If David Cameron really wants an “assault on poverty”, he could always try giving the poor more money

One of the striking things about David Cameron’s much admired speech yesterday was the emphasis on the concept of “equality”. This was very much at the heart of the rhetoric: he promised to “finish the fight for real equality” and even went so far as to say that “you cannot have true opportunity without equality”.

Equality is undoubtedly a powerful concept. But it’s become a political cipher. And I mean that word in every sense: when a politician uses the word “equality”, it is simultaneously devoid of any meaning at all; a code that the politician’s supporters instinctively feel they can crack; and a method of concealment. The same can be said of words like “values”, “progressive” or – most problematically for my party – “liberal”.

Cameron himself acknowledged that he believes in equality of opportunity, but not equality of outcome. This is what enables the key elision in the most “centre left” section of his speech: that an “assault on poverty” is the same thing as tackling “the root causes of poverty”. If you read this part of the speech carefully, you can actually see the ghost of Lewis Carroll’s Humpty Dumpty hovering smugly in the background:

Central to [tackling big social problems] is an all-out assault on poverty.

Conservatives understand that if we’re serious about solving the problem, we need to tackle the root causes of poverty.

Homes where no-one works; children growing up in chaos; addiction, mental health problems, abuse, family breakdown.

This is a revealing passage. To put it in the language of sophisticated political commentary, Cameron has things completely arse about face. Look at what he is saying: that the reason people are poor is because they have dysfunctional lives, health problems, or are actually guilty of criminal behaviour.

I’ll repeat that: to David Cameron, the root causes of poverty are the terrible decisions that people choose to make about their own lives.

Poor children in olden times. They probably should have worked harder tbh.

Or to boil it down still further: if you’re poor, it’s probably because you live a life that led inexorably to that outcome.

If you really believe this – as David Cameron claims to – then equality of opportunity is a meaningless concept; there’s no use trying to magically turn such bad, stupid, dangerous people into good, intelligent, virtuous ones.

Of course, he’s wrong. The root cause of poverty is – surprise! – people not having enough money.

This might be a shocking revelation to some people. But it seems pretty obvious to me. People who have enough money aren’t poor. People who don’t have enough money do tend to be. QED.

Now, you might say that’s far too simple, and I’m making the same mistake that Cameron has, but from the other side. But if I’m right, then there would be lots of evidence suggesting that if you give poor people more money, their lives get better, yes?

And it just so happens that there is. In lots of countries across the world, governments have found – ASTONISHINGLY – that if you directly transfer cash into the hands of poor people, they… spend it on things that will make their lives better. And no, I don’t mean cheap booze and cigarettes – or even beer and bingo.

There are articles and studies which explore this phenomenon further.

But obviously, David Cameron isn’t just intending not to give the poor people in the UK more money. He’s already announced, via his sidekick George Osborne, that poor people will actually have money taken away from them. I’ve used this graph before, but it is kind of essential to understand the impact of the Budget on the UK population:

The Institute of Fiscal Studies, which produced the above graph, has also undertaken further analysis since then. This reaffirmed the fact that people on low incomes will be far worse off, even when you include all the random policies Cameron claims will alleviate the impact.

If David Cameron really wants an assault on poverty, and to ensure that there is equality – even just equality of opportunity – he could start by reversing or at least drastically reducing his tax credit cuts. But more importantly, his entire government needs to start seeing poverty the right way round, rather than from a position some way through and to the right of the looking glass.

To win, we have to beat the Tories at their own game

Attempting to understand the mindset of the typical voter is a fool’s game. The last election bequeathed upon us a huge amount of commentary attempting to explain why it was that the Tories had such success – not least from the Tory high command itself, hastily moving to pretend that a majority government had always been on the cards.

The Labour leadership campaign, meanwhile, has seen much of the same discussion, with the Blairite remnant arguing for soft Toryism on the basis of nothing much at all, and the Corbynite insurgency cherishing the fond myth that if only some more non-voters would vote, a reheated and insubstantial version of soggy socialism will take the country by storm.

