There is an auction taking place on the size of the welfare cuts to be imposed in the next 5 years. The Tories are arguing for £30bn cuts in the first 2 years to 2017-8 via no tax rises, £12bn in welfare cuts, £5bn in extra corporate tax evasion revenues, and bigger departmental cuts (up to £17bn). The LibDems accept the overall £30bn target set by the Tories, but propose to reach it by £6bn in higher taxes, £6bn by clamping down on corporate tax evasion, £12bn in departmental cuts, and £3.5bn in welfare cuts. The Labour party has not explained in detail how it would reach its target of eliminating the structural deficit by 2019-20, though the cuts would be less than under the Tories and confined to current expenditure, not capital expenditure. Nobody is saying that there should be no welfare cuts in the next 5 years. But they should be, for several strong reasons.
First, it is iniquitous to impose on the poorest and most vulnerable sections of society – namely the 13.5m people living in households below the official poverty line (60% of median incomes) – huge further burdens when they are already living so precariously on the edge of the abyss, and especially when they had no responsibility whatever for the financial crash which is allegedly the cause behind this whole decade of austerity. Second, it is egregiously harsh to concentrate further savings heavily on welfare cuts when no tax increases are being imposed at all, letting the richest completely off the hook.
Third, there is no a big song and dance about where exactly Osborne’s further £12bn welfare cuts are going to come from, and with good reason. Leaving aside the £93bn devoted to pensions and pension credit which Osborne has said he won’t touch, how then will he chop £12bn off the remaining £74bn of the UK’s total welfare bill? Housing allowances cost £18bn and have been rising fast, but that’s because far too few houses are being built and anyway the benefit goes entirely to private landlords; excluding young people from the allowance, as is mooted, will not save anything remotely near £12bn. Both DLA and ESA pay out £13bn a year, but to disabled people and those with long-term illnesses, and the government’s callous attempts to cut their numbers drastically by Atos declaring them fit for work has already run into the sands. So what is left? JSA, the government’s favourite target, only accounts for £3.6bn, and at £72.40 a week this unemployment benefit is already almost the lowest in Europe and so meagre that it’s difficult to survive on.
Nobody, but nobody, is saying, not just that further major welfare cuts won’t work, but rather that it’s the wrong policy. Contracting the economy further, and at such a huge human price, is self-defeating. It won’t even begin to make any significant contribution to cutting a deficit still stuck at £92bn. The real way, the only way, to escape this endless recession is to break with further cuts and grow the economy though public investment to kickstart sustainable growth, raise household incomes, increase government tax receipts, and pay down the deficit much faster.