It's exactly 5yrs since G. Osborne arrived at Tory conference under fire for plans to cut tax credits by £1,000+. A month later he'd u-turned. Today Rishi Sunak begins his (virtual) conference defending similar plans. He should u-turn too and here's 5 reasons why he probably will
1. Sunak’s planned cut to benefits is MUCH bigger than Osborne’s in 2015. This time 6m households will lose £1,000 each next April vs 3.3 million 5yrs back - that adds up to an £8bn income reduction this time vs less than £4bn last time
2. This is a huge living standards hit to lower income Britain. Reversing the £20/wk boost to benefits in six months time means the poorest fifth will lose an almost unimaginable 7% of their disposable incomes...
3. Sunak's plans mean taking £1k away from 1 in 3 households in the Red Wall. Lots of new Tory MPs are going to see over 4 in 10 of their constituents lose out
4. When Osborne was cutting benefits employment was rising fast - this time the backdrop is fast rising unemployment. A typical worker had 83% of their income protected by the retention scheme - that falls to 30% on Universal Credit and these cuts will make it just 23%...
5. This is terrible macroeconomics. Just as now is exactly the wrong time to be raising taxes and weakening the recovery, it's an awful time to be taking £8bn out of the economy by cutting benefits - reducing incomes for the households that actually spend it
A final history lesson? Back in 2015 Boris Johnson led the backlash against George Osborne’s cuts, saying the Chancellor should “make sure that hard-working people on low incomes are protected”. He was right then, and it is all the more right now resolutionfoundation.org/publications/d…
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Understandably lots of debate about child poverty this morning – something we as a country should spend much more time focusing on
The context here is the first Labour Kings Speech in 14yrs – implementing a manifesto just endorsed by the election result. No-one should be surprised that 98+% of Labour MPs voted for it/against amendments from other parties. That’s business as normal just days after an election
More importantly we shouldn’t confuse parliamentary procedure with what actually matters - reducing child poverty, something I’ve spent my life working on – in the last Labour government (which did exactly that) and ever since.
The case for @RachelReevesMP’s sweeping changes to the planning system announced today…
1. For 15yrs, we’ve been attempting to dig a tunnel under the Thames. No digging has taken place, but £800m has been spent & 9k pages of planning applications drafted. This is double what Norway spent actually building Lærdalstunnelen, the world’s longest road tunnel…
2. If we want net zero to happen, and to happen without higher costs, then things are going to have to be built. Things that not everyone loves. And they will also have to be built if we want our firms to be able to invest, grow and pay higher wages
This is yet another example of total tax policy chaos - this proposal is to reintroduce the exact same higher tax allowance for pensioners that George Osborne abolished a decade back. As with the personal allowance & corporation tax it’s going back to square one (ie Gordon Brown)
What is going on? A Tory panic that recent tax rises having been particularly large for richer pensioners (see the blue bars) rather than having confidence in all pensioners having gained from the triple lock (red bars)
Lots of focus on whether the radicalism of Labour's proposed employment law changes are being neutered - but the discussion is weirdly abstracting from the specifics and 'watering down' talk is overdone - this is largely the inevitably turning of slogans into govt action. Quick🧵
Here's @PickardJE list of what he thinks @AngelaRayner programme is. Let's take each in turn
1. creating a single "employee" status. This is about merging current "employee" & "worker" categories + clarifying boundary vs self-employment. It's a fiendishly difficult technical task - if you think it can be done without consultation you've never looked at any employment law
Time to talk Universal Credit. We're 10yrs into its roll-out, so understandably interest has waned. But it's impact on Britain has built - whoever wins the next election will be governing a "Universal Credit Britain" with 7m families - and big winners and losers - on it by 2029🧵
In 2019 the debate was whether to scrap Universal Credit, as Labour proposed. This time is very different. The pandemic showed UC had big advantages (processing millions of claims fast) and the roll-out has gone way too far to be reversed. So we should focus on its impact
What makes this difficult is that UC was introduced at the same time as big cuts to benefits. It's those cuts NOT UC that mean 71% of families are worse off on UC today than the legacy benefits it replaced as they were in 2013/14 (overall the change = average £1,400 worse off)
This is a REALLY good tool, that busts the myth that the biggest problem facing deprived areas is that there talented young people leave. Let's take the case of Hartlepool... 🧵
Overall, young people growing up in Hartlepool are less likely to get a degree than the national average. You already knew that. Let's get to what's interesting
Of those who do get a degree they are far far MORE likely to stay in Hartlepool than graduates generally are to stay where they grew up. The brains are not draining despite what you're always told.