Despite Osborne’s patrician brave face, all we can expect on budget day is standard Tory fare

by Sally Bercow

With the amount of cereal my kids get through, action was required. Out went Kellogg’s Frosties at £2.69, in came Essential Waitrose frosted flakes at £1.69. The kids objected at first – not on taste grounds, mind, but because they missed seeing Tony the Frosties tiger cavorting about on the box. Happily though, as own-brand fish fingers have passed unnoticed, no such bond appears to have been forged with Captain Birdseye. Indeed, our cupboards are now heaving with Essential Waitrose and I’ve cut my weekly Ocado shopping bill by around a quarter (and, yes, I know I’d save even more shopping at Tesco or Sainsburys but, the last time I looked, neither would deliver to Parliament – apparently because it’s a business address).

Now I’m not going to pretend that switching from Kellogg’s to own brand means I’m in the same boat as families whose very existence is a struggle to make ends meet. But squeeze on living standards (the biggest in 90 years) is hitting everyone – even those, like David Cameron and George Osborne, multi-millionaires by birth, with rather a lot of cushioning and very little idea of what life is like for those who struggle to eke out an existence. Inflation is rising twice as fast as pay and the Chancellor is only making matters worse – adding to the squeeze with his 2.5% VAT hike in January.

That’s why Ed Miliband and Ed Balls are right to say that this country is undergoing a “cost of living crisis” and to call on George Osborne to use his second budget to help hard-pressed families, starting at the petrol pump. If Osborne thinks that merely cancelling or postponing the annual 1p-a-litre tax rise on petrol will be a sufficient sop to beleaguered motorists, he’s gravely mistaken. Instead, he needs to go beyond this and reverse the VAT rise altogether, by using the extra £800 million brought in by the bank levy.

Despite the brave, patrician face he puts on it, the chancellor’s economic strategy isn’t going to plan. The recovery has ground to a halt (the economy didn’t grow at all at the end of last year and the OBR will be forced to downgrade its GDP forecasts for this year and next), unemployment has soared to 8% (the highest since 1994) and youth employment, fast approaching one million, has never been higher. The most reckless and extreme public spending cuts in a generation, the VAT hike and, as outgoing CBI boss Richard Lambert recently observed, the complete absence of a growth strategy have all combined to mean that the government’s plan is hurting but not working.

So, if he were to do what makes economic sense, the chancellor would announce this week that the government will ease up on its deficit reduction plan and change course. After all, choosing to cut the deficit in one parliament was exactly that – a choice. Moreover, it was a deeply political choice – after all, if he’d stuck to the Brown/Darling plan of halving the deficit over four years, the chancellor wouldn’t need to cut deeper and faster than any other major economy. But that simply didn’t square with the Tories’ blind ideological mission to shrink the state for political reasons, irrespective of the economic consequences.

The best way to reduce the deficit is to get the economy moving again and get people back into work. So that’s why the chancellor should heed Labour’s call to repeat the banker’s bonus tax in order to help create the jobs and growth we need. (Not to mention that a banker’s bonus tax would have the added advantage of making the people who caused the global financial crisis pay a fair share.) As Ed Balls has outlined, raising an extra £2 billion via a bonus tax on banks would enable the government to fund the construction of 25,000 more homes (in turn generating more than 20,000 new jobs and as many as 1,500 construction apprenticeships) at a cost of £1.2 billion; to establish a £600 million fund to help more than 90,000 young people into jobs; and to boost the regional growth fund by £200 million, thereby supporting investment in the regions.

Instead, it seems likely that a central plank of the government’s new-found “growth strategy”, to be announced in Wednesday’s budget, will be to cut red tape for business and attack the “enemies of enterprise” (that’s civil servants to you and me). It has been suggested that, as part of a deregulation drive to assist firms with fewer than 10 staff, employers may be exempted from honouring some employment rights (eg. maternity and paternity leave). This is quite wrong: the needs of parents and their children do not vary according to the size of their employer’s company. The last thing the country needs is 3.8 million insecure, demotivated, second-class citizens in the workplace.

The budget is also expected to include £100 million to boost growth in 10 enterprise zones. This is a complete waste of money – enterprise zones didn’t work in the 1980s and they won’t work now. Their defining feature is bringing short-lived prosperity to one area at the expense of another (a recent survey by the work foundation reported that 80% of jobs in enterprise zones have just been displaced from elsewhere and that each job created within them cost £23,000).

If he were progressively-minded, the Chancellor would:

a) reverse the child benefit change which hits single-earner higher rate tax payers but leaves a couple on £80,000 to get off scot free;

b) pledge to cut, sooner rather than later, the rate of VAT which is a deeply regressive tax;

c) introduce a fuel stabiliser to insulate motorists and businesses from swings in the oil price;

d) increase the minimum wage for apprentices (currently £2.50 for under-19s and anyone in their first year of training) and start to acknowledge their value;

e) offer tax incentives to companies which adopt the living wage for their workers.

