Lies, damn lies and Tory economics

By Tim Nicholls / @tim_nicholls

It’s been a few days since the budget now. Initial anger has had time to subside. We can look on the budget now with cool dispassionate analysis. Except, it hasn’t and we can’t.

The budget was an affront to our values and principles; a slap in the face of progress from a man who made vain attempts to ignore the regressive policies he was bringing in. And what was worse, the ‘better angels’, the ‘progressive’ Liberal wing of the coalition looked on and smiled for the cameras as it happened.

It was a budget founded on a lie. That the deficit is the single biggest issue facing the British economy is not true. The biggest issue is growth.

But the two are synonymous to the Lib-Cons, which shows a simplistic understanding of economics. I don’t pretend to be a world-class economic mind (which is one of many things that sets me apart from George Osborne), so I will defer to someone who is; Josef Stiglitz:

“For an economy facing an economic downturn, the benefit of, say, increasing expenditures enormously exceeds the costs, even if the expenditures are entirely financed by deficits, and that is especially the case when the expenditures are high-return investments.” (Stiglitz, The Roaring Nineties.)

View this against the backdrop of Sheffield Forgemasters and you can see the budget’s prioritisation of deficit reduction is the wrong way to turn.

“But,” students of Stiglitz might proclaim, “he also says that managed deficit reduction worked in the USA because other taxes were increased.” First of all, the US economy never fully recovered, nor is this managed deficit reduction: this is a dogmatic hatchet job. It is fuelled by the idea that the state is too big: the deficit and a ‘lack of confidence’ are the excuses to cut. Second is that, while Clinton raised taxes, he tried to levy them on negatives. Osborne & Co. have taken a different approach; one that, in my mind, compromises our national values. VAT rises will hit the poorest hardest: it is a regressive tax. Ministers trip over themselves to claim that the top 10% are paying more as a proportion of their earnings, but this completely ignores that people on lower incomes can ill afford to give up any proportion of theirs. We may all be in this together, but some are more in it than others.

At the same time, child benefit has been frozen. Let us not kid ourselves: this is a cut. Public sector pay, also frozen (cut).

Disabled people are targeted too. New ‘objective medical assessments’ are being introduced for Disability Living Allowance. These are notoriously bad at identifying disabilities: too often they are simplistic tick box exercises, carried out by under-trained staff. Anyone who knows anything about disabilities will recognise that they rarely fit into tick boxes. And today, incapacity benefits are in the crosshairs.

These things aren’t unpopular policies, from the margins of society. These are integral parts of our values as a country. They’re being attacked under a false cause, and a pernicious one at that. Something tells me the anger won’t subside so quickly after this budget. It’s time to come out fighting, as all the leadership candidates have. It’s time to square up to the Lib Dems, as Ed Miliband is. If we can rally our anger into passionate opposition, the Tories and their Liberal buddies should look scared.