If they say you’re a Red Tory or a Yellow Tory, ask about Corbyn’s welfare cuts

Jeremy Corbyn’s team had promised to reverse child tax credit cuts, but in their 2017 manifesto, they did nothing of the sort as the Institute for Fiscal Studies shows:

Corbyn’s manifesto planned to increase taxes by £46bn per year and to borrow an extra £350bn. With so much extra funding, there was enough to honour their promises on welfare, so voters could be forgiven for assuming that they would.
In his first leadership election, Corbyn said: “Families are suffering enough. We shouldn’t play the government’s political games when the welfare of children is at stake”.  This issue of welfare cuts is why he defeated his Labour rivals for the leadership, because they had previously abstained on a number of votes.
In autumn 2015, John McDonnell, his Shadow Chancellor, didn’t just commit not to implement these cuts, he promised to reverse those that had already happened: “We are calling on Osborne to reverse his decision to cut tax credits. If he doesn’t reverse these cuts, we’re making it clear that we will”.

Three weeks before polling day, Corbyn said to Jeremy Paxman, “I am fighting this election on … the levels of poverty in our society, … children that are not supported properly in our society. I’m fighting this election on social justice” (7.15 mins in). Yet his manifesto was proposing to implement £9bn of the £13bn/yr of planned Tory cuts to benefits.
Over the years, Corbyn supporters have hurled endless abuse at Labour moderates, they have called them Red Tories and Tory-lite. They have accused them of selling out, of adopting Tory policies in a cynical game of triangulation. Yet on Corbyn’s policy on welfare during this last election, they were strangely silent.
The Liberal Democrats have been under constant attack too, accused of being Yellow Tories and Tory enablers. Many Lib Dem members have found this deeply painful, after all, there were deeply unpleasant cuts to welfare in the time of the Coalition, some of which the Lib Dems now propose to reverse.
In 2010, the government was borrowing one pound for every four pounds it was spending. Experts worried that, if no coalition were formed, the markets would panic; that, even if a coalition were formed, if serious action on the deficit was delayed, there was still a risk of panic. Panic could mean lenders refusing to provide loans at a reasonable rate of interest. If this happened, it would be extremely difficult to keep the government finances going. The UK might be forced between the choice of much harsher cuts, or a very large increase in inflation.
Did the Lib Dems make the right call in supporting cuts to government spending, and in making compromises in coalition with their tradition political opponents? There has been much angst among Liberal Democrats on that question. Even those who think they made a mistake, mostly agree that it was an extremely difficult dilemma.
This year, Corbyn faced no such dilemma.
In 2010, the country had a structural deficit of 5.3% of GDP, now it is about 0.9% of GDP. From 2010, the Liberal Democrats were the minority partner in a coalition, and had only 57 MPs out of 650. In contrast, Corbyn’s manifesto was not for a coalition, but for a government with a Labour majority.
In 2015, the then Labour leadership argued that Labour should adapt its policies to public opinion. If Corbyn now conceded that they were right, his attitude would not be hypocritical. However, he and his supporters have done little but rail against what they call the “neoliberalism” and the “pro-austerity” policies of previous Labour leaderships. They claimed that moderates were only interested in power, and had sold out their principles.
The Tory welfare cuts, which Corbyn and his allies are proposing to implement, are cuts to benefits that were raised by the New Labour government of 1997. So, as far as welfare provision for those on low incomes is concerned, Corbyn is now well to the right of Blair’s government.
Many have said that the proposed Corbyn cuts are too harsh. Bizarrely, the so-called neoliberal Economist thinks that Corbyn’s manifesto was too regressive on welfare.
These are the same cuts that the Lib Dems vetoed during the Coalition, because they thought they were too cruel and regressive, and why the 2017 Lib Dem manifesto allocated funds so they would not have to be implemented. This means that, as far as welfare provision for those on low incomes is concerned, Corbyn is now to the right of the Coalition.
Instead, Corbyn’s team allocated £11bn/yr to abolishing university tuition fees, and unspecified sums to nationalisation of water, electricity and other services.
Perhaps, these welfare cuts in Corbyn’s manifesto were never intended to be carried out. If so, this raises two uncomfortable questions. Were they due to incompetence? Or he was playing the same sort of dishonest games that he has accused others of?
After the 2017 election, he is basking in comparative electoral success. But for those who are motivated by social justice, the idea that £9bn/yr of his funding promises were on the backs of the low paid must be a bitter pill to swallow.

