BUDGET has been welcomed in some quarters but questions still remain to be answered, writes Brian Wilson
By tradition, Budgets which are cheered to the echo on the day they are announced have a habit of looking a lot less clever a month thereafter.
George Osborne could perhaps avoid that pitfall by accepting the garlands with which he has been showered and then quietly acknowledging that, even within the context of his own objectives, there is some of this that does not make sense.
The sight of patently honest, hard-working women weeping on our television screens because they can no longer foresee the means of making ends meet scarcely reflects the intentions Mr Osborne intended to convey. At least, I don’t think it does.
Budgets deal in headlines but it is the detail that matters more. In my early years as an MP, presentation was still rather less slick and the conventional Budget formula was for the Chancellor to plough through all the technical stuff before getting on to the populist bits.
Occasionally, some intricacy in tax law would be greeted with a low growl of “Hyah, hyah” from those Tory MPs who matched Baldwin’s image of hard-faced men who had done well out of the war. At that point, you knew they had just been awarded another shed-load of money.
In general, anyone who says this was a Budget redolent of Thatcherite times probably did not live through them. It is much more subtle than that and instead of polarising opinion is intended to tick boxes which most of society can approve of. It is the means of implementation that will define the policy and its authors.
By far the biggest threat both to hard-working families and to Mr Osborne’s reputation lies in the proposed changes to Tax Credits. In the headline version, it all seems quite reasonable. Costs now far exceed what was predicted and continue to rise at an unsustainable rate. Something must be done. Box ticked. Big employers who could well afford to pay more are using Tax Credits to subsidise parsimony and profits. Sounds reasonable. Another box ticked. Therefore, in addition to limiting tax credits, we will raise the National Minimum Wage by more than Labour was offering. Box ticked and loud cheers.
But then comes the detail and it is not a balancing act at all. The timings aren’t in sync. The losses are far greater than potential gains. So we have millions of worried parents coming up with truly awful, unsustainable conclusions about impacts on their own finely balanced budgets. Despair is written over their features.
If carried through as currently proposed, these changes will certainly not benefit hard-working families and will drive many who desperately wish to minimise their relationship with the benefits system far more deeply into it. These are precisely the opposite of Mr Osborne’s stated intentions.
Far more work is needed on the detail of these changes. They can still remain consistent with the popular headlines while recognising the entirely counter-productive human impacts and future costs of what crude implementation would involve.
Tax Credits were Gordon Brown’s great strategic weapon in addressing inequality and reducing child poverty – and were pretty successful in doing so. It is grimly ironic to hear malevolent people who just a few weeks ago were sneering at “Red Tories” now demanding that the reforms these hated forces put in place must at all costs be retained, untouched, to protect their defenceless constituents.
Such empty rhetoric is of no use to anyone. What is urgently needed is the hard work of detailed research in order to force rethinks and minimise impacts upon those whom George Osborne claims, as a matter of political principle, to want to help – hard-working, low paid families.
The downside of Brown’s reforms always lay in their complexity so it is logical that dismantling part of his legacy is also a complicated business. The people charged with implementation should seek refuge in that reality and take back the message that this is not as straightforward as it might have looked. More time and thought are needed.
Another headline which owed more to politics than economics was about 18-21 year olds losing the automatic right to housing benefit. The word “automatic” is important because it means there is a get-out clause for various categories of young people who are in serious need. That is something to build on.
The political nature of the change is confirmed by the amount of money it might save – £25 million next year rising to £40m in 2020, the merest drop in a Budgetary ocean. This is all about the symbolism of declaring it wrong for young people to come straight out of education and on to benefit, with which few would disagree. Box ticked.
Yet, of course, there will be victims unless safeguards are watertight – young people escaping violence, coming out of care, all the other contributory factors which put so many on the streets. Surely this is an area in which the Scottish Government could make a name for itself by giving an absolute commitment, at minimal cost, to create a safety net for anyone who failed by the new rules.
The far bigger issue is housing benefit itself and who can deny there is a massive problem? An excellent report published last month by the independent Housing and Wellbeing Commission highlighted that the cost, much of it paid to private landlords, has risen in real terms in Scotland by 29 per cent since 1997. The bill is now £450m yet the result is still huge numbers of people living in miserable conditions.
The answer, quite simply, is to build more homes. There is no use pretending that George Osborne’s Budget is inventing problems that do not exist. The challenge in Scotland is not just to denounce it but to add value in addressing these deep-seated issues.
Robert Black’s report said that we need 9,600 extra houses each year for social rent to meet a waiting list of 150,000.
Let’s do it. And if we need to pay a bit more through tax to make it possible, let’s face up to it. Scotland now has the powers to ameliorate what we don’t like in Budgets and to set our own priorities for addressing challenges which are our own. Let’s get on with using them.