Democracy Gone Astray

Democracy, being a human construct, needs to be thought of as directionality rather than an object. As such, to understand it requires not so much a description of existing structures and/or other related phenomena but a declaration of intentionality.
This blog aims at creating labeled lists of published infringements of such intentionality, of points in time where democracy strays from its intended directionality. In addition to outright infringements, this blog also collects important contemporary information and/or discussions that impact our socio-political landscape.

All the posts here were published in the electronic media – main-stream as well as fringe, and maintain links to the original texts.

[NOTE: Due to changes I haven't caught on time in the blogging software, all of the 'Original Article' links were nullified between September 11, 2012 and December 11, 2012. My apologies.]

Tuesday, April 02, 2013

Welfare reforms: we will make work pay, says George Osborne

The chancellor will launch a counter-offensive in the increasingly bitter war over welfare, accusing his critics of a cowardly defence of vested interests, and claiming the increase in the personal tax allowance introduced this month will make work pay.

With a week-long chorus of protest from Labour, charities and church groups constantly intensifying, George Osborne, in a relatively rare set-piece speech, will insist the changes are not simply a necessary evil to tackle the deficit, but a positive reform of a bloated welfare system.

But his claim that most families will benefit this week from the increase in the tax allowance will be immediately challenged by a leading thinktank warning that the move will be undermined by the introduction of the new universal credit.

The majority of the benefit from raising the personal tax allowance will be eaten up by welfare reductions under the universal credit, the Resolution Foundation claims, arguing the government is "giving with one hand, while taking away with another".

Osborne, convinced that Labour is on the wrong side of the welfare argument politically and intellectually, will claim the current system is broken, and that the reforms he is introducing this month will leave the average voter better off. His claim is focused solely on measures being introduced from this week and is designed to show that the furore over welfare cuts should be counter-balanced by the impact of the latest increase in the personal allowance. Osborne will say the reforms are "about making sure that we use every penny we can to back hard-working people who want to get on in life. This month we will make work pay."

Putting himself on the side of the "striving" classes, he will say: "For too long, we've had a system where people who did the right thing – who get up in the morning and work hard – felt penalised for it, while people who did wrong thing got rewarded for it. That's wrong."

Speaking to employees at a supermarket distribution centre, he will round on the loud complaints from those who defend the current benefit system.

He will say: "These vested interests always complain, with depressingly predictable outrage, about every change to a system which is failing. I want to take the argument to them. Defending every line item of welfare spending isn't credible in the current economic environment."

He will add: "Defending benefits that trap people in poverty and penalise work is defending the indefensible. The benefit system is broken; it penalises those who try to do the right thing; and the British people badly want it fixed. We agree – and those who don't are on the wrong side of the British public."

Although some of his remarks are aimed at church groups which have been critical of the welfare reforms, he will reserve his most savage criticism for the shadow chancellor, Ed Balls, saying: "Some politicians seem to think we can just wish away Britain's debt problem. They want to take the cowardly way out, let the debt rise and rise and just dump the costs on to our children to pay off."

He will claim welfare payments became so generous that people felt better off on the dole, adding: "Once it becomes the norm in an area not to work, welfare dependency can become deeply entrenched, handed on from one generation to the next."

He will accept the Thatcher government contributed to this welfare culture in the 1980s by introducing incapacity benefit as a way of taking the long term unemployed out of the statistics, describing it as quick fix politics of the worst kind.

In an attempt to reverse the impression the country is being pushed towards unreasonable austerity, he will claim the measures announced this month will mean nine out of 10 working households (around 14m households) will be better off by, on average, almost £300 a year.

Osborne includes in this calculation the £1,335 increase in the personal allowance, freezing of council tax and fuel duty, and limiting many benefit rises to 1% this year. His figures do not include the unemployed.

Labour said IFS figures show that the average family will be £891 worse off this year because of the cumulative effect of tax and benefit changes since 2010.

The Resolution Foundation, in a new report, warns that Osborne's plans to introduce universal credit, merging different benefits, will undermine the impact of personal allowances. More than two-thirds of the benefit of a tax cut will be taken away from a universal credit claimant and returned immediately to government. Universal credit, merging six different benefits, is due to be phased in this year.

Its warning also applies to Labour's plan for a 10p starting rate of income tax, and suggests the whole political class has not yet found a way to integrate its flagship reforms into a coherent tax and welfare package. In a new report it says: "Tax cuts will not, in large part, reach low to middle income working households. This is because universal credit is calculated on the basis of net income, meaning that any tax cut that boosts a household's income also reduces their UC support. Put another way, any tax cut will give with one hand and take away immediately most of the gains with the other. No party has questioned this basic aspect of UC's design."

The report argues: "A tax allowance hike of £1,000 would be expected to lead to a gain of £200 in post-tax income. However, this increase in post-tax income leads to a reduction of £130 in universal credit, and therefore a net gain of just £70. This means that rather than every taxpayer gaining a flat rate £200, those in the greatest need gain barely a third of this amount – while those higher up, and not in receipt of universal credit, gain the full amount."

Original Article
Source: guardian.co.uk
Author: Patrick Wintour

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