To the Editor
George Osborne really ought to know better than to lie to the public about an issue as important as welfare reform (“Calling all progressives: help us reform the welfare state”, Observer, 19 July 2015).
The Chancellor says we have “a welfare system that has become unsustainable and risks crowding out other areas of government spending”.
In fact, for decades welfare spending has risen in line with the overall growth of the economy. This means, in the words of the independent Office for Budget Responsibility, that “the proportion of national income devoted to welfare spending has not shown a significant upward or downward trend over time.” By Osborne’s measure, welfare spending has been “unsustainable” since the 1950s.
The Chancellor goes on to say, of the much-ballyhooed Universal Credit, it “is bringing some sanity to a system David Blunkett described as ‘crackers’ by ensuring that it always pays to take a job or work more hours.”
In truth, the rollout of Universal Credit is far behind schedule, and the repeated raiding of its budget by the Tories will make it significantly less effective than it could have been. The Tories have also reduced the work allowances in a way that the Institute for Fiscal Studies says “will reduce the incentive for the first earner in a family to enter work”.
Oh and by the way, the Blunkett quote, taken entirely out of context, comes from 2005. Blunkett was specifically describing the disability benefits system which the Labour government was then in the process of reforming.
The sophistry continues as the Chancellor seeks to justify his massive cuts to tax credits by saying that his “national living wage will ensure you get a decent day’s pay”.
But a living wage, it should be obvious, is based on the cost of living. A higher minimum wage, which is what we’re really talking about here, is welcome in itself but won’t come near compensating for the coming raid on tax credits. The IFS has shown that it is “arithmetically impossible” for the sums lost to working families as a result of the tax credit cuts to be recouped by the higher minimum wage.
I could go on, but I think I’ve made my point. I’m all for having a debate about welfare, but not if it’s as ill-informed as the Chancellor’s disgraceful article. If he really believes in the fairness of his proposals, surely he shouldn’t be arguing in their favour by peddling a pack of flat-out lies.
Emily Thornberry MP (Islington South and Finsbury)
Chair, London group of Labour MPs