I don’t pretend to know the “average voter”. I do know my fair share of people who, when it comes to elections, um and ah over which party merits an X by its name. For such people, elections are not about neatly packaged sets of policies, or coherent ideologies. They are instead typically about the feeling that each party gives them, along with perhaps one or two ideas that have burst through the media ether and captured their hearts.

Usually the former trumps the latter, though, and I think a cold hard look at the facts of the 2015 general election bears that out. The Tories aren’t in power because of their frankly creepy “plan for every stage of your life“. They’re in power because voters in the right places looked at them and thought “well, they’ve been in government for five years and we haven’t been forced into indentured servitude yet, and by the way have you SEEN the other guy?”

The central question of British politics right now is not who leads Labour (or even the Liberal Democrats). The question is how far the Conservatives can push their ideological agenda along before voters start to object to it. At the moment they are making excellent progress on this; George Osborne’s summer budget was the supreme example of a viciously regressive set of policies made palatable by sugary, centrist presentation.

The spending review that looms in November will be another step down this road. But as others have written, there will have to come a point during this Parliament where the impact of spending restraint on public services begins to bite in places where it has yet to do so. As the Financial Times’ recent superlative in-depth exploration of austerity Britain pointed out, the cuts to date have fallen on services catering to marginalised social groups which are almost invisible in political terms, having no natural media presence or support behind them.

But this can’t continue. If the Conservatives continue to cut public spending “until the pips squeak”, sooner or later the “typical voter” will start to see, or rather feel, it.

It’s my hunch that adult social care might well be the tipping point. This is an area that doesn’t just affect a small group of marginalised people but an increasing number of relatively well-off and middle class voters. Crucially, it’s not just the service users that are affected by the strain on the system, but their children and sometimes their grandchildren too may well be of voting age.

The story in the Observer this weekend, in which the Chief Inspector of Adult Social Care warned over the bad care being created through systemic pressure, could be the starting point. But in order for this to change voters’ minds in the longer term, the effects of such bad care will need to be seen far and wide. It’s not until such stories start appearing in the Daily Mail or the Daily Express that they are really taking root.

The Conservatives have nurtured a reputation for competence which is actually a mask for an ideology that simply doesn’t want well-funded public services. Unfortunately, they are so good at wearing that mask that the underlying ideology can’t be challenged on its own terms. So instead the task must be to challenge and destroy that reputation for competence. When that has been done, then, and only then, will voters seek a true alternative.

The lesson for Labour and the Lib Dems? Make arguments personal. Go and find people whose lives are being ruined by this government. Make sure they are people with whom the “typical voter” can easily identify, and tell their stories. Don’t talk in abstract technocratic terms about “integration” and “personalisation”.

It’s the sort of thing the Tories do. It’s part of how they win. They are past masters at manipulation and fabricated fear. The only way to beat them is to play them at their own game. If you can make people feel the true impact of a regressive government, you can earn the right to offer them something else. But you have to earn it.

Osborne’s Budget is another nail in the coffin for comprehensive and high quality public services

People have different ideas on what makes public services viable. If you take the purpose of services such as the NHS to be meeting the needs of the population, then it is almost inevitable that, at times, they will run at a deficit, as government funding lags demand. This is certainly true of many NHS Trusts at the present time; financial difficulty is not a proxy for the quality of services being delivered.

The corollary in the private sector is that super profits are no indication of a quality service either. It is often assumed that the more profit a company makes, the better the service or product that it delivers or makes – but this is lazy thinking. Key public services operate based on need, regardless of the profitability or convenience of the service user; private companies have no such restriction, and can pick and choose their market based on the path of least resistance.

A consequence of this difference is that public services need staffing levels that match the amount of need – at all times. This is incredibly difficult to achieve. If we think of health, especially, there are some trends you can predict, such as increased incidence of colds and flu in the winter months, but there will always be significant variation from month to month and year to year.

One way to deal with this is through temporary staff, but it’s difficult to get enough people in that way, and it’s hard to obtain that kind of flexibility without taking a hit on quality, which is why hospitals increasingly turn to private agencies to plug the gaps. This, in turn, leads Ministers to panic over what they see as an excessive reliance on temporary agencies. Yet this expense is a symptom, not the ultimate cause. The ultimate cause – whether in the NHS or in other parts of the public sector, including social care, schools and social work – is a chronic recruitment shortage.