* George Kendall is the acting chair of the Social Democrat Group. He writes in a personal capacity.

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  • Colin Green 25th Jun '17 - 9:29am

    Corbyn has pulled off a triumph of rhetoric over reality. People voted for his words of ending austerity yet his manifesto ruled out reversing cuts made to the least well off. People voted for him to oppose Brexit, yet he whips his party to support it. It works because he didn’t win the election and so doesn’t have to do what he talked about. How well will he survive if he does become PM in an autumn elections?

  • Brian Milnes 25th Jun '17 - 9:44am

    Just watching the Labour Shadow Work & Pensions Sec. Debbie Abrahams on Andrew Marr admitting to not having costed item after item of their proposals. Admitting that they weren’t going to unfreeze benefits.
    “Smoke and mirrors” anyone?

  • Dave Orbison 25th Jun '17 - 9:46am

    Colin Green ‘it works [for Corbyn] because he didn’t win the election and so doesn’t have to do what he talked about’.

    Is that all it is to it? Just leaves me wondering then why the LibDems who have 0% chance of forming the next Government couldn’t exploit this seemingly obvious ploy. I do accept though that there is confusion around whether Labour’s future benefits would be frozen. Corbyn has said in interviews that the freeze will be lifted but Labour have not done a good job around this. That said, it’s gives me a wry smile that the LibDems are switching tack from Corbyn the reckless spender, to ‘Corbyn the mean’ for not promising to spend as much as the LibDems.

    Of course there is that tricky issue for the LibDems, TRUST. Just because the LibDems put something in their manifesto, would they do it? I think the further fall in LibDems hare of the vote answers that

  • why did the Liberal Democrat manifesto not commit to implementing the court ruling on pip then, beings it was the Liberal Democrats who submitted the prayer motion against the legislation in the first place?

  • Dave Orbison
    I don’t think Labour has a lot of trust on the economy. Mr Corbyn seems to have taken Labour back to the 1970s. A time well remembered for its stagflation and IMF.

  • Andrew McCaig 25th Jun '17 - 10:46am

    The Labour manifesto was, as said above, a manifesto for opposition, not for government, full of big promises to the middle class and with an income side that did not add up at all. The combination of a huge increase in corporation tax and leaving the Single Market would never have raised the income they said in favourable circumstances, and with Brexit it would have led to a huge flight of companies to Ireland and other EU countries…
    Labour knew they could not possibly get a majority. Next time they will have to be more careful, or they could suffer the fate of the Socialists in France, down from 40% to 9% in 5 years.

  • Dave Orbison 25th Jun '17 - 1:07pm

    Manfarang – “Mr Corbyn seems to have taken Labour back to the 1970s. A time well remembered for its stagflation and IMF.”

    Well remembered? By what % of voters? Incidentally, you might recall between1970-1974 there was a Tory Government. Then in 1973 we had a World energy crisis, hardly a Wilson Govt invention. But this sort of attack simply illustrates how out-of-touch the LibDem Party has become. Harking back to something that is nearly 50 years ago. Why stop there, why not talk about Gladstone, oh wait some here still do?

    George Kendall – one of the commonest excuses offered by LibDems re the broken pledge on student fees was “Of course the pledge was only relevant had the LibDems been able to form their own Government”. Nice try but not good enough.

    We know, if we are being honest with the electorate, that there was more chance of us being wiped out by an asteroid than the LibDems then, let alone now, forming their own Government. Notwithstanding the fact that it appears that the Tories had not even insisted on this as part of LibDem manifesto being ditched in the cosy Coalition talks.

    Given this defence, then just what is the point of a LibDem manifesto? At best you can say it sets out the LibDem priorities should they form part of a coalition. But then of course, as per above with student fees, we know that even in that event the LibDem manifesto counts for nothing.

    So do you not see the irony of the LibDems going round saying there’s a problem with the Labour manifesto? Apart from the fact that no one is listening? Is this the role of the LibDems?

    At the moment the LibDem Party appears to be lost with little or no purpose or policy focus let alone any consensus as to which direction of travel they should adopt. Perhaps they should get their own house in order first. But to those that refuse to accept the LibDems have any real problems, that they are right on most issues (leaving aside that appears they are pro-austerity one day and anti-austerity another) by all means stay as you are and watch as the World goes by.

  • Sue Sutherland 25th Jun '17 - 1:11pm

    I never understood why our leaders didn’t say they couldn’t vote against tuition fees when they realised the scale of the cuts in benefits that were going to have to be made to balance the books.

