U.K. Austerity set to outstay it’s welcome

December 11th 2012

This post from Julia Unwin, Cheif Executive of the Joseph Rowntree Foundation and the Joseph Rowntree Housing Trust follows in our current series on the Autumn Statement.

Austerity is here to stay. That is tough for everyone – but hardest for the poorest.

The uprating of benefits by 1% will increase poverty. We should be clear about this. The distinction between ‘strivers’ and ‘shirkers’ is totally false: we know from years of research that people move in and out of work. Last week we published a report showing that there are some 6.1 million people in poverty living in working households.

So the welfare cut (and in real terms, it is a cut) does not just affect some mythical group of immoral workshy scroungers. It affects people who are working – who are, in the political lingo, Doing The Right Thing, and playing by the rules. Poorer people are facing destitution, perhaps a decade of destitution, felt by future generations.

When Government budgets are going down, what is not included is often as important. Social care and childcare were notable by their absence. JRF has long argued housing tax needs urgent reform: the house-building guarantee had already been announced, so substantive action on housing overall felt lacking.

Then there were some smaller, better items. Devolving further powers to the north was a major recommendation of the Northern Economic Futures Commission, which JRF helped to fund, and on which I was a Commissioner. The Chancellor’s hint at devolution of skills and transport funding is intriguing. We’ll see what’s in the Spending Review, but if done properly it could give the north a bit more control over its own destiny.

Scrapping the planned fuel duty rise will make life that little bit cheaper for drivers and many small businesses. As will raising the income tax threshold – though that will probably be more than outweighed by the benefit uprating. Neither of these things are quite the panacea for living costs that many claim them to be.

Capital expenditure is welcome, especially on roads and broadband in the north. We should guard against seeing it as an increase in budgets – it’s shifting money around and cancelling cuts, rather than an actual rise – and there is a question about whether an extra £1 billion for education spending is best spent on physical infrastructure. But overall, placing the emphasis on investment is right.

Overshadowing all of this, though, is the wider economic picture. The Autumn Statement was a confirmation of what we already suspected: that austerity is here to stay, and growth is as elusive as ever. Regardless of your economic views, or analysis of the causes of our anaemic economy, this looks like a fact of life for the immediate future.

That is tough for everyone – but toughest for those at the bottom.

Perhaps the worst thing about this autumn statement is not what it announced, but the realisation we will face many more statements and budgets like it for years to come.

 

Julia Unwin, Cheif Executive of the Joseph Rowntree Foundation and the Joseph Rowntree Housing Trust

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