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OSBORNE Robin Hood

Alex Burghart is Director of Policy at the Centre for Social Justice.

OSBORNE Robin HoodWay back in October 2005 when the Tories were on 33 in the polls (against Labour on 38), and subprime mortgages were still overvaluing quietly to themselves, George Osborne (then 34) addressed the Conservative party conference in Blackpool. He told the faithful:

“For too long we have allowed Labour to claim a monopoly on social justice. Let us resolve today that we will never allow that to happen again.”

Some nine years and one financial crisis later, how is that resolve bearing up and what has George Osborne done to stiffen it?

Perhaps a little unsurprisingly, his greatest contribution has been economic. A total Greece-style fiscal meltdown (for which there may have been no available bailout) and a sink hole of public debt (perhaps ending in default), would have inevitably led to huge unemployment and far greater public service cuts. As it is, not only has there been a recovery, there has been soaring – and record – employment. 30.8 million people are now in work and, crucially, long-term unemployment is falling as people start to rebuild their lives (since 2010 there has been a 14 per cent fall in the number of households in which no one has ever worked).

In this the Treasury has been helped by the DWP’s welfare reforms – recently singled out by the Bank of England as a likely driver of the ‘jobs miracle’ – but no recovery, no fall in worklessness. So successful has this transformation been that in April this year Osborne could declare it his ambition to deliver ‘full employment’ without being laughed out of the room – indeed OBR figures suggest that (global economy permitting) there may be another 1.2 million jobs by 2018. We might want a lot of people to have greater job security, and we might want them to have more hours and better pay, but having more people in work rather than stuck in the welfare system is an essential prerequisite of social justice.

This is not to say that HMT and DWP have always been in step. It is no secret that the Chancellor and the Work and Pensions Secretary have fought a tug-of-war over welfare spending. But given that 24 per cent of public spending goes through the DWP, could it have been otherwise? Although he has made considerable cuts to welfare since 2010, and plans to take a further £12 billion in the first two years of the next Parliament, Osborne has not done so blindly. Even in the depths of austerity, the Chancellor has countenanced crucial innovations. As Matthew D’Ancona showed in his account of the Coalition, In It Together, the deal that Osborne struck with IDS was that if DWP found £18 billion worth of savings, HMT would allow it to keep £2 billion for Universal Credit.

Even if he was wary of doing so, this willingness to reinvest in the long-term structural reform necessary to help people move into work – particularly when its full benefits will not be felt within this Parliament – shows a greater ability to see things from a social justice perspective than many have given him credit for.

The same can be said of a number of vital policies for which the Chancellor has provided the readies. The first phase of the Troubled Families programme has focused over £400 million of funding on giving intensive support to 120,000 chaotic families who cost the taxpayer £8 billion. Not only will this improve lives and communities, it will save cash. As should, in due course, the pupil premium which has given schools extra funds for the poorest children that will hopefully start to close the grades gap between rich and poor and lead to better opportunities for disadvantaged children.

Not everything has been quite so cut and dried. Osborne, it could be said, has been the man to increase in the personal tax allowance from £8,105 to £12,000 – taking millions of the poorest people out of income tax altogether. Yet of the £12.2 billion per year giveaway to families that this entails, only 15 per cent will go to working families in the lowest-income half of the population.

There are also occasional glimpses that HMT does not quite get the social justice agenda in its entirety. The attempt in 2012’s Omnishambles Budget to cap tax relief on charitable donations could have caused huge damage to frontline poverty fighting charities had it not been swiftly reversed. Rumour has it that the transferable tax allowance for married couples was a policy the Prime Minister had to push through despite resistance from his Chancellor, which tallies with the view that he does not really do family policy. This despite the fact that stable families are one of the most effective ways to fight poverty and that the UK has one of the worst levels of family breakdown in the developed world.

Likewise, the decision to focus all welfare cuts in this parliament and apparently the next on working-age benefits appears more geared towards electoral than social justice considerations. This is quite some ask when pensions account for around half the welfare budget. In a time of stringency it is scarcely fair that wealthier pensioners’ fuel allowances remain immune to cuts whilst those of less fortunate claimants do not. Such policies sit uncomfortably alongside the tone of his 2012 conference speech in which he talked of those “behind closed blinds…sleeping off a life on benefits” when such an example says more about the need for welfare reform than it does about the need to cut working-age welfare.

For all this, George Osborne’s main job has been to keep the UK’s finances afloat and, in doing this, he has known that good social justice is good fiscal justice. Universal Credit looks set to move 300,000 people into work, saving billions in the short term and more in the long. Early suggestions are that the Troubled Families programme saves £2 for every £1 spent. Everyone knows Britain will benefit from having a workforce with better basic skills.

A Chancellor who spoke only the language of cuts, whose only obsession was austerity, would have missed or overridden all this. As it is, even in the midst of some of the toughest cuts in living memory, he has allowed efficiencies to subsidise social policy innovation and, in doing so, has done much to help prevent his opponents from re-establishing their monopoly on social justice.

6 comments for: Alex Burghart: Osborne as Chancellor 3) Social justice, not just fiscal prudence

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