  • Dave Orbison
    Yes things have changed. East Asia is the economic powerhouse now. Countries such as Burma have thrown off socialist policies that brought them to absolute poverty. Is Britain equipped to meet the economic challenges this new world orders brings? I see little of it in today’s Labour party.

  • Tony Dawson 25th Jun '17 - 4:05pm

    A truly excellent article. The Labour position appears to be to move every few years between huge expenditure pots which they fail to uprate one at a time in order to make it a wee bit easier to balance their books/borrowing requirement publicly. They hope that each election they can con enough of the voters then next time they move to another huge issue which they ‘short change’ massively. In 2015 it was the NHS where they appeared to actually be publicly sticking less money in than the Tories were.

  • People keep going on about the 70s, but actually the economy was for most of the 80s was worse and the economy is even more dismal now. The 70 is the rights bogeyman because they had to pay workers properly.

  • Glenn
    Certainly the deindustrialization continued throughout the 1980s and beyond. How is a new hi-tech economy going to be created across all of Britain’s regions?

  • I think I have let you know already that the IFS figures are wrong. (I am sorry I didn’t comment on your draft.) The £4.8 billion for Child Tax Credits is wrong. I know it is wrong because in our manifesto we have allocated only £1.3 billion for this and reversing the cut to those in the Work Related Activity Group. The IFS state they are using the figures from each party’s manifesto. Both Labour and us published costing documents online.

    We committed to:
    £3.7 billion to reverse cuts to Universal Credit;
    £1 billion to abolish the bedroom tax, restore Housing Benefit for those aged 18-21, link LHA to average rents again;
    £3.3 billion to remove benefit freeze and extras for those aged 18-24
    £1.3 billion to reverse child tax credit cuts etc.
    Totally £9.3 billion

    Labour committed to:
    £2 billion to reverse some Universal Credit cuts;
    £2 billion to reverse the cuts to those in the Work Related Activity Group, abolishing the bedroom tax, restore Housing Benefit for those aged 18-21, implement the court ruling on PiP and scrap bereavement support payment reforms.
    Totally £4 billion

    The IFS accept that Labour will have a Budget surplus, excluding investments in 2021-22 and that re-nationalisation does not affect the nation’s balances sheet at all. (You even got Labour’s spending commitment wrong it was £48.6 billion.

    It is generally accepted that the Tories proposed £12 billion of welfare cut since the 2015 general election. Remember the bedroom tax is a coalition cut.

    The OBR that you link to states that the government borrowing was only 11% of GDP in 2009-10 falling to 10.1% in 2010-11 while the cyclically-adjusted deficit was only 5.3% in 2009-10 and 4.8% in 2010-11. A ratio of 11 (borrowing) to 47.5 (spending) is not 1 to 4 it is one to 4.7 or 5 if you prefer.

    @ Andrew McCaig
    The IFS accepted that the corporation tax rises would raise the income Labour said they would but concluded that over the long term these revenues would decrease because of changed actions.

  • One of the misconceptions of the 2010-15 coalition government is that things would have been radically different if Labour had won the election or if Libdems had won an outright majority.

    For all the rhetoric, the public spending program that was ultimately followed in that period was virtually identical to that outlined by Alistair Darling immediately prior to the 2010 election.

    Mervyn King, the governor of the Bank of England reportedly said that “Whichever party wins the election will have to impose spending cuts of such severity that they will find themselves exiled from power for a generation.”

    The Conservatives appear to have escaped that fate with many accepting that cuts were needed in that period, although public support for a continuation of that level of austerity cuts appear to have now slipped away.

  • Panicos Georgiou 26th Jun '17 - 8:31am

    We need to offer radical but fair policies, the welfare state is a massive burden but an essential burden on the state. We need to find the balance though between the safety net the welfare state was meant to be and the current situation where it has become a way of life for millions.
    The way to achieve this is to make the incentive to work even greater than the welfare state
    We should not become a little Labour Party offering money for everyone which makes reliance upon the welfare state inevitable but we cannot cut everything like the Tories.
    We need to have distinctive policies and make sure people know we are the party of the workers, the poor, the family, the old and the entrepreneur

  • “I don’t think Labour has a lot of trust on the economy. Mr Corbyn seems to have taken Labour back to the 1970s. A time well remembered for its stagflation and IMF.”

    Sorry that Tory ploy doesn’t work anymore, I and much of the electorate wasn’t even born in the 70’s. Using the bogyman of the 70’s to scare us, is a bit like trying to scare us with the threat of the black death or invasion by the Spanish.

