Sunday 13 September 2015

Sunday, September 13, 2015 Posted by Jake No comments Labels: , , , , , , , , , ,
Posted by Jake on Sunday, September 13, 2015 with No comments | Labels: , , , , , , , , , ,

“tax increases raise £47.2 billion over the Parliament…various tax and spending decisions have indirect effects that raise a further £14.2 billion.”

“Budget decisions also imply £3.5 billion of extra borrowing over the Parliament, on top of the £14.6 billion increase implied by our pre-measures forecast.”

“Government’s provisional spending assumptions imply that Resource Departmental Expenditure Limits (RDEL) – which cover day-to-day central government spending on public services, grants and administration – would be £83.3 billion higher in total over the current Parliament”

Premonitions of a Leftist Corbynite cataclysm? No, the above quotes are taken from the Office of Budget Responsibility’s (OBR) independent analysis of the Conservative government’s July 2015 Budget. The first pure Conservative budget, undiluted by their late LibDem coalition partner, since Kenneth Clarke had his last dram in the Commons in 1996, 19 years earlier.

Those fearing Jeremy Corbyn's tax, borrow & spend proclivities would find him in surprising company: George Osborne. Perhaps they have failed to notice because the Tory Chancellor has repeatedly proved to be a master of misdirection. Not in the way of a top hat and tailed king of conjuring, more like an emperor with no clothes. Both Osborne and Emperor could parade in their nakedness not because the people were convinced they were covered, but because those who should have said they were bare didn’t dare. Like the people in the fairy tale praising the Emperor's dress sense, the 2010-2015 Labour Party didn't dare oppose Austerity for fear of seeming too economically stupid to love it. In both stories it takes someone considered to be a naïve nobody to expose the streakers. 

To misdirect attention from his overall large tax hike Osborne flourished £24.6 billion in tax cuts. The OBR report stated these were “primarily cutting corporation tax rates, raising the income tax personal allowance and extending inheritance tax relief for main residences”. In 24.6 billion bounds, the Chancellor escaped notice yet again!

To misdirect from massive welfare cuts to the poorest, Osborne waved the risibly named “National Living Wage” (NLW) wand. The Tories set the NLW at £7.20 per hour from April 2016, promising it will rise to 60% of the national average (median) wage by 2020. Risible because:
a) 60% of the median income is a common definition of Poverty.
b) By having a single "National" living wage, Osborne ignores wide regional variations in living costs and incomes. According to the Resolution Foundation even by 2020 the NLW will only be 47% of the median income in London.
b) The “living wage” is already a well defined and considerably higher amount calculated by the long established Living Wage Foundation. For 2014-15 the Living Wage Foundation set this at £9.15 per hour in London, and £7.85 per hour outside London.

Osborne’s high-jacking of the “Living Wage” was his icing on what turned out to be a cow-pat (or was it bull s**t?). The report "Higher ground: who gains from the National Living Wage" by the Resolution Foundation points out what Osborne gave with one hand he took back and more with a wheelbarrow. 

Cuts to working age benefits, which have mainly been the government subsidy for low paying employers, wiped out many times over what those on low pay gained from the new “National Living Wage”. The Resolution Foundation report states "The NLW only partially offsets the losses low-income households face after the Summer Budget". The graph below shows that this Summer Budget, with its National Living Wage, left the poorest 40% of households hundreds of pounds a year worse off representing a cut of up to 9% in their incomes. The richest 10% are also hundreds of pounds worse off but that represents a tiny fraction, less than 0.5%, of their incomes.

Not only did Osborne pick the pockets of the poor, he also managed to discombobulate employers with his National Living Wage caper. According to Gavyn Davies, hedge fund manager, former Goldman Sachs partner, and former chairman of the BBC, two thirds of corporate profits since 2008 have come from holding wages down:

"[If the] decline in the wage share had not occurred, and everything else had (implausibly) stayed the same, then gross profits in the developed economies would have been about one-third lower than they are today and net profits (after depreciation) would have been about two-thirds lower."

From this we can understand the bleating about the cost of National Living Wage from top executives of the care sector and the retail and relaxation industries. They fear the profits in their pockets may leak back to their staff in higher wages.
Doubtless some will assert we are all in it together; it's all done for their own good; and the only way the poor can escape being poor is by staying poor.

The President of the Institute of Chartered Accountants chimed in with a piece for the CityAM newspaper titled “The National Living Wage could make eradicating the deficit a three Parliament problem”. He provides a reminder that the way things are the prosperity of the nation depends greatly on the poverty of the poor.

But things only stay the way they are until they change. 

The Tories comfort themselves that Corbyn as Labour leader is absurd. The Spanish author Miguel de Cervantes, author of the novel Don Quixote, wrote: "To attain the impossible one must attempt the absurd"

Another author, Arthur C. Clarke, commented on the evolution of revolution
"Every revolutionary idea seems to evoke three stages of reaction. They may be summed up by the phrases: (1) It’s completely impossible. 
(2) It’s possible, but it’s not worth doing. 
(3) I said it was a good idea all along."
Perhaps this is how it will be with those Labour MPs who scurried for cover for fear of Corbyn's "impossible dream".

For a political balance that provides representation for the widest range of people in Britain it was necessary for Labour to move back to the Left. Will Jeremy Corbyn have what it takes to bring positive change first from opposition and perhaps later from power? Now we will have a chance to see. But even if he doesn't, cracks are surfacing in the self-serving assumption of the few that the left-behind are happy to be left behind.


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