Politically it’s undesirable for Ministers to recognise this fact. But a fact it is. Partly, it’s due to ineffective recruitment programmes, which often require a financial commitment on the part of the student. But a lot of it is also due to dismal retention rates. Take teachers, for example: reports in the past 18 months suggest that two-fifths of teachers leave the profession within five years.

Why is it so difficult to keep public sector workers in their posts? Because the work is hard, the pay is low, and the pressure placed upon you by the government is well nigh unbearable. The workload experienced by state school teachers is well-documented, but nowhere is the stress of the public sector more obvious than in social work. Here is a profession which requires you to work closely in some really difficult, knotty situations: where hard cases lead to unfair dismissals and obscenely large compensation payouts. As soon as you attempt to intervene, you are accused of nanny statism. And now the government is moving to stigmatise the profession further by criminalising service failure – threatening to throw ordinary social workers, teachers and councillors in jail for wilful neglect. Who would want to have to find the balance between these two extremes?

So even before Wednesday’s Budget we had the makings of a perfect storm on public sector recruitment: an existing shortage, a crunch in recruitment, and terrible retention rates. I could also talk about the effect of the government’s attempts to shut down immigration routes, which are also highly relevant. But the Budget adds to this storm in two highly significant ways.

The first is the “national living wage”. Amid the furore over the terminology and the impact on business, it’s been little noted that one of the main sectors most affected by a higher minimum wage will be social care. Of course, most providers of social care are private businesses, but they are paid by the public sector, and the providers find it incredibly difficult to find and retain good staff. Social care services spend about 60% of their entire budget on staff, so an above-inflation increase to the minimum wage creates huge cost pressures. And this is against a backdrop of continuing punitive cuts on local government – the purchaser of such services – which has meant a long-term freeze on the fees paid to providers. It’s entirely possible that smaller social care providers will be forced out of the market as a result of this Budget, at a time when demand for such services is inexorably rising. Sooner or later, the system is going to fail, we will see more incidents of bad care or even abuse, and the victims will be vulnerable elderly people.

The second, which is more widespread, is the decision to cap public sector pay rises at 1% for the next four years. This is an outrageous decision that, at a stroke, makes recruitment far more difficult. Ok, at the moment inflation is running low enough that 1% would actually be a real terms pay increase; but compare that to average weekly earnings to April 2015, which rose at a rate of 2.7%. It’s important to remember that the public sector has to compete with the private sector for staff: what’s the incentive for an energetic, ambitious, skilled young person to go into teaching or care or nursing here? At some point, “vocation” is not sufficient to bridge these gaps – and the situation we’re in suggests we reached that point some time ago, so we don’t need to widen the gap further.

So what’s the result of all of this? It seems clear that the current government has taken the decision that vital public services can be allowed slowly to dwindle and die, to be replaced by a patchwork of private sector providers motivated by profit. The contradictory motives and ethe involved in this approach will eventually be unsustainable.

It would take a huge commitment of political and financial capital to turn this listing ship around.

CORRECTION: This article previously mentioned a claim by the Association of Teachers and Lecturers that 40% of newly qualified teachers were not in teaching after a year. This has been comprehensively debunked, for example here, so I have removed the reference. I’m grateful to Damian Counsell for pointing out the error.

George Osborne’s populist conservatism: insidious, illiberal and regressive

A little after the Budget, Peter Sigrist, one of the organisers of #LibDemPint, tweeted the following:

This led to a long discussion with Peter in which we found little common ground on the measures set out by the Chancellor yesterday. He viewed the Budget, in its entirety, as “relatively balanced“, and even as evidence that “the Lib Dems have had a lasting effect on George Osborne“.

If you hadn’t guessed from the title of this post, I vehemently disagree with Peter’s view. My central point in our discussion was that Osborne’s brilliance involves shifting the political centre to the right, through appropriating previously left-wing policies such as the “living wage” to suit his own ends.

When you consider that Osborne and Cameron gained their initial political colours during the period when Tony Blair was in the ascendant, this becomes unsurprising: they are merely doing what he did, but the other way round, and arguably more successfully.

