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Published on December 12th, 2012 | by Iain Waterman
Image ©   [caption id="attachment_11498" align="alignnone" width="566"] Laughing Tories: Ed Balls fluffs his opening lines in his repost to George Osborne's Autumn Statement to the delight of the Coalition front bench[/caption] “Osbo sets elephant trap for Labour” tweeted Politics Home editor Paul Waugh after George Osborne’s autumn statement last Wednesday. Elephant sized indeed: Osborne announced a cap on benefit increases of one per cent for the next three years of government. With inflation set to rise substantially above this, the welfare bill will shrink in real terms and claimants will feel the pinch. Ed Balls announced yesterday that Labour would take the bait and oppose the cut, exposing themselves to two years of ‘Labour defends benefit scroungers’ and ‘Labour supports shirkers over strivers’ attack lines. The alternatives are probably worse however; if they support the government, then their support base could abandon them. If they had refused to commit, as they have done so often, then the case would become the starkest example of their lacking of a credible economic plan. Getting snared in the trap may be the safest option simply because it is what they are expected to do – better the devil they know than the devil they don’t. Despite having to admit that austerity may last into 2018 and that he has missed his one-term debt reduction goal (at least he was honest), Osborne was able to make some positive announcements last week: The Office for Budget Responsibility, the neutral body set up under the Coalition to provide objective economic data for the Treasury, predicted that borrowing would fall next year despite the poor return of growth.  He was also able to announce that UK private sector job growth had been stronger than all ‘our competitors’. The news appeared to deflate Ed Balls who stammered and choked through his 20 minute reply, unable to find his range or rhythm. His colleagues behind him had little reason to cheer and subsequently didn’t. With little wiggle room, Osborne also pulled out a further increase in the tax-free allowance (good for low earners), a lowering of the tax-free exemption for pensions (bad for high-earners) and the scrapping of the proposed 3p fuel duty increase (good for everyone). Also in the goody bag were a lowering of UK corporation tax and a raft of stocking-filler-sized investment measures: £1bn for new schools, £1.5bn to finance exports, a £1bn small business bank and 140,000 new homes. ‘Fairness’ is of course the ‘it’ word right now. The British public seem to have accepted that a country living beyond its means must make savings somewhere and, rightly or wrongly, welfare is a popular target. The recent British Attitudes Survey turned up the alarming finding that the number of people who think a life on benefits means a life of hardship fell from 55 per cent in 1993 to just 19 per cent now. Benefits have been rising faster than wages since the crash and Osborne’s cap will save the taxpayer £3.6bn from what is the largest single bill for the government. This logic is easy to sell to the electorate and puts Labour between a rock and a hard place. Though the Guardian continues to peddle the notion that any cuts orchestrated are for the amusement of Tory fat cats who laugh at hungry people in cold houses, Ed Miliband and his team will be aware that they need to start outlining some credible savings they would make if elected. So far they have been content to condemn all Coalition policies without actually admitting whether they’d do the same (perfect example – lowering the top income tax rate to 45p). Sometime soon they need to start pulling out some ideas and formalise an economic blueprint. The problem is, if it were balanced between ‘fair’ and ‘competitive’ and was still credible, it probably wouldn’t look too different to the Coalition’s. Labour’s ambiguity is not helped of course, by their record. The ‘you’re doing this all wrong; let’s go back to how we did things’ argument might work if they had more than a residue of economic credibility – but they don’t. The next few years are set to get even harder for the country and for the coalition, but the closer they get to the election, the more the Tories and Lib Dems (who, don’t forget, are closer to Labour economically but have still signed up to a budget till 2018) will push Labour to name their cuts. Labour voters will be delighted by Balls’ ‘boldness’, but his decision means we are still waiting for his Party to produce any clear indication of where they will save money. The opposition front bench has oft repeated the definition of madness, ‘repeating the same thing and expecting different results’, in their critique of the Coalition’s handling of the economy. So far however they are happy to adhere to this philosophy – every penny of bloated state spending seems too important to cut.    

