George Osborne is in many ways, lucky. Whilst he is the chancellor who inherited the deficit from the Labour government in 2010 he is lucky that though he regularly broke promises made concerning budgetary predictions, he maintains a pretty decent level of support amongst the general public. This week’s announcement that tax credit cuts will no longer take place would, under normal circumstances, be considered such a volte face as to question the continued stewardship of a lesser person than George Osborne.
However, George has his eyes on a bigger prize; to succeed David Cameron as prime minister and so he had to find a way to deal with the unrest in his own party caused by his announcement only a couple of months ago to cut tax credits that would result in an estimated 3 million families losing an average of £1,000 per year. These families, many of whom are working but on such low pay as to be considered in poverty are the so called ‘strivers’ that this government proclaims as being key to economic growth.
But the Great George has proved himself to be a master of conjuring up luck when he needs it. The £27 billion (that’s £27,000,000,000) he has been able to draw on from higher than expected tax revenues as well as lower interest payments on government debt has allowed him to write off the £4.4bn cuts that were leading many Tories to question the belief that Osborne is the man to lead the Tory party into the next election. He owes the staff of the OBR (Office of Budget Responsibility) a very large drink.
Beyond this shock what today’s statement represents, though, is the fact that austerity will continue for the remainder of this parliament. Whether there really will be a surplus in the run-up to the next election in 2020 is far from certain. Remember, the deficit was supposed to have been eradicated in the last parliament. What we can be sure of based on today’s statement by George Osborne is that the balance of state and private sector will change. What we traditionally consider to be the public sector will shrink dramatically in the next five years. The UK of the 1970s that I grew up in will be gone forever.
Sadly, it seems, we will have to get used to the rich getting richer and, well you know the rest of this old adage.
Source: Guest Blogger at Birmingham City University.
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