Tory Welfare Reforms: Right Idea, Wrong Execution

After this weeks tax credit debacle, Worcester Lib Dem, Adam Warner offers his perspective on the controversial proposals

Many will remember the haunting image of Iain Duncan Smith cheering in the House of Commons as Chancellor George Osborne announced welfare changes that will see tax credits cut for millions of working families.

The Institute for Fiscal Studies (IFS) has said that it is ‘arithmetically impossible’ for ‘no-one to lose out’ whilst the Resolution Foundation says the average family will be £1,350 worse off even with the introduction of the so-called ‘national living wage’. Even Conservative MP’s have criticized the plans with Boris Johnson saying at the Conservative Party conference this week that more must be done to ‘protect the low-paid’.

Many on the left have condemned the changes entirely and some have marched against them. This is despite the fact that the principle behind them seem reasonable. Conservatives have repeated many times that the changes are an attempt to move the UK away from a low pay, high welfare economy to a high pay, low welfare economy.

There is no doubt that this would be a desirable result. The current system of central government subsidising low pay from exploitative big business is not only inefficient but just plain wrong. Surely a system where work pays more – which it will with the national living wage set to rise to £7.20 next year and to £9 by 2020 – is a better one?

The problem lies with the scale of the proposed tax credit cuts. As aforementioned, the overall package of reforms will see millions of what the Tories call ‘hard-working families’ losing huge amounts of money. In a society where the poorest have borne the brunt of austerity these changes will look like another attack on the most vulnerable.

There are certainly aspects of the changes that are not only positive, but necessary. However, yet again the Tories have decided to appeal to the minority who reside in the right of their party by sending out a message that they are ‘tough on welfare’ and ‘scroungers’ instead of doing what’s right for the millions of low paid workers in this country who do not earn enough to sustain a reasonable standard of living.

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Tories Must Come Clean About Welfare Cuts

Interesting article in the Independent yesterday about the Conservatives proposed £12bn welfare cuts – difficult to see where they are going to come from.

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When the Conservative manifesto confirmed plans to cut £12bn from welfare, some senior Tories thought the party would never have to implement them.

They did not expect to win an overall majority and knew that the Liberal Democrats would accept only about £3bn of social security cuts in another coalition.

There was a natural deal to be done under which David Cameron backed down from £12bn of welfare savings and, in return, Nick Clegg let him have an in/out referendum on Europe. George Osborne could have filled the hole by raising taxes for the better off – and blaming it on the Lib Dems.

But now the Prime Minister and Chancellor have no excuses and must trim welfare by £12bn. It will not be easy. And it could revive memories of the “nasty party” just when Mr Cameron, with an eye on the 2020 election, is relaunching the Tories as a “One Nation” party which champions working people.

Indeed, one of the cuts already planned would undermine that. Mr Osborne announced last October that most working-age benefits would be frozen for two years from April next year, which is likely to hit 11 million families. It would save £1bn.

 The Queen’s Speech on 27 May will include a Bill to reduce the cap on benefits that can be claimed by one household from £26,000 to £23,000 a year. Opinion polls show that this headline- grabber is popular with voters, but it would not save very much – about £135m a year.

The plan to remove housing benefit from jobless 18 to  21-year-olds, who will be expected to live with their parents unless there are exceptional circumstances. This would save about £100m. They have also pledged to replace Jobseeker’s Allowance for 18-21 year-olds with a youth allowance limited to six months.

So Mr Osborne has found only about £2bn of the £12bn he needs. During the election campaign, Labour and the Lib Dems accused him of having a “hidden agenda” of cuts but Iain Duncan Smith, who has been reappointed Work and Pensions Secretary, was almost certainly telling it straight when he said the Tories had not yet done the work on finding the rest of the savings.

Their room for manoeuvre is limited. About £121bn of the £220bn welfare budget goes on pensioners and is protected. The state pension is covered by a “triple lock” under which it rises each year by prices, earnings or 2.5 per cent, whichever is highest (and 2.5 per cent is generous at a time of low or zero inflation). Mr Cameron did not join Labour and the Lib Dems in pledging to axe perks such as winter fuel payments and free bus passes and television licences from better off pensioners.