1

Balls happy to trigger Osborne’s elephant trap

 

Laughing Tories: Ed Balls fluffs his opening lines in his repost to George Osborne’s Autumn Statement to the delight of the Coalition front bench

“Osbo sets elephant trap for Labour” tweeted Politics Home editor Paul Waugh after George Osborne’s autumn statement last Wednesday. Elephant sized indeed: Osborne announced a cap on benefit increases of one per cent for the next three years of government. With inflation set to rise substantially above this, the welfare bill will shrink in real terms and claimants will feel the pinch.

Ed Balls announced yesterday that Labour would take the bait and oppose the cut, exposing themselves to two years of ‘Labour defends benefit scroungers’ and ‘Labour supports shirkers over strivers’ attack lines. The alternatives are probably worse however; if they support the government, then their support base could abandon them. If they had refused to commit, as they have done so often, then the case would become the starkest example of their lacking of a credible economic plan. Getting snared in the trap may be the safest option simply because it is what they are expected to do – better the devil they know than the devil they don’t.

Despite having to admit that austerity may last into 2018 and that he has missed his one-term debt reduction goal (at least he was honest), Osborne was able to make some positive announcements last week: The Office for Budget Responsibility, the neutral body set up under the Coalition to provide objective economic data for the Treasury, predicted that borrowing would fall next year despite the poor return of growth.  He was also able to announce that UK private sector job growth had been stronger than all ‘our competitors’. The news appeared to deflate Ed Balls who stammered and choked through his 20 minute reply, unable to find his range or rhythm. His colleagues behind him had little reason to cheer and subsequently didn’t.

With little wiggle room, Osborne also pulled out a further increase in the tax-free allowance (good for low earners), a lowering of the tax-free exemption for pensions (bad for high-earners) and the scrapping of the proposed 3p fuel duty increase (good for everyone). Also in the goody bag were a lowering of UK corporation tax and a raft of stocking-filler-sized investment measures: £1bn for new schools, £1.5bn to finance exports, a £1bn small business bank and 140,000 new homes.

‘Fairness’ is of course the ‘it’ word right now. The British public seem to have accepted that a country living beyond its means must make savings somewhere and, rightly or wrongly, welfare is a popular target. The recent British Attitudes Survey turned up the alarming finding that the number of people who think a life on benefits means a life of hardship fell from 55 per cent in 1993 to just 19 per cent now. Benefits have been rising faster than wages since the crash and Osborne’s cap will save the taxpayer £3.6bn from what is the largest single bill for the government. This logic is easy to sell to the electorate and puts Labour between a rock and a hard place.

Though the Guardian continues to peddle the notion that any cuts orchestrated are for the amusement of Tory fat cats who laugh at hungry people in cold houses, Ed Miliband and his team will be aware that they need to start outlining some credible savings they would make if elected. So far they have been content to condemn all Coalition policies without actually admitting whether they’d do the same (perfect example – lowering the top income tax rate to 45p). Sometime soon they need to start pulling out some ideas and formalise an economic blueprint. The problem is, if it were balanced between ‘fair’ and ‘competitive’ and was still credible, it probably wouldn’t look too different to the Coalition’s.

Labour’s ambiguity is not helped of course, by their record. The ‘you’re doing this all wrong; let’s go back to how we did things’ argument might work if they had more than a residue of economic credibility – but they don’t. The next few years are set to get even harder for the country and for the coalition, but the closer they get to the election, the more the Tories and Lib Dems (who, don’t forget, are closer to Labour economically but have still signed up to a budget till 2018) will push Labour to name their cuts.

Labour voters will be delighted by Balls’ ‘boldness’, but his decision means we are still waiting for his Party to produce any clear indication of where they will save money. The opposition front bench has oft repeated the definition of madness, ‘repeating the same thing and expecting different results’, in their critique of the Coalition’s handling of the economy. So far however they are happy to adhere to this philosophy – every penny of bloated state spending seems too important to cut.

 

 

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About the Author

Iain Waterman

Iain recently graduated from the University of Leeds in History and worked at Dods Political Communications (www.politicshome.com) and The Times newspaper before Catch21. He began writing about politics whilst in his final undergraduate year and founded a blog that he still edits today (http://cromerterrace.wordpress.com/). His primary focus is British domestic politics but he is also very interested in American and Russian politics, as well as the broader themes of international relations, development and social progress. Iain supports a range of policies from across the three main British parties and therefore does not consider himself to be aligned to an ideology, instead he believes that a pragmatic, evidence based approach is most essential to good government.



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