Thursday, 26 November 2015

The Spending Review.

Yesterday was Chancellor Osborne's spending review which set the economic framework for the next five years.

Review policy was formulated in the context of the independent Office For Budget Responsibility predicting improved tax receipts and lower debt repayments would give The Chancellor an extra 27 Billion pounds to spend between now and 2020, however those are just forecasts, but ones that are likely to be more accurate than say mine!

In the review, the Chancellor reversed the cuts to Tax Credits which I think showed strength of character and also a valuable flexibility to his approach.

Remember, the reversal of Tax Credits cuts is a temporary 2 or 3 year reprieve for people, as all welfare will be switched to Universal Credit in the next few years. Universal Credit will have no Tax Credits and the same group who benefit from the Tax Credits cuts reprieve now, will be worse off under Universal Credit.

A positive move is the new policy to build 400 000 new private sector homes by 2020, which now has some funding and legislation to help achieve the target.

A new 3% stamp duty tax on second homes/buy to let homes can only be a good thing. We don't have enough properties for people to have one home each, let alone two. And, buy to let Landlords swallowing up much of the property is just going to artificially inflate rents and choke off housing supply.

Negative points are, OK 400 000 new private sector homes - but where are the Council houses and Social housing? Just what is the Conservative Parties ideological problem with Social housing we wonder? With Social/Council housing, tenants have secure lifetime tenancies and regulated rents.

Before the last election Labour proposed to regulate private sector rents and were going to introduce 3 year minimum rent terms. This would have  helped private renters to have some housing security, at least for 3 years at a time. Security which is essential for stability in your country and people, see for example Maslow's hierarchy of needs.

With The Conservatives in charge, private renters have no guarantee that their Landlord will not put up rents unreasonably high once they are settled into their new home. The renter also has no guarantee that their time at the rental property will be longer than 6 months at a time, great huh!

Whilst the Tories, making improved efforts to provide 'affordable' private housing supply is welcome and should be supported. Economists have said yesterday that people on the Median wage will not be able to afford one of the new affordable homes currently. However if housing supply continues to increase, eventually a private home would once again be within grasp of someone on a Median wage.

Owen Jones was saying in a new video today that the people who voted The Conservatives in this year were mainly the over 44 age group. I'm not trying to be ageist, but it has to be pointed out, this age group are the ones who benefited historically from much cheaper house prices in relation to their wage packets. It's a hard thing to say to this age group, but many in this age group are very 'I'm alright Jack' aren't they.

The 12 Billion of welfare cuts pledged by the Tories are still scheduled to go ahead in this parliament. This is not a good thing as the cuts will hurt the poorest and most vulnerable in society, remember there is only jobs available for 1 out of every 3 people seeking work in this country. For 2 out of 3 job seekers there is no job available.

Polly Toynbee pointed out yesterday in The Guardian that under Margaret Thatcher's rule annual state spending was equivalent to 46% of UK annual GDP. The current Conservative party is well on it's way to cutting the state down to 36% of GDP.

Just a reminder, as there is much psychological  trickery in the right wing press, state spending is not just welfare benefits. In fact state spending is our NHS, our schools, our police, our armed forces etc.

Public sector spending needs to be viewed in terms of priorities, and very high up should be providing food and shelter for people. Yet the welfare state has been cut by 35.8% since 2010, the second largest cuts of all government spending departments. Can we re order our priorities here please?

I'd like to reiterate that Labour Party policy is also that the UK should live within it's means, that the government should not spend more than it's income. We just propose to live within our means in a way that is fairer to all groups in society, low income, the middle and the rich.

Anyway, as stated in earlier articles, George Osborne and Mr Cameron are making at least some moves toward returning back from the hard right to a more human like centre ground, so that's good.

I sort of feel I'd like to buy Mr Osborne a half pint of beer to encourage him to keep moving towards the political centre ground after yesterday.

But I'd sure like to see policies in the future where he'd earned a full pint...

James Bickle.