Tag Archives: Uk

All aboard the Tory budget train…

When I was younger I made promises to my future self. Many have been left tattered by life; ‘never allow yourself to become too cynical’ has fared particularly badly.

Developments like George Osborne’s recent budget don’t help (UK, Wednesday, 8th July 2015). I can’t stop my mind returning to the image of an overcrowded train carriage. Instead of supplying more trains, passengers are asked to move further down into the carriage to accommodate more people in the limited space. It’s a risk to everyone on board, of course, but it’s the more profitable solution.

In this first fully Conservative budget since the General Election in May, Osborne led with the introduction of a new national living wage of £7.20 an hour for those over 25. There are a number of obvious and some less obvious problems with this superficially liberal sleight of hand. The first is the conundrum of just who would actually be able to ‘live’ (and where) on £7.20 an hour. And whilst Osborne estimates that 2.5 million people will benefit by some £5,000 over the coming five years, he is surely balancing the budget in his favour with the unspoken calculation of just how many will find their incomes reduced by employers who can relax their standards to the level of this new bar.

The question of what happens to those under 25 is thornier…. If they are unfortunate enough to be born to parents earning the national living wage, it’s unlikely that they’ll be able to stay at home long beyond working age; they’ll soon be pushed out of the meager nest by the benefits cap (£20,000 per household outside of London).

They’re unlikely to be able to educate themselves out of poverty, as they will no longer be able to access student grants (now abolished). The deal offered by student loans is not attractive – look at their parents’ impossible debts, now exacerbated by the reduction of working tax credits.

Anyway, given the national living wage and the new alignment of Employment and Support Allowance with Jobseeker’s Allowance, they are unlikely to be able to work enough hours to sufficiently supplement a student loan. The rents demanded by the private landlords will be unattainable now that there is a limited and stagnant supply of social housing. And 18 to 21 year olds will no longer be entitled to housing benefit (you’ve got to ‘earn to learn’ now, fam).

Don’t worry though, this new undereducated, undernourished and homeless underclass won’t be encouraged to reproduce (assuming they can find a park bench somewhere on which to entertain such a possibility) – restricting tax credits and Universal Credits to only two children will ensure the feckless and the lowly won’t be able to occupy their time breeding.

But they won’t have to pay tax, so that’s a positive isn’t it? The personal allowance for tax will rise to £11,000 next year. You’ve got to be pretty lucky to hit that target on a £7.20 zero hours contract.

But don’t be fooled into thinking this is some sort of new Tory benevolence. No, look instead to the simultaneous trial of a fresh approach to non-dom taxpayers. The new rules are that if you’ve lived in the UK for over 15 years, then you have to cough up your taxes like a good old boy. The flaw is that, as we all know, good old boys don’t pay tax. This will be a popular but ineffective fundraiser – if you’re rich enough to qualify for non-dom, then you’ve got a second home to move to when the deadline approaches.

But this is not just a sop to Middle England (where the hobbits live). The real significance of this new bit of legislation is that it sets a precedent. Once established, it will be much easier to suggest that anyone will have had to be resident in the UK for more than 15 years before they can benefit from its welfare provision.

Or that benefits are restricted to UK taxpayers.

Who’s paying tax again? Ah.

So, there you have it. The great divide. The creation of an underclass of non-unionised, disposable, internationally exchangeable, cheap and non-dependent migrant workers.

And what will happen as the underclass ages? While state pensions will be triple locked (dying old people being a tabloid hit any government would wish to avoid), the threshold for tax-free pension contributions has just been reduced, so if you want to stay out of the miasma you’re going to have to pay.

But that’s ok because if you’re already established in salaried, pensioned employment chances are that you’ll benefit from this budget by some small but smugly comforting margin.

So that’s alright, isn’t it?

You won’t mind when the government announces that the train is moving more slowly than scheduled, but if we just uncouple that heavily overcrowded carriage at the back that’s weighing us down…..

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