Sunday, June 9, 2013

Ed Balls vs the Treasury: how the cuts debate became utterly meaningless

It’s been a pretty depressing week all round on the cuts front, with the Institute for Fiscal Studies claiming that the next two elections will continue to be dominated by austerity, and the Labour party admitting that none of the Tory cuts they’ve been screaming about for the past three years would be reversed under a future Labour government (I understand that this is supposed to prove their ‘credibility’, presumably in much the same way that the ability to hold two contradictory ideas in your head at once proves your cleverness).

But there was one detail of the week’s news which really irritated me, and which I think deserves unpicking. When Ed Balls announced that Labour would take winter fuel allowance away from wealthy pensioners, the Treasury dismissed the policy on the grounds that it would barely save anything, telling the press that “one pledge that saves less than half a percent of the welfare budget is utterly meaningless”. 

This strikes me as disingenuous bollocks. The change to winter fuel allowance was projected to save around £100m a year. The government’s benefits cap is projected to save around £275m a year, within much the same order of magnitude. And that’s just DWP’s own, highly dubious estimate: it doesn’t include either the cost of administrating the cap or, more significantly, the cost to local authorities of providing temporary accommodation to families made homeless by the cap. Once these things are factored in, even DCLG reckons that “the policy as it stands will generate a net cost.” 

Oh, and if the Treasury really wants to pick a fight over whose policy saves a bigger fraction of the welfare budget, perhaps it would like to have a chat about this pie chart, which was doing the rounds on social media a few months back and which demonstrates the hollowness of government rhetoric blaming the size of the benefits bill on ‘scroungers’.

In fact, the government has been pretty open that the benefits cap is at least in part a symbolic gesture rather than a policy designed to achieve genuine savings, with Cameron and Osborne repeatedly drilling home the message that it’s just wrong for any family to get more from the state than the average working family earns.  All politicians make gestures designed to convey a political message rather than for their fiscal impact: the real debate should be around the content of that political message.

In the Tories’ case, the message is that people out of work are feckless scroungers responsible for all our economic problems, and that the government is on their case. In Labour’s case, the message is that they might no longer be the anti-cuts party, but at least they’re the party who’ll focus cuts on the wealthiest. And that’s why the analogy between the benefits cap and the cut to winter fuel allowance holds so well. In both cases, the purpose is to set out the party’s stall on the kind of cuts they want to make: cuts that demonise the poorest, or that target the richest.

Of course, pitting these messages directly against each other lays open just how narrow the political debate on austerity has become: disagreement between the mainstream parties is restricted to how we should go about cutting welfare, rather than whether we should cut it in the first place. Still, if the Treasury had responded to the content of Labour's gesture rather than just the headline figure, at least we'd have something that vaguely resembled actual political debate. To criticise them on the basis that their gesture doesn’t save much is, to borrow a phrase, utterly meaningless.

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