So what could the new Government do? According to the Institute for Fiscal Studies (IFS), the ring-fencing of spending on pensioners means the Tories will have to lop about 10 per cent off the budget for other benefits – most of which goes on working age households in the bottom half of the income scale. Hardly very “One Nation”.

The IFS said options could include saving £5bn by abolishing child benefit and compensating low-income families through universal credit, which will merge six benefits including tax credits. Reducing the child element of universal credit by 30 per cent could save £5bn. Although Mr Cameron promised not to cut child benefit and tax credits during the election campaign, Labour claims he did not rule out some changes. One option would be to mask the cuts by reducing tax credits instead of launching a full-frontal attack on child benefit, which could alienate middle income families. Mr Duncan Smith has floated the idea of limiting child benefit to the first two children. Mr Osborne is said not to be keen. This change might eventually save £1bn a year but would almost certainly not apply to existing children, which would be very controversial.

Housing benefit, which costs £19bn a year, is a likely target. Making all claimants pay at least 10 per cent of their rent would raise £2.5bn.

A more controversial option would be to pare benefits for the disabled. Taxing disability living allowance, personal independence payments and attendance allowance would save about £1.5bn. But Mr Cameron and Mr Osborne hinted during the election that the most vulnerable would be protected, and hitting the disabled would hardly chime with “compassionate Conservatism”.

The Prime Minister and Chancellor have played down the hard task ahead, pointing to £20bn of savings in the last parliament. But the low-hanging fruit has been picked. For example, about half the savings since 2010 have been achieved by curbs such as raising benefits in line with the consumer price index rather than the higher retail prices index. There are no soft options left.

Piece written by Andrew Grice for the Independent on Friday 15th May 2015.

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Lib Dems Success on Pensions

In the last couple of week, the Tories have tried to take the credit for the work of the Lib Dem Steve Webb MP, on ensuring a better deal for pensioners.

David Cameron has portrayed himself as the saviour of pensioners; ensuring universal free bus passes, free TV licenses for over 75s and maintaining the winter fuel allowance.

In actual fact, it is the Lib Dems who have helped pensioners the most over the course of the coalition government, including the following policies that were included in the 2010 manifesto (see below)

  • Increased pension by £800 a year since 2010, thanks to our new ‘triple lock’ rule which ensures state pensions always rise with inflation, earnings or 2.5% – whichever is highest.
  • Planned to raise the state pension from £107 to around £144, protecting future pensioners with a fair, single tier pension.
  • Guaranteed 9 million people an automatic workplace pension, which their boss and the government pay in to, giving everyone the confidence to save.

Lib Dem proposals in 2015 only involve taking free bus passes and tv licenses away from the wealthiest pensioners; people who do not need it. There are many instances of wealthy pensioners sending their winter fuel payments back as they do not deem them necessary. The money saved will go towards paying for a discounted bus pass for 16-21 year olds. This is an example of the Lib Dems providing a fairer society for all.

GE2015: The Choice Could Not Be Clearer

The upcoming General Election is set to be one of the most closely fought in a generation. The UK’s two-party system has been blown out if the water and many parties, who for years could only dream of getting elected, are now relishing the prospect of having the balance of power in what is looking like an inevitable hung parliament. The choice you make will have a huge impact on the country. The following article should help you make your decision.

There are 6 parties who could realistically be in government, in one way or another, after the 2015 election. These are the Conservatives, Labour, Lib Dems, Greens, UKIP and the SNP. You probably already know which one I will be voting for (Look at the web address!). This article is designed to help you, the voter, make an informed choice.

Conservatives – A party who seem to be hell-bent on making life worse for most people whilst maintaining the wealth of the rich. They claim to be making ‘difficult decisions’ which include, incidentally, changing the highest band of tax from 50% to 45% whilst cutting sure start centres and welfare payments for the most vulnerable. George Osborne recently set out what he would do if he were allowed to set his own budgets without a Lib Dem influence which includes a further £50 billion of ideological cuts which would see the state shrink to a size last seen in the 1930’s. A chunk of this would come out of local government, effecting local services such as buses and walk-in health centres.

Recent revelations also suggest a party in complete disarray with Home Secretary, Theresa May reportedly ignoring orders from Cameron after he fired two of her special advisers. It has resulted in a stand-off with May trying to gather support for a leadership challenge, should the Tories lose the election. Can we trust these people to govern us?

