If he appears to be stepping back from his austerity programme, it is probably wise to assume that he's planning to take a run at it and his latest wheeze seems just the job.

The comfortably off can then ask why it should be that they are asked to contribute to a system they are excluded from reaping any reward from – that they can see, any way. The one tangible stake they had has been pulled out. Why should they hang around? The right wing press will loudly concur on the front page and step back in the editorial, knowing that the markets will see things differently; they will see an opportunity and, rest assured, the austerity we need for growth will be modified yet again, this time to include means testing for all benefits. This will blaze a trail down which other universal benefits can be marched, from education and care for the elderly to health care, the holy grail to the modern rentier.

In terms of its impact on the benefits bill, the amount saved will be negligible. Given that many well paid people do actually have a social conscience and don't even claim it, any government estimates can be reduced further still, as these are based on numbers entitled to it – which they need to budget for – not numbers actually claiming it. And of course, the wealthy self-employed know better than to declare a personal income of anything above the minimum wage now anyway and an entire industry dreams up elaborate financial apparatus and advice to make sure they can do just this, ably supported by a supine inland revenue that allows, amongst other basic necessities, massive and lavish entertainment bills to go down against tax liability.

In all probability, out of those who will cease to be eligible, it will be the lower bracket who will shoulder the losses more, the ones on the fringes of having attained the financial momentum to cruise unassisted to comfortable eternity and beyond; the ones who might just be realising that most of the good seats have been sold. Their resentment, however, will already have been channeled into hostility towards not the Coalition government, but the iniquity of a system that habitually excludes them and rewards who are now considered, yet again, to be a feckless underclass. The poor take the blame for the privations of the rich and the band plays on. Their votes will now swing towards the very party that has just whipped them. The irony can shout from the rooftops and nobody will hear.

The wealthy shouldn't worry. George Osbourne still has his eye on the long game and has pulled off a stunt in keeping with the truest traditions of the snake oil business. The already over-rewarded will still be in the clear and only those at the margins will notice any drop in their take; these people are probably mere social parvenus and over-aspirational anyway and they have little by way of constituency. In Osbourne's myopia, there is political capital in sacrificing them and they certainly aren't the types he would meet at his club.

The benefit bill will continue to rise as unemployment piles up. Tax receipts will drop. These are the two points a chancellor who can't count cannot seem to grasp. If he is wondering why his targets on growth, inflation and, yea, borrowing and his precious deficit are not being met, even with stubborn inflation supposedly devalueing them by the day, he should look no further, but don't hold your breath. No child will be lifted out of poverty, no elderly or sick will be helped and not one brick placed upon another by a decision that was born of narrow political opportunism and is at best probably fiscally neutral. It is gesture politics at its emptiest, though, some are eyeing it and taking note.

All that has happened is that one of the central planks of the welfare state has been prised up, leaving a gap for the markets' crow-bar to loosen up the remainder. George Osbourne is nothing if not consistent in his pursuit of policies drawn up before he'd even looked at the books properly. George didn't need to look at the books properly because he was reading from a brand new one and had carte blanche to do what the Tory party lives for, which is to cut, cut, cut. They don't need an economic downturn to inspire them, but it looks like we've obliged them and thanks all the same.

While other lesser ministers have been forced into pausing in their wrecking policies, to great fanfare, if only to resume with only marginally less malign intent, Osbourne has ploughed on regardless with a dogmatism that knows which side its bread is buttered and shows no sign of letting up. He'll cut until he is cut down.

Pseudo-concessions through seemingly "fair" cuts are still just that, cuts. If this is the worst the wealthy have to fear, they will sleep easy. A precedent has been set and it has nothing to do with making the wealthiest share the pain. The removal of universal child benefit will be but a pinprick, an inoculation against further pain for the already well immunised and a cut at the roots of system which is already under strain from the same chancellor's hysterical austerity drive. There is more – or, strictly speaking, less - to come and we will doubtless be appalled, but we should probably be more wary when he appears to be doing the right thing, especially if he is doing so by the light of his deepest principles.