Another pale blue budget

That man Darling certainly knows how to make my job a damn sight more difficult than it might otherwise be. To write a paean of praise for a truly socialist Budget would have been wonderful, if a little unlikely. An outburst of rage at a truly reactionary Budget would have been, at least, easy to write and an opportunity to inspire people to react against it. But the pallid and undernourished animal taken out for a walk by the Chancellor in Parliament yesterday inspires neither hope nor fear, just a sense of bitter resignation that Mr Darling has, again, got it wrong. Overall, it's a palest of pale blue Budget, giving little except to businesses and shirking any direct intervention to revive manufacturing, leaving it to business and the markets to sling the cash where they may. On education, Mr Darling announced a £35 million enterprise fund to help universities to float new companies to profit from academic reasearch. There was also a one-off £270 million to fund another 20,000 new places at university. But somehow he forgot to mention the £518 million cutback in university funding announced by Peter Mandelson just before Christmas, which rather takes the gilt off Mr Darling's gingerbread.

On the public sector, Mr Darling was a bit of a deeper shade of blue, however. Pay limits of 1 per cent from 2011 on top of the current stringencies is a foolish and reactionary attack on some of the poorest paid workers in the sector. And as for announcing that he will reform public-sector pensions to make sure they are affordable, the Chancellor is so far off the wall that it's plain silly. Mr Darling is pandering to all the most nonsensical propaganda put out by the Tories when he says this. Even the London Evening Standard, whose Tory proclivities are well known, knows better. Its City commentator Anthony Hilton, not the most notorious of socialists, had this to say only a couple of weeks back: "In the context of the wider economy, public-sector pensions are eminently affordable and not at all generous. Cutting them would save nothing because - deprived of this income - many recipients would have to fall back on other state benefits." Well, Mr Darling, if even the Standard can see it... It's probably possible to write the longest leader on record on Budget day, but it's a temptation that we are going to have to resist. However two more points really must be looked at. Housing deserves far more thought and consideration than Mr Darling has given it.

A knee-jerk doubling of the stamp duty threshhold from £125,000 to £250,000, coupled with doubling the duty to 5 per cent on houses worth over a million, may sound very redistributive, but it's really a nonsense. In the context of helping more first-time buyers onto the housing ladder, it's all very well until you remember that the ladder is propped against a wall of huge personal debts which it isn't fair to force people into. Rather than dragging young couples into lifelong debt, wouldn't it have been better to release cash to councils to fund a programme of affordable homebuilding? It would certainly have been a damn sight better use of funds than £4 billion extra for the Afghan war. And, as for the reform of housing benefit to save £250 million, it's not clear what reforms, but it's a sensitive area to play with and you can bet that claimants won't be the recipients of any great largesse. And lastly, there's pensions. The National Pensioners Convention points out that, for the first time ever, this year's £2.40-a-week increase in the state pension does not apply to SERPS or graduated pension payments. They also point out in the frostiest terms that maintaining the winter fuel allowance at last year's levels is not much use given last year's fuel cost rises. Cold comfort there. So it's another year of missed opportunity, and one that Mr Darling may well regret come May.

Budget day started with PCS pickets outside the Houses of Parliament, the Treasury and almost every jobcentre around the country. Anyone observing MPs drive past the PCS protesters to hear Alistair Darling's words of wisdom would have been struck by the lack of public esteem for Parliament. In fact, it's at an all-time low. Ordinary men and women across the country, such as public-sector workers and BA cabin crew, are struggling against pay cuts, redundancies and attacks on their terms and conditions. Add to that a string of parliamentary scandals and it's no wonder people are so disillusioned.

Expenses claims, the shady lobbying practices of Geoff Hoon, Stephen Byers and Patricia Hewitt, plus the Tory Ashcroft debacle have left MPs reeling. So this particular Budget comes at a key time for Labour. Key choices are to be made as the recession - according to some commentators - "draws to a close" and in the wake of the decisions taken in 2008 to bail out the banks. At one level Darling made some fairly encouraging Keynesian remarks about the "role of government," defending the role of the state and comparing current levels of unemployment and interest rates to the recessions of the 1980s and '90s. But he soon retreated into Great Britain PLC mode when he said all the bank shares would eventually be sold and that the age of interventionism was over. If Darling really believes this, he should cast an eye to the media reporting of what is happening in Greece. Greece's budget deficit, coupled with pressure from the EU and international banks, has forced the hapless George Papandreou to make endless flights to European capitals to pledge even more cuts and attacks on the welfare state, only to return home to more strikes and even bigger demonstrations. Darling seemed like a man uncertain of what to say. What was obvious, though, was that above all he wanted to please the City commentators and be told he was being "responsible" and "cutting the deficit."
The Chancellor has allowed, even encouraged, praise from the City to be the gold standard of 21st century fiscal policy. The new national barometer by which government success is measured appears to be at what the level the deficit is. Emphasising the point is the international banking fraternity's decision to lower Portugal's credit rating, which demonstrates the power of big-business sophistry over the real needs of people. Darling did announce some welcome changes and improvements, but, as he trundled his way through his speech, he continued with the same theme he has adopted for so long - essentially that public employees must pay a wholly disproportionate share of the debt burden created by the banking crisis. A 1 per cent pay limit on public-sector pay for three years, the loss of many jobs and the relocation of one-third of Civil Service positions currently in London will mean hardship and depression for many who are already low paid.
As one of the PCS pickets outside Parliament laconically put it, their struggle has an effect on everyone else in the public sector.

If this dispute is lost then it can only be a matter of time before severance arrangements for the police and others are affected. Since the EU does not allow state subsidies or direct support for industry, government powers are limited to tax-raising and giving out benefits. In another nod towards Keynes, the Chancellor announced a cut in stamp duty for first-time buyers and an increase in the rate for £1 million-plus properties.
However, he then went on to make a very curious reference to the way "welfare reform has restricted the rise in inactivity benefits." This indicates the real purpose of taking many people out of benefits altogether and making draconian demands on accepting low-paid jobs that the welfare trap of housing benefits penalises them from accepting - it's all about the deficit.

Yet the huge housing benefit bill for tenants of private landlords who charge exorbitant rents is to be dealt with in absolutely the wrong way. Instead of controlling rents and the obscene levels of profit made by renting to the poorest tenants, the plan is to prevent those on benefit being allowed to go into "expensive" homes. It looks as though an era of social cleansing could begin with restricting housing support to "low-cost" areas. In a continuation of the Great Britain PLC theme, Darling confirmed the sale of the Dartford river crossing and the Channel Tunnel rail link, putting pressure on government departments and local authorities to continue asset sales to meet infrastructure investment needs. New Labour and the Tories have always believed that government is essentially a business, not a public role and while Darling has changed the mood music, he has saddled himself and any future government with the millstone of debt reduction, whatever the circumstances. The Tory response was as expected - more cuts more quickly and not raising tax and national insurance contributions for the wealthiest. David Cameron's strange obsession with marriage was dealt a neat blow with plans for tax credits to be paid to families irrespective of the status of the parental relationship.

One telling figure, hidden quietly in the midst of all this was the cost of the Afghanistan war. Some £4 billion in the next year alone. Free market obsessions brought us the crisis and while the initial reaction to the crisis of partially taking the banks into public ownership was welcome, the price is being paid by tight spending, wage control and asset sales. Public support for global regulation and the so-called Robin Hood tax show that for all the shallowness of the media presentation of the crisis, there are many who see the real causes of poverty and inequality in Britain and are prepared to do something about it. With election fever about to fully set in, perhaps the best way of defeating the Tories is to promise a period of redistribution of wealth or quite simply the end of new Labour.