Labour – A party trying to distance themselves from the previous Labour regime, but oddly containing many of the same members – Miliband, Harman, Balls, Burnham, Alexander and Benn were all part of the Cabinet that lead the country into the deepest recession in living memory. Do you want to go back to those dark days? More worryingly, the party seems void of new, innovative ideas. On the economy, they have no credible plan to balance the books, only the current account. There is no doubt, that under Labour, borrowing would increase and the UK’s economic recovery put at risk.

They also claim to be the guardians of the NHS, saying that they are the only party that can be trusted with it. Seems very strange considering that the first privatised hospital was Hinchingbrooke in 2007, under the Labour government. They also gave sweeteners to private firms looking to invest in the NHS, something reversed as a result of Lib Dem policy in the current government.

UKIP – A party beautifully described as ‘angry men in suits’ this week by Nick Clegg. Everything seems to be the fault of Eastern European, congestion, housing shortages, unemployment (which is falling!) among other things. On top of this they do seem to attract a wide variety of ‘interesting’ candidates with antiquated views including Roger Helmer, an elected MEP who once supported gay conversion therapy and is against same-sex marriage, along with Kerry Smith, a PPC who was recorded using offensive language towards Asians and homosexuals. Whilst these views are not necessarily the views of the party, the prospect of being governed by people like this is a worrying one indeed.

Greens – A party that has taken over the far-left, abandoned by Labour in the late 1980’s. They make big promises which upon further inspection are unachievable, At council level, they pledge to install cavity wall insulation in ALL houses, without suggesting how to pay for it. They promise to make the ‘living wage’ legislation, against the advice of the independent Low Pay Commission, thus effecting employment numbers. Whilst in principle, the Greens and the Liberal Democrats have quite a lot in common, we recognize that the economy and reducing public expenditure is as vital as maintaining public services.

SNP – A one cause party in denial. Their dream of Scottish independence appeared to over for another generation, but Alex Salmond has other ideas. Even though Scotland voted against independence, he is willing to jeopardise the prospects of businesses again by pushing for greater autonomy, through Westminster, pushing Scotland further away from the UK. No does not mean no to this party and voters should be aware that every move they make is geared towards one thing; independence.

So this leaves only one party…..the Lib Dems. Whilst mistakes have been made, largely due to only having 1/6 of the power in the cabinet, many of the policies set out in the 2010 manifesto have been carried out. The pupil premium, free school meals, taking 26 million out of tax the list goes on. When a pledge was broken, Clegg offered an unreserved apology – when have you ever seen a politician do that! In addition, Lib Dems ensured that average monthly repayments for graduates fell! So if you want a government that works for a stronger economy and a fairer desire without the ideological austerity of the Conservatives or the irresponsibility of Labour then voting Lib Dem is the way to go.

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Clegg: Bite The Ballot Review

On Tuesday evening, the leader of the Liberal Democrats, Nick Clegg, appeared on Leaders Live – a programme supported by the youth organisation Bite the Ballot; that hopes to raise awareness of politics and political issues amongst young people. Clegg answered questions from a studio audience and from people on Twitter. Below are the main points that were raised.

Introduction : Clegg urged the audience to get involved in politics and to stand up against the ‘politics of fear’ currently dominating British politics (A reference to UKIP? We couldn’t possibly say) He then went on to reference his proudest achievements in government ; the pupil premium and free school meals.

Jobs – Clegg emphasized the need of a strong economy to provide jobs and referenced the drop in youth unemployment and increase in apprenticeships to emphasize how the government has increased opportunities for young people. He went on to say that if involved in the next government he would take more low paid workers out of income tax and make it easier for people to move up the career ladder.

Zero Hours Contracts – Said that exclusive zero hours contracts were ‘deeply exploitative’ and should be outlawed. Also said apprenticeship minimum wage (£2.73) should be abolished and that apprenticeships should be put on the age related minimum wage (£3.71)

Unpaid Internships – Said internships should be about ‘what you know and not who you know’ and should be completely meritocratic. He went on to say that companies that offer work masked as an internship should be clamped down on. In government he has quadrupled the penalties companies can receive for such an offence and increased the number of inspections they have to undergo. He also noted that it is now much easier for the public to report abuses.

