Budget 2010: Make the best of us, not the worst

For me as for many, I suspect, the merchant bankers snagged by TV news cameras supping in Corney & Barrow last night (could have been any C&B, didn't matter) looked altogether too relieved and thirsty and ready for the weekend. Not that I didn’t want the markets to approve the ‘Unavoidable Budget’™, you understand – au contraire. I was just fantasising that the markets' handmaidens might have to feel as sober and filled with foreboding as the rest of us, at least for an evening.
Because I have no imagination I couldn’t foretell any of yesterday’s Budget except for what had been leaked, plus the surety that Nick Clegg would be talking it up weasel-style in front of a camera and his imaginary legion of fans. I almost didn’t want to buy outright the Krugman thesis that we are on the brink of a historic error, austerity in a time of weak demand. And I didn’t fancy going along automatically with Alastair Campbell’s tribal reading of the runes: “...George Osborne puts the fragile recovery at risk with his ideological onslaught on public services, by pretending the economy is worse than it is, and using the quisling Lib Dems as political cover.”

However, it seems clear today that the poorest areas and people in this country have been disproportionately hit by Osborne’s cleaver. As Tory minister Bob Neill put it with such candour a few weeks back, "those in greatest need ultimately bear the burden of paying off the debt." (Eh?) Anthony Painter gave a strong response today: “any group that disproportionately relies on benefits will be marginalised, plunged into poverty, and facing despair. This is not the way it’s meant to be. Not in a decent, relatively wealthy society. The basic post-war compact on support and advancement for all in exchange for doing the responsible thing was broken yesterday. Not only lone parents, but also those who are poor, mentally impaired or incapacitated, the disabled, certain minority groups, and anyone relying on benefits to get by.”

Now, to say quickly - I do appreciate the rebuttal that to live 'disproportionately' on benefit is not right for any capable and able-bodied person, and in those cases should not be encouraged/tolerated. I agree that the public sector contains waste (and by that I include the NHS) and that Labour was going to have to cut big too. I’m not in fear of 'Bankrupt Britain' but I can feel the horror in the concept of interest on national debt exceeding the economy’s growth rate. I just haven’t ever trusted the Conservatives to do the harrowing – they’ve never been notably skilful at it. But I agree with Hopi Sen that it’s not a case of 'whether' but of ‘whose public sector pensions and pay should be cut.’ (Even John Redwood seemed to show some appreciation of the case for exemption of the low-paid public servant on Newsnight last week.)

And still, the thought of 25% less spending by government departments is stomach-churning. Surely paying more tax would be cheaper? This blog favoured the D. Miliband ratio of spending cuts to tax rises (2:1) rather than what looks like the 77-23 split of G. Osborne. That would be what’s properly called ‘a progressive alternative’, if the tax rises were sensibly applied to some of the sorts of ‘middle and high-income earners’ who were feeling so cheery round the bars of Broadgate and Exchange Square last night. But, but… I also acknowledge and defer to what John Rentoul described the other day as: “a strong “tree” bias (“Don’t tax you, don’t tax me, tax that man behind that tree,” as Andrew Dilnot, formerly of the Institute for Fiscal Studies, once surprised me by chanting in a television interview).” And if everyone with taxable earnings between £37K and £150K is to be taxed at 40%, and at 50% above that, then that’s about as much income tax as I would have thought proper or permissible.

I do understand the thinking and appeal of a firm smack from government so as to teach that Britain should ‘live within its means.’ But the other day John Redwood did that quaint Tory thing of comparing the nation’s economy to a domestic household knuckling down to unavoidable frugality: ‘I know it is asking a lot for an outbreak of commonsense by public sector CEOs in councils and quangos. But can they spare us the crocodile tears and the parade of the bleeding stumps? Can they do what any household or company does when faced with a few percent off their income? Just get on and manage it in the least damaging way possible.’ Redwood’s analogies, however, were all drawn Margaret-style from good Grantham housekeeping: (‘You can holiday nearer at home… eat in more than in the local restaurants… draw some money out of the savings account... buy more of the value items at the supermarket, and put more vegetarian dishes into the home menus.’)
I’m sure a great many Britons have come to terms with the end of their excessive consumption based on borrowing, and so would fit Redwood’s model. If you are a company, though, then you just have to fire a proportion of your staff. And if you are someone who never earned enough to have significant savings, or weren’t reared on a middle-class diet, and did all your eating indoors on ‘value items’ anyway… What commonsense homily has John Redwood got to tell you then?

Labour has to offer an alternative, of course. No sitting on the hands. I further agree with Hopi Sen that this alternative ‘needs to be built on creating growth’, ‘we need to create jobs to grow’, and so we ‘need to be talking about measures to support private sector job creation and these can’t be simply extensions of State Aid.’ For sure, with all these benefit cuts we’re looking at a big reserve army of the unemployed. But, really, where will the jobs come from? Can anyone say? They’re hardly going to emerge blithely when people are afraid to spend, businesses afraid to invest, and our imagined export markets are outbidding each other in the austerity stakes, Germany 'leading by example' etc.

Over to you then, D. Miliband...