    The 70’s is ancient history that has no relevance for increasing numbers of the electorate.

  • Peter Martin 26th Jun '17 - 9:56am

    @ George,

    You’re quite right. Labour should have promised to reverse the welfare cuts but the leadership made a cynical choice about that. Nearly everyone who was in favour of the reversal was going to vote Labour anyway so there weren’t any votes to be gained. I wish that weren’t the case but that’s politics.

    The problem is that hardly anyone understands how Govt finances work. It would help a lot if you didn’t go around peddling such nonsense as “In 2010, the government was borrowing one pound for every four pounds ” and explained the sectoral balances.

    2010 was an extra-ordinary year. The private sector was saving to the extent of 8.4% of GDP. Our trade deficit was 2.4% of GDP.

    Therefore the Government’s deficit had to be 10.8% of GDP. It’s just simple arithmetic.
    Was it a bad thing that most people were choosing to save their money rather spend? Most people would say it was a good thing. If so, it must be a good thing for the Govt to run a deficit.

    You can’t have it both ways!

  • Peter Martin 26th Jun '17 - 10:20am

    @ Sue Sutherland

    “cuts in benefits that were going to have to be made to balance the books”

    Neither cuts in spending nor increases in taxes can necessarily “balance the books”. Ask George Osborne about that if you don’t believe me!

    Money in the economy is like the flow of an electric current or the flow of electrons. If we have fewer electrons coming back at one terminal (taxation) than are going in at the other (govt spending) they must be being stored somewhere in the circuit. Restricting the number going in is likely to mean fewer coming out. The deficit remaining the same.

    Having that deficit isn’t necessarily a bad thing if the money is simply being stored. Its when it’s being spent to excess than we can have an inflation problem and that’s the time to cut back and maybe increase taxes a bit as well.

  • We need to be clear about how our policies will help those who need it, not just as a safety net, but as a means to no longer needing that safety net. And that second point must be done properly, with recognition that people get stuck in ruts, and can’t see the way out. We need to help them find that way out, without creating an environment where those who find it too hard are disproportionately punished.

    Any scheme to encourage people back to work, and that work pays, must ensure there are secure and properly paid jobs for people to go into. On that point, we should be firm in our support of proper wages, including , but not limited to, a minimum wage that a full-time worker can live off of. I hear legitimate concerns that some small businesses will struggle, which leaves us with two choices. We accept that those businesses are simply not viable, and let them adapt of close, or we develop a means of supporting them. As we are indirectly subsidising large numbers of businesses, big and small, who pay low-wages through the benefits system, we might as well do it properly.

    If a company thinks it will struggle to pay proper wages, then it can apply for government support. I say we are generous with new start-ups, and speciality businesses that provide a useful service, especially in remote areas, and that support should include advice and mentoring, not just cash. High Street coffee chains that arrange their affairs never to make an operating profit would not be eligible for support.

  • Fiona – Agree with you. Small businesses who are real wealth creators must be supported whole-heartedly, but kebab kiosks and equivalents should not receive any kind of support.

    We can promise to expand British Business Bank to £20 billion in terms of capitalization.

    We can increase our investment spending from £100bn to £200bn, with £50bn for support firms’ adoption of automation technology, which is estimated to deliver a return on investment of £49 for every £1 invested according to Barclays.

    Well, a ROI of £49 will justify our extra investment in automation technology and shut up opposition, thus making our plan light year more credible than the unpredictable Corbynite plan.

  • David Allen 26th Jun '17 - 1:42pm

    Good article (despite the flaws found by Michael BG) – but what lesson should we draw?

    I think the lesson we (and also the Tories) should draw is – You win elections not by being right, but by persuading the public that you are right.

    Lynton Crosby sold an idea to the Tories in 2010-2015, which was “Play totally dirty. Win with dead cats, false narratives, and scare stories. Con the public that it was Gordon Brown who caused the global financial crash. Learn from Karl Rove and George W Bush, who successfully persuaded the US public that Saddam Hussein was an agent of Al-Qaida. You can con anybody into believing anything, if you say it often enough.”

    Well, it worked against Brown and Miliband. So the Tories decided that Crosby was God. Actually, Crosby was a one-trick pony.

    Crosby then single-handedly lost us Europe in 2016 by taking a good case and ludicrously overstating it, to the point when people did not believe it. Nothing daunted, Crosby’s main charge against Labour in 2017 was that Corbyn supported IRA violence. Once again, he managed to overstate his claims to the point at which people stopped believing them. What was worse, they helped people overlook the more important real deficiencies in the Labour manifesto – many of which George Kendall spells out here.

