Labour's meekness has given Osborne the cover to savage the working poor

Osborne prepares to present his Budget to the Commons
Osborne prepares to present his Budget to the Commons
Ian Dunt By

One of the cruelest ironies of the general election is that Ed Miliband's tepid political offering has been interpreted as a parable about the dangers of being too left wing.

Case in point: the living wage. It took the Labour leader years to say whether he even supported it and then, when he did, his big offering was to set it at £8 an hour by 2020.

That failure of nerve has now allowed George Osborne to leap-frog the Labour offer and present himself as a social justice chancellor while he savages the working poor.

Osborne used his so-called emergency Budget today to offer a mandatory living wage of £9 an hour by 2020. There are plenty of problems with the offer, given he is cutting benefits for those same low-income workers elsewhere. It's basically a minimum wage with a striking new name. The mechanics of working impoverishment stay the same, but the chancellor can shift the politics to his advantage. The left's criticism of his plan will fall on deaf ears, because it is superior to Labour's offer.


This is what a timid Labour party does. It does nothing to limit the attacks from the press. They spent the election calling Miliband a crazed Marxist anyway, even though he bent over backwards not to do anything remotely radical. But it succeeds in giving the Conservatives maximum room to manoeuvre.

If Labour had any sense it would learn from what has happened today. But it does not and they will not. The party will continue to shift right, even when presented with the evident political danger of doing so.

Behind Osborne's living wage decision was a savage attack on the working poor. Maintenance grants would be replaced by ramped-up loans for poorer students. Those aspiring to a better life and struggling against a system which already advantages those with private means will have more and more debt heaved upon them, lasting probably throughout their working life.

Tax credits and universal credit will be limited to two children – a move which is almost guaranteed to drive children into poverty. We won't technically be able to call it that, of course, because the government took the precaution of changing the definition of child poverty before making the announcement.

The benefits cap will be reduced to £20,000. The income threshold in tax credits will be reduced from £6,420 to an eye-watering £3,850. Universal credit work allowances will be taken away from able-bodied people without children altogether. The taper rate at which tax credit is awarded will be raised to 48% and the income rise which is disregarded cut from £5,000 to £2,500.

This is a punishment regime imposed on the very people Osborne claimed he wanted to help – those who don't sit at home 'with the curtains drawn', those who get up and go to work despite meagre wages, those who encourage their children to go to university so they can have a better life. They are the target of Osborne's red pen.

Meanwhile, the middle and upper class were showered with rewards. The wealthy will be able to pass on up to £1 million to their children free of inheritance tax. The upper rate income tax threshold will be raised to £43,000. Corporation tax will be cut once again, to 19% in 2017 and 18% in 2020.

That's the reality of Osborne's Budget – the working poor savaged, the wealthy rewarded. But a final flourish on the living wage protects him. Afterwards Harriet Harman seemed all at sea. The SNP and Labour were in disarray.

The Tories frightened Labour into a pitifully meagre election offer and today they mercilessly used it against them. 

Comments

Load in comments
Politics @ Lunch

Friday lunchtime. Your Inbox. It's a date.

Newsletter update
wa