Unequal Pay and Gender Discrimination – He noted that the gender pay gap has almost been eliminated for under 40s. For over 40s where gap is still wide, he suggested that all companies should have to publish what their pay back is, thus increasing scrutiny. He also spoke of the increase of women on the boards of FTSE100 companies.

Living Wage – He paid tribute to those who have implemented a living wage, including Ed Davey, Secretary of State for Energy and Climate Change and several councils. However, he stopped short of saying it should be implemented as legislation due to the findings of the low pay commission, an independent body which sets the minimum wage based on maximum job creation. He said disregarding this would be foolish.

(58% OF TWITTER AUDIENCE AGREED WITH NICK)

Education – Emphasized the need to help children early – ‘before they’ve hung up their coat on the first day of school’. Referenced policies that help children from disadvantaged backgrounds from the age of 2 and universal childcare and pre-school support for 3-4 year olds. Spoke of the pupil premium that has pumped £2.5bn into schools for disadvantaged children. He added that vocational courses should not be seen as less worthwhile than academic courses – calling the current perception as ‘snobbery’.

Tuition Fees – Explained the reason for his well publicized u-turn, saying that scrapping fees would have been impossible due to economic restraints and a Labour-Conservative consensus against it. He went on to say that he’s ‘learnt his lesson’ and will not make a promise he can’t keep again. He went on to say how the rise actually makes the majority of graduates better off as nothing is paid until they are earning £21,000, up from £15,000 and that no up-front payment is required. Stated that more people from ethnic minorities and disadvantaged backgrounds are attending university than ever before. When asked about the Scottish paying no tuition fees he said that the system was ‘unsustainable’.

Political Studies in UK – He said that citizenship and sex education should be taught in all schools, including free schools and academies. He also said that he was trying to secure money to publicize the new electoral registration system.

Age of Compulsory Education – Said that he supports the rise from 16 to 18. Went on to say that a 2/3 reduction in bus fares for all 16-21 year olds would be included on the front page on the 2015 general election manifesto.

Gender Equality in School – He said that the best way of promoting this is to have successful women in schools that the girls want to emulate.

(45% OF TWITTER AUDIENCE AGREED WITH NICK)

Health – He said that we should ‘cherish, defend, promote and protect’ the NHS.

Mental Health – He said we should end the ‘dickensian’ treatment of mental health in the UK and that it should be put on an equal footing with physical health. NHS constitution has been changed to reflect this and £120 million has been put in to improving waiting times for mental health patients. He added that funding for mental health clinics is now on a par with physical health clinics. He then spoke of the mental health taskforce that he founded and currently chairs. Health secretary Jeremy Hunt is the vice-chair. A report is currently due on how to get treatment for children with mental health issues more quickly.

Governance – He said that getting involved locally is the best way. From this people can get involved nationwide. Noted the current trend of decentralisation of power.

NHS Privatisation – Noted that it was actually Labour who introduced private companies into the NHS and that privatisation has slowed under the current government. He said that he has outlawed the practice of giving sweetners to the private sector and that £1 billion extra should be put into the NHS pot, paid for by taxing the rich on their dividends, shares and assets at the same rate as their income. He finished by saying that ‘people should come before profit’.

(60% OF TWITTER AUDIENCE AGREED WITH NICK)

Immigration – He said that Britain needs to ‘fair but firm’. He noted the contribution of immigrants to Britain, 1 in 7 companies in Britain set up by foreigners, and that without immigration the NHS would disintegrate. He added the immigrants should be counted in and out as one of the biggest problems regarding immigration is people staying in the UK on expired visas. Illegal immigration needs to be clamped down on and exploitative companies paying migrants less than minimum wage should be reprimanded.

EU – He said the EU is very beneficial as issues such as climate change and cross-boarder crime must be done collectively.He also added that 3 million jobs directly depend on EU membership. He said leaving the EU would be ‘economically self-defeating’.

Benefits – Said that freedom of movement is not the same as freedom to claim and that immigrants should not be entitled to take benefits that they haven’t paid into. He said that the issue was not about race but principle.

Integration – Agreed that immigrants should learn English and that there is greater focus on this at job centres than under the last government.

(61% OF TWITTER AUDIENCE AGREED WITH NICK)

Do you agree with Nick? Comment you thoughts below. For more info on the work of Worcester Liberal Democrats follow us on twitter @worcesterlibs.