    We didn’t tell the voters about these deficiencies. We have only ourselves (and Crosby) to blame for the fact that the voters didn’t notice them.

  • David Allen 26th Jun '17 - 1:53pm

    Dave Orbison said “do you not see the irony of the LibDems going round saying there’s a problem with the Labour manifesto?”

    Dave Orbison, do you not see the irony of a Labour supporter going round saying that the way to respond to reasoned criticism of the Labour manifesto is to ignore the critical argument and write ten paragraphs of ad-hominem attack against the critics?

  • @ George Kendall

    I don’t think you have watched the presentations made by the IFS. I have. They are supporters of the economic orthodoxy and might even be more cautious that the orthodoxy. As I liberal I am very happy to challenge the orthodoxy. As a graduate I am very happy to look behind the headlines and Powerpoint presentation and seek what the basis for the IFS’s opinion is. So I am happy to be called braver than you. When I watched the presentation I think there was another mistake in the slides which you are using. I also expect you are using reports of the IFS presentation. I am not.

    I looked for the IFS’s sources expecting to find that they used the OBR, but they haven’t “Sources: Conservative Party Manifesto; Labour Party Manifesto; Liberal Democrat manifesto”. (see page 16) This is why I am 100% confident that the £4.8 billion is wrong. But I did more than that I tried to find an official figure – £1.365 billion in 2020-21 (£1. 055 billion (2019-20) according to government figures (2015) signed off by the OBR (p 50 https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/443195/Policy_costings_summer_budget_2015.pdf).

    Hopefully you will now accept that the IFS figure is wrong.

    You presented your OP as being an argument people could use. They would be wrong to use it because your figures are not correct. It is not good enough to say figures vary if you are recommending people to use them. You should check your figures before advising people to use them. The OBR give the most reliable figures (note forecasts are subject to change every year).

    The IFS mistake about the money needed to reverse the two-child limit does not affect their analysis because Labour don’t change anything and they didn’t do one for us.

  • I agree that we had the better policies to reverse at least 75% of the recent benefit cuts and that we were committed to spending £5.3 billion more than Labour to do it. But like you I don’t understand why we didn’t say we would implement the court ruling on PiP. I think it is legitimate to point this out to Labour supporters (if we can present the true facts and not slant them). It is right to point out that Corbyn had problems with this policy and the hypocrisy of Labour MPs saying they would reverse the cuts but only promising to doing about a third of them in their 2017 manifesto (which I did in another thread (https://www.libdemvoice.org/tainted-love-54693.html#comments).

  • This is disingenuous. Labour committed £30 billion to reform of the welfare system over the parliament, which would have made committing to simply reversing various cuts meaningless, as John McDonnell said on the Marr show: news.bbc.co.uk/1/shared/bsp/hi/pdfs/21051702.pdf

  • ‘The Tory welfare cuts, which Corbyn and his allies are proposing to implement’, and to hammer on that theme as if it isn’t even contested when we have the Labour shadow chancellor explicitly saying that is not the case is disingenuous. To try and discuss Labour’s welfare policies going into the election without mentioning their biggest funding commitment, £30 billion for a broader reform, or how that reform was intended to account for the supposedly neglected areas, is disingenuous.

    Even the Daily Mail got it right: http://www.dailymail.co.uk/wires/pa/article-4526906/McDonnell-Labour-end-welfare-benefits-freeze-using-reforms.html

    Labour proposed a reform of the welfare system, which would have made any claim to return to previous levels of funding meaningless as it wouldn’t be a like-for-like. I’d like to see Labour set out in greater detail what these broader reforms would entail, but Corbyn and McDonnell are far more to be trusted on this than any Lib Dem going by their voting records. Every one of us knows you would throw welfare recipients under the bus again if you could buy your way into coalition by it.

    But don’t worry about being called Yellow Tories – over the last few years ‘Liberal Democrat’ has become insult enough.

  • And another thing, I can’t believe that Lib Dem members are fine with such a shameless appeal to ‘Labour moderates’ with this whole ‘*we* won’t call you Red Tories’… rubbish. These ‘moderates’ are the people who supported ID cards and other socially authoritarian measures, supported the Iraq war, supported the deregulation of finance and the hyper-financialisation of our economy, the privatisation of all-and-sundry. It says it all that you think you have more in common with these ‘moderates’ than with someone like Corbyn who has done more for genuine positive liberal values than any of them.

