Campaign news

A budget for UKIP not ‘hardworking people’

23rd March 2014

A budget for UKIP not ‘hardworking people’

By Michael Roberts, the LRC’s economics commentator

The British government’s annual budget for the fiscal year beginning in April 2014 was a budget for potential UKIP voters. The UK Independence party is riding high in the polls and likely to take huge votes away from the main parties in the upcoming Euro elections in May. The average age of potential voters in elections in the UK is now 49 years. UKIP voters are mainly older and many are not working. They are relatively poor pensioners with just some savings, small business people about to retire and generally don’t have children of school age.

So the main proposals in the budget presented by Conservative chancellor to parliament, Gideon ‘George’ Osborne, are measures aimed at them. There are special high interest bonds for pensioners, higher tax-free savings schemes and the removal of compulsory annuities in pensions when retiring.

Despite much talk from multi-millionaire Osborne and his fellow Etonian millionaire primate minister David Cameron of ‘hard-working people’ (mentioned at least half a dozen times in their speeches), there was little of nothing for ‘hard-working families’.

There was a rise in threshold for paying income tax from £10,200 a year to 10,500 a year, but this would only provide an extra £56 a year to such income earners and only £26 a year for those who don’t pay social security contributions. Three-quarters of the cash gains from lifting the allowance will go to the top half of the income distribution. And the increase will only take an additional 200,000 people out of tax.

There is an increase in the subsidy for child care, but the government’s support for hardworking families in child care is the lowest in Europe. Two million families will be offered up to a maximum £2,000 a year of state help per child towards the costs of care. The government says this is 20% of costs of £10,000 a year but average full-time childcare costs for a ‘hardworking family’ with a two-year-old and a five-year-old are estimated at £11,700 a year by the Family and Childcare Trust. So the ‘help’ is really only 17%.

An extra £50m has also been found to provide extra help for children aged three or four from the poorest families. But the ‘subsidy’ scheme would benefit most the better-off earners with both parents working ‘hard’ on incomes of up to £150,000 each. And here is the secret: the actual spending on childcare of £750m won’t rise at all because the Treasury has revised its estimate of the number of families likely to be eligible for the scheme down from 2.5 million to 1.9 million!

‘Hard-working people’ who do not earn enough so that they qualify for benefits and ‘universal credit’ to top up their incomes from work – the so-called working poor – get nothing from this budget at all. And remember the majority of people who are not pensioners and who get state benefits are working. Instead the government is imposing a ‘cap’ on welfare spending and extending this cap to end of the decade. As pensions are not being capped, that means the reductions in benefits for everybody else are huge. The austerity for the ‘hard-working’ poor will continue with a vengeance. On the government’s plans, spending on day-to-day services will be reduced to their lowest share of GDP since 1948 (the post-war austerity). And only a third of the cuts have been implemented so far.

And there is no help at all for young people. They are without children, without pensions, without savings and in many cases, without jobs or paying huge student fees. The latest youth unemployment rate is still close to 20% of 16-24 year olds, or just under one million. Underemployment, as measured by those working part time because they cannot get a full-time job, is 1.4m. While overall employment rose to over 30 million in early 2014, the unemployment rate remains above 7%, well above the level before the Great Recession.

But don’t worry says Osborne. His government’s plans are working. He made much of the pick-up in national output growth that had taken place in 2013 and gleefully reported that the independent Office for Budget Responsibility was revising its forecasts up to 2.7% real growth in 2014 and something similar for every year onwards.

But the UK economy has been one of the slowest to recover of the major economies and even if this growth forecast is achieved in 2014, it will have taken six years for national output to have returned to its previous pre-crisis level – what a waste of resources and prosperity.

Indeed, real incomes for ‘hard-working people’ have still not stopped falling. Average weekly earnings in the UK, between November and January, rose by 1.4% still below the rise in the official price index of almost 1.9%. This will be the sixth year of the squeeze on average real earnings. For young workers, real incomes have fallen over 12% in that period. Workers in the private sector have seen no real rises since 2009 and those in the public sector will see none before 2018 at the earliest.

And all this to ‘balance the budget’ and get public debt down – deficits and debt caused by the bailout of corrupt banks and the loss of incomes from the huge economic recession. Even if the government’s forecasts prove correct, the budget deficit, still at 6.6% of GDP in 2014 (way higher than most economies including those in the Eurozone), will not balance until 2019. The public sector debt is now near 100% of GDP – that’s gross, not the net debt figure of 78% that the government likes to quote. And that will not fall at all this decade.
The UK’s economic growth pick-up is based not on increased business investment or exports, both are in the doldrums. It is founded on a government-stimulated housing boom through cheap credit and subsidies for home purchasers, against all the principles of a ‘free market’. This has driven home prices through the roof, but mainly in the better-off parts of London.
This expansion is unproductive and fictitious and cannot sustain real growth. UK productivity growth is non-existent and the government’s forecast of huge expansion in exports is a pipe dream. This will all end in more tears for hardworking families.

This is taken from Michael Roberts’ blog.
He blogs at

Bookmark and Share


By Ian Hodson It’s great news that a mainstream political party has recognised the importance of taking positive action to raise pay. Since 2008, politicians from all parties along with many in the media, have pushed the narrative that society will somehow improve by imposing austerity and blaming minority groups for the state of the country’s finances. Sadly, many have fallen for this deception and the ‘look over there’ politics that has rose to prominence since the Conservatives returned to power in 2010. [continue...]

Folkestone United – coming together to support migrants Bridget Chapman, Folkestone United, reports [continue...]

No Witch-Hunts In The GMB, Reinstate Keith Henderson (The Online Petition) Keith Henderson Essex LRC member and former Regional Organiser of the GMB Union was dismissed from the GMB last December, Keith has always believed that the real reason for his dismissal was because of his socialist beliefs and the manifestation of his beliefs. [continue...]

Please see our Labour Briefing Website here: [continue...]

The LRC is supporting a broad alliance of campaign groups and trade unions against the proposals in the Welfare Reform Bill (currently before Parliament) and putting forward our alternative based on social justice and welfare for all. [continue...]

Across the country working people are losing their jobs and their homes. Meanwhile the bankers who plunged us into this crisis have been bailed out with billions of pounds of our money. It’s time to fight back. Their Crisis Not Ours! is the LRC’s campaign to bring together workers, pensioners, the unemployed, students, those facing repossession and all those suffering because of an economic crisis that has been imposed on us. The campaign is supporting the demands of the People’s Charter. [continue...]

Rail bosses are using the recession as an excuse to attack jobs and conditions and cut back on services and essential rail works, and hike rail fares - as LEAP research suggested they would. Thousands of jobs are being threatened or have been lost. At the same time rail fat cats are raking in big profits and bonuses on the back of the most expensive fares in Europe. Make no mistake: as the recession worsens so will the attack on rail workers and rail services. [continue...]

The campaign calling on the Government to abandon its plans for privatisation of Royal Mail. The Government has introduced the Postal Services Bill to part-privatise the Royal Mail. With our affiliate union CWU we are fighting to Keep the Post Public! [continue...]

The campaign to demand the Government funds improvements to all existing council housing, and to start building first class council homes to address housing need. For more information see Defend Council Housing website. [continue...]

Campaign news


Find us on Facebook Follow LRCinfo on Twitter

Corbyn for 2020:


Subscribe to Labour Briefing

Labour Briefing