The loss of the UK’s triple-A rating, an economy teetering on the brink of a triple-dip recession and a deficit growing rather than shrinking – the news is not good for George Osborne just two weeks before his budget statement.
But before I risk evoking sympathy for the chancellor, it’s worth remembering that the human cost of his failing austerity policies is not merely reputational but material for millions of people. Increasing numbers of people are finding it impossible to make ends meet – with over 6 million unemployed or underemployed, hundreds of thousands dependent on food banks, and child poverty rising again.
So here is a 10-point plan to boost the economy in the public interest, in place of the government’s failing approach:
1. Break the pay freeze
Pay across all sectors has risen below inflation in the last four years – taking £50bn out of workers’
pockets. For the 250,000 public servants I represent it means they are more than £1,200 a year worse off. These real-term pay cuts are forcing millions to cut back on their spending, denting economic demand and forcing thousands deeper into debt and payday loan lenders. It would also reduce public spending on tax credits and housing benefit – 93% of new housing benefit claimants in the last two years have been in work.
2. Increase the minimum wage
The value of the minimum wage has been allowed to drop in recent years. If it had kept pace with inflation, it would be more than 6% higher. People on low incomes spend their wages because they need to – it prevents poverty – which puts money back into our economy.
3. Stop cutting jobs
Over 300,000 public sector jobs, including 75,000 in the civil service, have been cut under the coalition government. This has damaged local services and caused hardship for many of those without work. But public jobs also save money, and lives – the knock-on effects of public sector job cuts are visible and costly: mistakes are made due to higher workloads, fraud increases, standards of care and cleanliness fall in the NHS, emergency services don’t reach people in time.
4. Cap rents, not benefits
Housing benefit levels (around £23bn per year) are a national scandal. But the problem isn’t tenants, it’s landlords. By capping the level of rents we would save not only billions in housing benefit, but also thousands for private tenants to spend in the economy too.
5. Invest – and yes, that means borrowing more
The chancellor previously prioritised our credit rating because it influences the interest rate at which we can borrow. With historically low rates, the government should be borrowing to invest in job-creating opportunities: primarily house-building and renewable technology.
6. Scrap the work programme and increase benefit levels
Assessments of the government’s flagship welfare-to-work programme show that it is worse than doing nothing. Forcing people into workfare reduces work for those who want it and, as the DWP’s own studies show, is counterproductive in weak labour markets. The welfare state should not be providing free labour to profitable multinationals – if companies can provide work placements, they should be paid at the going rate. For people on social security, benefit levels have lost real value: in 1979 unemployment benefit was worth 21% of average earnings, today it’s just 11%. If we raised it to 21% again jobseeker’s allowance would be £130 a week instead of the measly £71 it currently is.
7. Nationalise the banks
The banks, still
propped up with public money and many with large public shares, must be taken into public ownership. The bloated banking sector was the cause of the crisis, and still represents the largest systemic threat to relapsing into crisis. We support the TUC policy to bring the banks into public
ownership (pdf). By controlling the banks we can cap bonuses, clamp down on tax dodging, end the inflated pay deals and direct investment to socially useful and job-creating schemes.
8. Scrap Trident
To say Trident is a necessary deterrent to defend our national security rather begs the question of why Germany and Japan haven’t been invaded, since their larger economies possess no nuclear weapons – and neither does more than 90% of the world. Our nuclear weapons suck in billions of public money and some of our best engineers and scientists. These resources can be put to much more socially beneficial use.
9. Close the tax gap
Thanks to the high-profile activities of UK Uncut and others, tax avoidance and evasion has even been described by David Cameron and Osborne as “morally wrong” and “morally repugnant”. Yet their government continues to cut jobs and resources from HM Revenue and Customs. Our research with the
Tax Justice Network suggests that £120bn in tax is evaded, avoided and left uncollected each year – dwarfing benefit fraud by a ratio of nearly 100 to 1.
10. Reverse the tax cuts for millionaires
From April this year the government will give those earning over £150,000 per year a tax break worth £3bn. While we’re at it, the corporation tax cuts should also be reversed – we already had the lowest rate in the G7, so largesse to the corporate sector is not a priority.
