With the unrepentant mantra that we are all in this together, George Osborne used his speech to the Conservative Party conference yesterday to warn of further public spending cuts, including an additional £10 billion to be taken from the welfare budget.
It was clear the Chancellor's Liberal Democrat Coalition colleagues were among those not in on the policy proposals. He ruled out their favoured policy of a mansion tax on houses worth more than £2 million, ignored LibDem claims that further cuts to the welfare budget would have to be negotiated and floated two policy ideas likely to cause them considerable difficulty. These would exclude people under 25 from claiming housing benefit and curb child benefit for additional children born to people on benefits. Significantly, possibly because of the U-turns he was forced to perform on VAT on pasties, charity donations and the fuel duty increase, these concepts were posed as questions rather than policies. Is it fair that people in work have to consider the full financial costs of having a child, when those on benefits will receive an increase? Is it fair that young people who have never worked receive housing benefit for a flat when those in work have to live with their parents?
Such issues go to the heart of what we expect from the welfare state and general agreement about obligations and entitlement. How we pay for and allocate public services and benefits are a defining issue for all political parties but, in a stalling economy and with an ageing population driving up the cost of the NHS, personal care and state pensions, previous assumptions must be re-assessed. This is provoking a welcome debate, especially in Scotland where the Labour Party is now questioning the sustainability of the SNP's commitment to free services, including personal care for the elderly and university tuition.
The Scottish Tory leader, Ruth Davidson, made an incendiary contribution to this discussion with a claim in her conference speech that only 12% of households in Scotland are net contributors (the taxes they pay outweigh benefits received through public spending). She is right to say we need to encourage entrepreneurs. It may be, as she claims, that means-testing prescriptions could fund more drugs for rare cancers. This is something the Scottish Government should examine.
Her observation that people contributing tens of thousands of pounds in taxation do not cover the amount the Government spends in their name demands closer scrutiny. We all contribute and benefit to varying degrees from childhood to old age and among public sector costs are the doctors, nurses, teachers, police officers, refuse collectors and others who provide essential services. Ms Davidson, who receives her MSP's salary courtesy of the taxpayer, fails to take into account the value of the services provided from the public purse.
By contrast, despite warning that the budget could not be balanced on the wallets of the rich, Mr Osborne acknowledged the value of Ed Miliband's one-nation approach. "Workers of the world unite", he said, announcing a scheme for employees to be given shares in their company free of capital gains tax in return for giving up some employment rights. It was his only real policy announcement and will have limited appeal.
In a double-dip recession and facing the likelihood of missing his debt-reduction targets, the Chancellor had no scope for a feel-good speech. Stimulus for growth was a notable omission. The message was prepare for further public spending cuts. That is why we need a rational debate about welfare spending that does not demonise the poor but helps them out of hard times while meeting their responsibilities.
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