Stop bashing the ‘scroungers’ and get to work, George

There is no ambiguity regarding the state of our public finances. As Labour left office with their scorched-earth policy still blazing through Westminster, Liam Byrne quite cleverly told the incoming David Laws that “There’s no money left!”.  I’m glad he found it funny: Government debt now tops £1 trillion.

It has been up to the Coalition government to sort out this incredible mess and make the tough and evidently unpopular decisions in an effort to clean up an earthquake with a dustpan and brush. But this is where my commendable remarks end.

Despite Cameron and Clegg renewing their wedding vows in line with the Mid Term Review, it is strikingly apparent that little has been done in the two and a half years since they tied the blue and yellow knot. If not for Michael Gove’s tireless school reforms, or Iain Duncan Smith’s brave attempts at redefining the swollen Welfare State, little else of note will write itself into coalition legacy. Reducing the deficit by 25% sounds great, but when the debt itself is increasing at a rate Gordon Brown would salivate at, someone, somewhere, is missing the point.

The UK economy is expected to follow the expected trajectory of skimming along the bottom this year. Next year isn’t much better either. Or the year after. Luckily, us Brits are the only people who like to be told how bad things are, we like being told the worst. Here’s one: Osborne is not working.

Meanwhile, Iain Duncan Smith is conducting his last job in politics with a Stakhanovite focus and zeal.

Finally wrestling with our ridiculously overgrown welfare state is a gargantuan task for any politician. Even Labour recognised the major malfunctions in a system that makes its clients better off out of work and on the dole. IDS’ reforms will make work pay, if there is any work to go, that is. You can’t force the unemployed into jobs that don’t exist.

Despite this conundrum, benefit-bashing has become just as popular a pastime as its not too distant cousin, banker-bashing. In the first game, you bash those who have very little money; the second game involves bashing people who you think have too much money. Neither game is fair or effective.

The idea of somebody getting up with the birds, heading to work, and walking past the drawn curtains of someone living off of their hard-fought tax money is universally unacceptable and George Osborne was right in saying so, even Owen Jones would agree on that one. But, he does not realise that in his position as Chancellor of the Exchequer that the responsibility to create the growth and prosperity that generates jobs, and thus getting people into work, is down to him. Where are the pro-growth policies?

The Autumn Statement said it all. Very little in the form of deregulation or targeted tax reductions; no special measures to help out small businesses; nothing that would even hint at an economically radical approach or mindset. Instead, our economy wades through the swamp weighed down with chains.

Like I mentioned previously, reducing the deficit by 25% is obviously good news and a rare opportunity to commend the Coalition, but, overall borrowing has increased and is forecast to reach £108.5 billion for this year. Cutting the deficit is futile if you’re adding to the total. The cuts in public spending are nowhere near at the level needed either. The recent 1% cap on benefit increases is welcome and popular with the electorate but at a saving of £3 billion per year, it is clear that spending cuts are only half the equation.

There needs to be a radical, bold, and determined plan to get the economy moving again.

First area in which to focus should be the deregulation of business. By lowering the barriers to employment we make it easier for businesses to hire employees and expand. Shredding Employers National Insurance would be a good start.

The second area needs to be a targeted tax cut for all income earners. The timidity in cutting the 50p rate to 45p smacks of trepidation, Osborne should have gone to at least 40%. A flat-tax would be even better, like the one proposed here.

Like most Eastern Bloc countries, decades of socialism left Estonia ruggedly poor with income levels that were 65% lower than their neighbours. After progressively cutting the tax rate for all income earners the Estonian economy has boomed and is currently growing at 11% per year. The percentage of GDP that came from foreign investment has risen from 5% to 20% since the flat-tax has been adopted. Businesses clearly value the simple, accommodating approach. Put simply: the Estonians lowered their taxes and revenues increased.

Also, raising the tax threshold to £12,500 in addition to lowering all rates would give everyone a tax cut and end the absurdity that is taxing our lowest paid into poverty and then using more bureaucracy to try and help them. These measures would free up money that can be spent, saved or invested.

Anders Borg, Swedish Finance Minister, cut taxes so much that the lowest paid had an extra month’s salary in their pockets. Bold amongst a chorus of Lefties harping on about ‘unfunded tax cuts’, Borg’s reforms saw employment take to the sky and Sweden’s deficit crash to the ground.

So, as Cameron and Clegg refresh their commitment to the two-and-a-bit years left of their arranged marriage with a plethora of condiment agendas, let’s hope Osborne gets to work and creates a job or two for the ‘scroungers’ his saxicolous self worries so much about . The next election, and his skin, depend on it.


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