Of course, they also have it easier, because Blair’s political strategy was based on using market mechanisms to reform public services. In purely economic terms, he didn’t even begin to challenge Thatcherite laissez-faire mores. So when the Tories came to power in 2010, they had little to unravel from that perspective – and they also had the perfect excuse (a massive financial crisis and an unsustainable deficit) to begin to reshape the size and role of the state as they wished.

Now Osborne can take that one stage further without the Liberal Democrats to restrain his more extreme ambitions. His goal is to create a new political economy: one in which the state is no longer involved in attempting to solve material and social inequality of outcome or, indeed, opportunity.

To take a charitable view, we might entertain the idea that he really is committed to a “high wage, low tax, low welfare economy” – but this would be to ignore the reality of the Budget he has just announced. The facts are that the policies announced yesterday achieve neither of the first two concepts:

  • The “high wage” aspect is a smokescreen. No government can raise wages simply by saying so, and the impact of the change is, by confusing the mandate of the Low Pay Commission, to politicise a system that previously worked well. The Office of Budget Responsibility is also clear in its analysis that the “national living wage” will create more unemployment, and will cost the economy money. Given that this is the only policy in the Budget that attempts to create “high wages” – we can chalk it up as a failure.
  • What about low tax? Well, it’s now clear that this Budget is a net revenue raiser, with £25 billion of tax cuts playing off against £47 billion of tax increases. So purely on that alone, he has failed. Moreover, the tax cuts he did announce were focused on the top end of the income and wealth distribution. Obviously the inheritance tax cut only benefits those who are sitting (or more accurately whose parents are sitting) on high-value estates. But the increase to the 40% income tax threshold also only benefits those who earn more than £43,000, while it is understood these days that increases to the basic income tax threshold also disproportionately benefit those on higher incomes.

No, in actual fact, the only portion of Osborne’s mantra that was successfully implemented was the “low welfare” bit. Here, it is true, the Chancellor has delivered in spades. The extent of the cuts and freezes to working-age benefits is breathtaking; more breathtaking still is how they are targeted on the poorest people in society, especially those in low-paid jobs.

The overall distributional impact analysis was, curiously, left out of the official Budget documents published by the Treasury. This was unusual, as in previous years (including all the years of the Coalition 2010-2015) the Red Book has included charts showing the impact of policy changes on each income decile group. This time, though, it has been left to others to demonstrate the starkly regressive – punitive – effect of George Osborne’s approach. This chart from the IFS speaks volumes:

Impact of tax and benefit reforms

Here you can see not only that the poorest third of the population lose at least £800 per year, but that the ninth richest decile is actually enriched by this Budget.

What’s the point of all this? It’s to show that the Chancellor has entirely failed to deliver a Budget consistent with his own stated aim – a “high wage, low tax, low welfare” economy.

If he were serious about the first bit, he would have used yesterday’s statement to use the proceeds of higher taxation (or even of lower welfare) to put money behind upskilling the workforce. But he didn’t.

If he were serious about the second bit, he wouldn’t have raised an extra £47 billion by disproportionately penalising small businesses through changes to dividend taxation, or by absurdly forcing a carbon tax on companies that buy renewable energy.

The only serious bit was the third bit, and that is because his central political aim is to strip away the support that keeps poor people afloat.

The genius of the Chancellor is to use sweeteners and carefully crafted soundbites to appear reasonable, even centrist. Yesterday was perhaps his most successful attempt yet. Aided and abetted by a supine media and an opposition that isn’t there, he is using the Conservatives’ new political capital to carry forward at a far greater speed his vision for Britain. It is a country gripped by greed, selfishness and suspicion. It is a country where the poorest are expected to fend for themselves and where the wealthiest are enabled and encouraged to hoard their riches.

The most worrying aspect for the Liberal Democrats about all of this is that we are in no position to oppose Osborne. It is only now, after our electoral destruction, that the full scale of our strategic failure in government is becoming apparent.

As Stephen Tall’s excellent but depressing blog today suggests, if our party were still in Coalition, we’d have cheered this Budget.

And, terrifyingly, George Osborne knows it.