Tuesday, October 05, 2010

The courage of George Osborne

Students of that documentary study of 1970s/80s politics, Yes Minister, will recall that there was no greater criticism of a minsterial decision than for Sir Humphrey Appleby to describe it as 'courageous.' Such decisions would inevitably end in the minister being reshuffled to somewhere less salubrious than the Department of Administrative Affairs. The steadying hand of Sir Humphrey has been missing in recent months, as the Tory/Liberal Democrat coalition have systematically been alienating their friends and enemies alike - the influence of Toby Young knows no bounds.


There have been the usual suspects for Tory approbation - the arts sector is up in arms as the British Film Council is scrapped and other cultural icons start to feel a chill. The universities - always hotbeds of lefty radicalism - are worried about money again, the quangos feel the heat of the fires stoked up around them and the unions are looking anxiously at legislative threats and the loss of development funding.

So far, that is business as usual, but then the Tories got overconfident and decided that there were other groups worth riling. The GPs - all private contractors to the NHS - are unhappy at the proposals for a wholesale and destructive reorganisation of the NHS. The military are just realising that the Strategic Defence Review has precious little to do with Strategy or Defence and much more to do with cutting costs, so they are heading to the barricades. Even the police - the ones that Maggie made sure to keep on side - are revolting at the plans to merge CEOP and SOCA, resulting in the resignation last night of the highly respected chief executive, Jim Gamble. The police are also facing the imposition of elected commissioners, despite the public opposition of the Chief Constables, a pay review and budget cuts that they have characterised as promising a great Christmas for burglars.

But George Osborne's brave attack on the middle income families with a stay at home parent is by far the most courageous, for it is apparent that if one parent is just over the limit for higher rate tax and earning £44,000 a year with a non-earning partner, then the child benefit - worth £1000 a year for the first child - is removed in what amounts to a 5% cut. If, however, both parents each earn £40,000 a year, then this joint household income of £80,000 will continue to be boosted by child benefit - a policy that creates an instant and obvious injustice. This is an attack on aspiration - parents may be better off asking for lower pay than taking a job paying just over the limit, simultaneously reducing their tax offering to the state. It is also an attack on women, as they tend to be the chief providers of stay at home care and their pension credits are attached to the payment of child benefit.

You also have to wonder where this idea came from, as it seems to be yet another of those concoctions cooked up in the Osborne/Alexander laboratory in a post-election haze. For was it not Philip Hammond, then shadow chief secretary to the treasury, who told Newsnight viewers that
Talking to people, one of the things they appreciate about child benefit that it is universal and easily understood. To start to means test it would erode it ... It reassures them about the availability of the benefit. If you start means testing it, if you start slicing away at that universality, then people are going to ask where you are going to stop
Or there is Nick Clegg, being interviewed by Paxman after Vince Cable had run a change to child benefit up the flagpole and found his policy being shredded by his own party
  • JP: Can we just clear up something on child benefit: in September last year, you said you wanted to get rid of child benefit for high earners. At the start of ...
  • NC: No I didn't say get rid of it. I didn't say; I've never said that.
  • JP: You've never wanted to get rid of it for high earners.
  • NC: No, I've never said that.
  • JP: But Vince Cable said in the Chancellor's debate,only a matter of two or three weeks ago, that he did want to get rid of it.
  • NC: No, he made quite clear, within minutes I think of the debate , that he misspoke, and that what he meant was the child component of the child tax credit system.We are not putting child benefit into question. I never have and he hasn't either.
Or Steve Webb, a renowned specialist in this field, who added after the Cable comments hit the fan,
'We've been able to conduct the review speedily over the last 24 hours - and I am pleased to say that the policy won't be changing", said Webb. Webb acknowledged the importance of universalism for maintaining support for tackling poverty.

Or as he said
I read…we were going to look at ‘middle class child benefit’. I have looked at it – and I have rejected it.

Only a year ago, George himself promised to support it, but as with so much policy, that was then, this is now.

There are a couple of articles worth reading on this. Firstly, there's an excellent piece by Declan Gaffney and a similarly fine piece from The Wandering Hedghog. If this local difficulty cannot be resolved, it is starting to look as though the partial withdrawal of child benefit will become the Tories' very own ten pence tax, especially when combined with the removal of the child tax credit from the higher end of the earning spectrum. Channel 4 News' Cathy Newman was taking the political temperature:
One minister told me just now he had four emails from constituents complaining about it within an hour of the chancellor leaving the stage. He said: “We’re p***ing off our core vote. We’re supposed to be the party of the hard-working family.” He went on to protest that the chancellor had sprung the decision on ministers, and that it appeared to have been hurriedly put together. A cabinet minister has just told me the cut was a “complete bombshell” – he hadn’t been given any advance warning either.

So there you go - the Tories are now at war with middle England as well, a position quite at odds with a promise to be the party for the family.

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