The best thing about the Autumn Statement was not having to listen to Osborne’s uber-smug tones. The section on welfare was very short, but then there is not much left to cut.
After all the talk about Just About Managing families, there had been some hopes raised that the government might reverse the effective cuts for people moving from Tax Credits onto Universal Credit, but those hopes were soon crushed (cue headlines about ‘no JAM today’). Remember all the excitement about Tax Credit cuts being rejected by the House of Lords? Well, it was only ever a delay, as the move from Tax Credits to Universal Credit is bringing the cuts in by the back door. The one positive change is a very small drop in the taper rate for people earning and on Universal Credit. Instead of losing 65p in benefits for every pound earned, they will lose only 63p – which is still an incredibly high effective tax rate. Even IDS has protested that this change is not enough. For the people who will be losing thousands of pounds through the move from Working Tax Credits to Universal Credit, the change in the taper will restore only a few hundred. Meanwhile, the rise in the minimum wage is actually less than would have been expected if it is to reach £9 by 2020, as Osborne had previously promised.
And though pensioners retain the triple lock for now (i.e. the manifesto promise to increase the state pension annually by 2.5 per cent, or in line with inflation or wage growth – whichever is highest), there were clear indications that this is in the government’s sights for after 2020.
Even within its own terms the government yet again failed to meet its fiscal targets – which it solved by moving the goal posts. This move is fraught with potential danger, as Richard Murphy explains:
‘…we learned fiscal rules can be abandoned with impunity as Osborne’s were rejected without a backward glance. That which replaced it was worse though in many ways. First the books will be balanced, but we don’t know when. So that’s austerity forever. Second, debt as a proportion of GDP will shrink. That’s a licence for privatisation. Third, benefits [i.e. total benefit spending] will be capped. This is a plan for continued shrinking of the state at cost to ordinary people, and the social safety net.’ And Murphy describes the proposed investment in infrastructure as ‘peanuts’.