Unfortunately, he isn’t, so he won’t. While I like to look on the bright side, there’s not much point looking into the crystal ball when you can read the book. In practice, George Osborne’s offer to the hard-pressed will be meagre, dressed up as majestic. Expect a lot of noise about very little come Wednesday afternoon. Doubtless, the chancellor will raise the income tax threshold a bit, scrap the 1p fuel duty rise, make a song and dance about enterprise zones, tinker with planning laws and trample on workers’ rights under the spurious Tory guise of cutting red tape. He might even decide to merge income tax and national insurance. Yet behind all the bravado and rhetoric, there will be little of substance. What the country needs is a change of course and a banker’s bonus tax to support jobs and growth. What the country will get is standard Tory fare.

Sally Bercow is a Labour activist, and a writer and broadcaster.

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9 Responses to “Despite Osborne’s patrician brave face, all we can expect on budget day is standard Tory fare”

  1. taffarel says:


    Incase you hadn’t realised, the current rise in living costs is wholly attribitable to the Labour party.

    Your economically clueless Brown devalued the pound by 40%. We are now seeing the result of that action.

    Why do Labour part members have no idea about cause and effect economics?

    After you bankrupted the mess is going to take 20 years to clear up.

    The electorate isn’t stupid. Most people realise that Labour have never been able to balance this nation’s books. There is always one more benefit that you can create, one more person to suck in as a voter.

  2. Robert says:

    I’m classed as severely disabled by the DWP not my GP, I get £96 a week, my wife gets £130 a week pension, we have to pay £100 rent and council tax. gas electric water TV all this has to be paid as well.

    If you want to know how demeaning it is to be disabled come down with me, see if you can do it, I will go to the back of shops and ask what do you do with food that’s out of date, many will sell you food for 10p a tin of beans.

    We actually did not turn on the heating through the November storms because we did not have the money to pay it.

    But remember it was Blair that gave us a benefit rise which was the smallest since welfare began, 75p he did not once gave us a rise to keep up with the cost of living.

    So Miliband might be saying a lot, is it worth listening to Nope i doubt it, Cameron has just given us the biggest benefits rise in 14 years.

  3. Peter Lunch says:

    “I’ve cut my weekly Ocado shopping bill by around a quarter”

    The horror! The horror!

  4. Martin says:

    I,m with taffarel.
    The Labour government turned a blind eye to the banks dodgy dealings with OUR money because of the massive tax revenues they were getting.

  5. You should have stocked up on Frosties when Morrison’s were selling them for 99p the other week!

  6. Margot Freed says:

    So the fact that your parents were able to send you to Marlborough College hence gaining a place at the exclusive Oxford University (subsequently dropping out) gives you some insight into the proletariat and their struggles? Pull the other one Sally.

    Is it that boring to be Speaker’s wife, do you have many encounters with the plebs there in Westminster?

  7. Another Young Nationalist says:

    Erm, you can’t fool everyone with your tribalist rantings. EDUCATED AT MALBROUGH COLLEGE? It boggles the mind how you think you can relate.

  8. Robert Newark says:

    Sally, I really do feel for you, you are clearly finding it difficult to cope on your family income of + £100k pa.
    Perhaps I can suggest that instead of wasting your time writing daft blogs, you get a job at Tesco’s, where you would enjoy a staff discount (as well as a wage) which would go some way to helping with the family budget and hopefully enable Tony to return to the breakfast table and thereby not allow your children to become disadvantaged.
    I think it is a bit rich (pardon the pun) calling Osborne et al, for being well to do. At least they are Tories, who’se general belief is to help everyone become well off themselves, by rewarding enterprise. You on the other hand, are a typical champagne socialist of the ,’ Do as I say, not as I do school’. If you really are a true socialist, then donate 50% of your income to charity. Otherwise, shut up.

  9. John says:

    I heartily endorse what Margot and Young Nationalist say. I am tired of Cameron’s and Osborne’s backgrounds constantly being used in a snide and underhand way. What matters is what people do not where they come from.

    Sally Bercow should remember that she is part of the same elite that she likes to denigrate. If she wants that to be an issue then that justifies a closer look at her own VERY privileged background and indeed that of numerous ‘Labour toffs’ (to coin her own phrase) which would include her beloved Ed Balls (private all boys school).

    It’s really not very wise for someone who lives at taxpayer’s expense in a Palace to moan about having to make economies. The fact is that through her husband Sally Bercow has a very good lifestyle indeed and one that is gilt edged and guaranteed. Not many of us get anything close to that!

    To move on to more substantive matters I also heartily endorse what Taffarel says. The Govt is clearing up a mess left by Brown and his closest sidekick Balls. Where was the talk of bankers bonus taxes back when they both advocated the light touch regulatory approach and kow towed to banking while allowing manufacturing to decline at a faster rate than at any time in our history?

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