  • @ Mike

    In Labour’s costings there is only £4.6 billion for what they call Work and Pensions. If we multiply it by five we only get £23 billion. However on p 56 of Labour’s manifesto they state, “Labour will reform and redesign UC, ending six-week delays in payment and the ‘rape clause’.” However in the costing document there is only £2 billion for this. Perhaps John McDonnell just forgot to put in the £6 billion to reserve the cuts they forgot about which we wanted to reverse.

    We like to talk about the £12 billion of Tory benefit cuts from 2015. Even if all of Labour’s £4 billion was put towards this there would be a £8 billion shortfall a year. 8 x 5 = 40.

    Labour haven’t included in their costings any savings (or costs) they expect from raising the Minimum Wage for every aged 18 and older to £10 an hour. If they thought it would save and/or raise £2 billion a year you would think they would tell the public!

  • @Michael BG: McDonnell said it would be dealt with in his first budget and floated a sum of £30 billion, and his word counts for far more on this subject than anything written in a Lib Dem manifesto. I can believe that a substantial reform of the welfare system would not be ready for inclusion in a manifesto for a snap election, it’s much more difficult than a meaningless commitment to simply reverse cuts, some of which the Lib Dems helped push through in in the first place without bettering the system, knowing you’ll never be called to actually do it.

    Corbyn and McDonnell argued and voted consistently against attacks on welfare recipients, and reaffirmed that commitment during the election. It is a principle for them and everybody knows it has been a priority of theirs from day one. The Lib Dems’ proposal to reverse the cuts was a transparent electoral gambit.

    The claims in this article are ludicrous: ‘The Tory welfare cuts, which Corbyn and his allies are proposing to implement, are cuts to benefits that were raised by the New Labour government of 1997. So, as far as welfare provision for those on low incomes is concerned, Corbyn is now well to the right of Blair’s government.’

    ‘The proposed Corbyn cuts’, ‘Corbyn is now to the right of the coalition’.

    Here in the real world, we had the Labour shadow chancellor making a well-publicised claim that his first budget would ‘in effect’ reverse these cuts as part of a broader reform of the welfare system, explicitly denying that Labour plans to keep these cuts. To try and label them ‘Corbyn cuts’ or claim that Labour are ‘proposing to implement them’ without mention of McDonnell’s explicit commitment is disingenuous in the extreme, and all your attempts to woo the authoritarian, war-mongering right-wing of the Labour Party is obscene.

  • Peter Martin 27th Jun '17 - 11:28am

    @ George,

    “The IFS has said, “borrowing in 2009–10 is estimated to have been 11.8% of national income. ……………….Peter quotes 10.8%, the IFS 11%. Who is right? I don’t think it’s helpful to call one figure right and the others wrong.”

    I agree. I don’t think it matters that much. It would matter if we had gone off to the IMF and borrowed the same amount in US$ or euros. But borrowing in our own currency is quite safe. Whenever any of us buys a Premium Bond or a National Savings certificate we are creating Govt debt. Most of us think it’s a good idea for people to save in this way, but on the other hand, most of us, but not me 🙂 , think it’s a bad thing for the Government to have the debt. So there is obviously confused thinking on the subject.

    Incidentally, I took the figures from the graph on this link. The important thing is that the Govt’s deficit is equal to the level of Private Sector Savings plus the Trade Deficit. It must follow that the Govt doesn’t have full control over its deficit. What is it meant to do? Stop us buying German cars and saving our money?


  • @ Mike
    “McDonnell said it would be dealt with in his first budget and floated a sum of £30 billion, and his word counts for far more on this subject”

    His words were meaningless because he seemed to be making policy up on the hoof and Labour’s manifesto didn’t include this promise and their costings didn’t include it, which show it hadn’t been agreed in the manifesto writing process. Andrew Marr let him off the hook. He should have asked why this £30 billion figure was not in their costings document.

    I am not convinced that time pressures meant it could not be included in Labour’s manifesto along-side how the money for it would be raised.

  • @Michael BG: As I said a while back, more detail from Labour would be welcome. Even so, they made their intention to undo the impact of these cuts one way or another, over the next parliament, very clear.

    The problem being ‘Labour didn’t set out clearly how they’re going to undo the damage they say they will’ is very different from this disingenuous article’s claims, that Labour are ‘proposing to implement’ these cuts, and trying to call cuts which in many cases the Tories and Lib Dems voted through and defended, and which Corbyn voted and argued against, ‘Corbyn cuts’. It is a ridiculous attempt to rewrite history.

