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Friday, 8 October 2010

Sorry David, your sums don't add up.

David Cameron's had a tough week.

And rightly so. The last few days have, I believe, demonstrated the shallowness of his attempts to portray himself as honest and above politics.

Let's revisit the child benefit debate. My own views are clear, and I've expressed them on here. However, I fully appreciate why the coalition government feels the need to consider all possibilities when it comes to tackling the deficit and I would - along with many other people - reluctantly accept axing child benefit payments to the better off if it could be demonstrated that such a political risk would make substantial savings.

David Cameron and George Osbourne have presented the child benefit reform as a painful necessity, essential to the long-term financial recovery. That's how they've sold it to the public and that's how it's been sold to MPs and even their own party.

It is, of course, plainly wrong of the Prime Minister to have done this. He's been disingenuous at best, at worst intentionally dishonest. Because, to put it simply, his sums don't add up.

Ensuring that their sums add up has not always been the Conservatives' strong point. However, given the current economic situation and the government's determination to press ahead with the Comprehensive Spending Review, it would be hoped that the Prime Minister would have some idea of the costs and savings involved in implementing policy.

Having sold us the child benefit cuts as vital, the government announced that it expected to save £1 billion (out of a total of £100 billion structural deficit to be recovered). Essentially this amounted to an admission that the government was willing to compromise its election pledges and take a huge political risk to make a saving of 1% of its overall target. However, after investigating further I discovered that no allowance has been made to assess the potential increased costs of administering the new child benefit system - bringing into question even this statistic.

This really is back-of-an-envelope stuff. An first year economics student would struggle to get a 2:2 for that one. I can only imagine that there may have been some opposition to ending universality, with the Tories responding by patching together a policy over a few drinks on Sunday evening that creates so many unfair anomalies.

That isn't the worst of it. As I wrote yesterday, I read in The Herald that the projected cost of the married person's tax-break - being promoted by Cameron as helping to compensate some of the projected loss of income from child benefit - is £550 million. This would mean a mere £450 million saving.

Except it doesn't. This figure appears to be yet another statistic plucked out of the air lacking in any quantifiable evidence base. Reading the same newspaper, I discovered that Michael Settle had uncovered some interesting analysis from the Institute for Fiscal Studies that reintroducing the married couples' tax allowance would cost £1.6 billion per year.

So we're not talking about savings at all, but a £600 million loss.

The whole premise that the child benefit cut was about making savings vital to economic renewal was a false one. We have been deceived, misled and lied to. I can accept it when our own, well-meaning MPs like Tim Farron and Menzies Campbell talked about the need to cut child benefit because they were doing so out of a conviction that this was regrettably necessary to make inroads into tackling the deficit.

But it is quite a different thing when it becomes apparent that the Conservatives' motivation in pressing ahead with such a risky policy is merely so it can claim credit for introducing one of its most backward-looking and illiberal manifesto pledges. I have no problem with making tough decisions aimed at alleviating poverty when the national deficit urgently needs to be reduced; I do, however, have a significant problem when policies marketed as doing just that are in fact little more than a smokescreen for implementing Cameron's ill-advised pet project to "reward marriage within the tax system".

Ignore the Tory sums. This is not about making savings, but about moral motivations and a Tory obsession with a misguided and outdated ideology that doesn't sit very comfortably with those of us whose instincts are by nature liberal. Cameron's ambition to "reward marriage" is - if we accept the calculations of the IFS - likely to cost us at least £600 million. It's hard to know how much dialogue has gone on within the Cabinet about this (not very much it would seem) but I resent the way in which Lib Dem ministers, bound by collective responsibilty, may now have to defend a cut on a completely dishonest basis.

Whether Cameron and Osbourne are guilty of deliberate dishonesty or just plain incompetence, one thing is clear. These decisions, combined with an unexceptional speech from the Prime Minister at Conservative conference, point to a leadership unsure of its direction and already out of touch with its own party. As Michael Settle noted, Cameron has succeeded in "snatching defeat from the jaws of victory".

Or, for a more blunt interpretation, how about this one from a Tory delegate: "the words ‘up’ and ‘cock’ spring to mind.”

1 comment:

tris said...

Children are an expense. They are also necessary for the continuation of the race.

It is reasonable to encourage people to have children, which will cost them money, by defraying some of that cost. After all even people who have no children will benefit from the children that are being born today, as they get older and rely on doctors, nurses, carers etc.

Getting married does not cost money (except of course for those who wish to throw a massive party and spend vast sums on food, drink and once worn clothes).

I can see no reason for subsidising people to get married.

From a Tory point of view it even seems to be interfering unnecessarily in the lives of citizens (or subjects).

It appears to suggest that, even in 21st century, the government approves of marriage so much that it is willing to pay people to do it.

Of course with around half the number of marriages ending in divorce (and that has no connection with "class"; 75% of Her Majesty's children are divorced), it does make rather a lot of money for lawyers. Therein may lie the attraction for Conservatives who count many lawyers amongst their number.

It seems then rather strange to take money from people who are providing us with the next generation, and might reasonably use that money to help bring up their children, and give it instead to married couples, who might not have children, or be past the age of having children, and might well use it for Mediterranean cruises, or cigarettes.

The fact that figures seem to show that it will cost more than child benefit makes it an even more ridiculous idea.

I find it difficult too, to work out whether Cameron and Osborne are dishonest or just stupid. I suspect a mixture of the two may be the answer to that conundrum.