    They can be sensibly criticised for not being clear enough on how their reforms will reverse the impact of these cuts, though I think it’s understandable why they wouldn’t have more than immediate measures to reverse the worst ready for a snap election. To say that Labour are proposing to keep the cuts is just a lie, and coming from a party that argued for many of them and whose votes pushed those cuts through is a ridiculous display.

  • @ Mike
    The £12 billion of Tory welfare cuts from 2015 were not supported by the Liberal Democrats – do not re-write history. We have changed our policy on the bedroom tax and now wish to scrap it. Which I would think you would think was a good thing. I haven’t said that Corbyn voted for the welfare cuts. I have been clear that according to Labour’s manifesto and their costing document they have only allocated £4 billion a year to reverse some of the Tory welfare cuts. A statement made during an interview is not a manifesto pledge especially where the person does not stated where he will find the money. Therefore to say that Labour has not promised to reverse £5.3 billion of Tory cuts which the Liberal Democrats have promised to reverse is true. It would also be true to state that there are about £8 billion a year of Tory cuts which Labour would implement if elected (according to their manifesto and their costing document and assuming that the £12 billion figure is correct [I haven’t checked this figure]).

  • @Michael BG: The Lib Dems might have ducked out of the £12 billion from 2015, they voted through the rest – the up-rating bill, the bedroom tax, etc. They were perfectly happy for the sheer misery those have caused, and now want to make electoral capital out of flamboyantly opposing what they caused in the first place. Nobody is fooled – the Lib Dems support welfare when there are no consequences and they’re only looking for electoral support, but helped to gut it when their votes actually had meaning for once. I’m sure if there wasn’t an election they’d have been just as flexible in 2015. The Lib Dems supported cuts as long as it was convenient (when it had real consequences), and now oppose them while it’s convenient (and has no consequences at all).

    Labour has set out an intention to undo the damage, but not in enough detail as yet – that is not justification to say they are ‘proposing to keep’ the cuts, or to call cuts you lot voted through and which Corbyn opposed ‘Corbyn cuts’. The manifesto doesn’t detail their plan of reform, which they’ve said will depend on a review anyway – neither was Universal Credit detailed in the Tories’ manifesto for 2010. Manifestos exist in the context of actual votes in parliament and claimed intentions beyond its pages.

    There is world of difference between ‘Labour have said they intend to undo the damage of the cuts, the worst of them immediately as laid out in the manifesto and the rest as part of a broader plan of reform over their first parliament subject to review, but haven’t laid out in detail how they will do the second half’ and this article’s claims, that ‘Labour are proposing to keep the cuts’, without mentioning their explicit claims they will be dealt with over their first parliament. That is why this article is disingenuous.

  • This is indeed something I wasn’t previously aware of.

  • Peter Martin 30th Jun '17 - 1:09pm

    @ George Kendall,

    Why should there be any “working age” benefits in any case? To answer my own question I can see the need for temporary support when workers have lost their jobs through no fault of their own, or if anyone is too sick to work, but other than that it a waste of resources to have workers doing nothing.

    The State would be better off just giving everyone a job who needs one as an employer of last resort. This would set a floor for wages which the private sector would have to match. There’s no point having to top up the wages of those who are deliberately paid less than a living wage by unscrupulous employers. An employer has to pay his workers a living wage.

  • Joseph Bourke 30th Jun '17 - 1:27pm

    A good series of comments here from Peter Martin. Wholly agree with comment above:

    “…it a waste of resources to have workers doing nothing. The State would be better off just giving everyone a job who needs one as an employer of last resort. This would set a floor for wages which the private sector would have to match.”

  • I also agree with Peter Martin,
    “…it a waste of resources to have workers doing nothing. The State would be better off just giving everyone a job who needs one as an employer of last resort. This would set a floor for wages which the private sector would have to match.”

    I recently followed a link to a paper on Keynesian full employment policies to this paper (http://www.levyinstitute.org/pubs/wp_789.pdf) which states that Keynes advocated this.

    I wonder if we could have a policy of a job guarantee for everyone. Would an hourly rate of £8.45 be enough to replace the income most people get when out of work? With a 37 hour week it would be £16,257.80. However it would cost lots of money. If it cost £30 billion it would be substantially less costly than quantitative easing.

  • nvelope2003 30th Jun '17 - 4:52pm

    Michael BG: What would these workers who had to be given a job by the state actually do all day ? Something similar was tried during the Second French Republic 1848 – 1852. The policy was soon abandoned when it was discovered the men were digging ditches and filling them in again. In modern terms no doubt they would litter the streets and then pick up the litter again.

  • @ nvelope2003

    I hope it would be as suggested by Minsky as suggested in the paper “An Employer of Last Resort (ELR) program would “take workers as they are” and “fit the job to the worker,” thus securing full employment over the long run (Minsky 1986) ” (p 9). The paper talks of these people as public service workers, so that means working doing civil service roles, working in local government (including in schools and social care), working in the police, working in the NHS or even the BBC. It does not mean digging ditches and filling them in again or collecting up litter after dropping it. The purpose is to ensure the worker keeps their skills up to date so that when the economy picks up they can move to the new jobs in the private sector which pay more.

  • @ George Kendall

    Higher wages encourages companies to innovate and increases productivity which should lead to higher wages.

    To ask “if anyone could point to a government which has rolled out such a scheme” means you never want to be on the cutting edge of innovation. It is a rejection of our radical tradition.

    If the government paid £8.45 an hour as the Employer of Last Resort and the National Living Wage was £9 the amount spent on in-work benefits would decrease. If we built 1.5 million new homes rents would stabilise and maybe reduce and less would need to be paid out in housing benefit. Inequalities for these people will have been reduced. Of course we could also try to reduce the pay ratios of companies which would also reduce inequalities by increasing wages.

    However you are correct benefits for those not in work would also need to increase and this would have a knock on effect on those (hopefully few) people who still needed in-work benefits. However Peter Martin would also like to see a great reduction in the number of people not in work and it would be possible to extend the ELR to those in the work-related group of ESA too.

    I think it is a little odd that Ed Miliband’s job guarantee scheme disappeared from Labour’s manifesto (perhaps they think achieving full employment would make it redundant). I wonder how many people receive in-work benefits excluding housing benefit who earn £370 a week? It is possible that a minimum wage of £10 an hour and achieving full employment would mean there is no need to increase in-work benefits for those working full-time. However a benefits freeze and not restoring the link of LHA to average rents are a policies that do increase inequalities for the poorest in society.

  • John Littler 2nd Jul '17 - 7:37pm

    I recall when the minimum wage was brought in initially, Tory threats of doom and collapse were proven wrong. There was a long period of string growth in the economy and the tax take.

  • Sue Sutherland 25th Jun ’17 – 1:11pm
    “I never understood why our leaders didn’t say they couldn’t vote against tuition fees when they realised the scale of the cuts in benefits that were going to have to be made to balance the books.”

    perhaps because everyone knew that cuts would be necessary and the Lib Dem manifesto claimed to have taken account of the state of the nation’s finances in their “fully costed manifesto “, claiming that tuition fees could be phased out in spite of this. and because money was magically found for Andrew Lansleys totally unnecessary NHS refirms, and for The Garden Bridge, HS2, Trident renewal etc etc . the nation is just waking up to the fact that the magic money tree does indeed exist, but not for our young people, the poor, disabled or the vulnerable or to reward our firefighters and nurses.

    and because the issue is one of trust, not tuition fees per se.

  • George kendall, you made some valid points (though the phrase ” people who live in glass houses….” comes to mind reading much of your criticism of Corbyn et al.). I’d like to propose a very simple response. Perhaps the public are in ” a plague on both your houses” mode and, concluding that neither Labour nor the Tories can be believed on their spending plans or the state if the econony, they have opted for the guy who seems to have his heart in the right place over the out and out ” nasty party”.

  • George,

    there is a bit more detail on the job guarantee scheme in this earlier piece https://www.libdemvoice.org/opinion-we-can-conquer-unemployment-38960.html
    including a link in the comments to a 2012 paper by the same economist for the Levy Institute.

  • Simon Banks 25th Sep '17 - 9:56am

    Dave Orbison: being historically illiterate is not a plus. On a discussion group like this, thoughtful people will look back to learn lessons from the past. Thoughtless people won’t.

    You do have a point about trust, though frankly, this hit Liberal Democrats so hard because previously, partly on their record in local government and partly of course because of lack of involvement in central government, they were seen as more trustworthy than Tories or Labour. Look at the broken promises of the other parties and we’re not the only ones with problems. But people trust Labour on the NHS despite all that Andy Burnham did to wreck it and they trust the Tories to help business despite the Major/Lamont disaster (though that caused a brief loss of trust). Perhaps we’re trusted willy nilly on civil liberties, but that’s not a big vote winner.

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