How the coalition can develop its case for fairness
Peter Hoskin 4:20pm
The coverage in today's FT is a reminder that one question will pursue the coalition more doggedly than any other: are the cuts fair and
"progressive"? This isn't an issue that Osborne & Co should duck, and not just because they've set it as a measure of their own success. There is, to my mind, a moral and economic
necessity for measures that benefit the least well-off – and, what's more, this is terrain which the coalition should feel quite comfortable traversing. Benefit reform, schools reform,
lifting low-income earners out of tax: these policies provide a solid foundation for an argument about fairness.
If the coalition wants to develop that argument persuasively, then it should remember four points:
1) The graphs don't show the whole picture. Many of the graphs which have been used to "prove" that the Budget was unfair operate only on a tax-and-spend basis. The VAT hike gets fed into the equation, for instance, as do reductions in benefits – so that winners and losers are determined by how much money they've lost and gained overall. This is a useful measure, but it is not the only one. As yet, the graphs don’t account for policies which operate on a less straightforward basis – such as IDS's benefit reforms, or Gove's schools reform plans. These should have a positive impact for the least well-off, but the proof will come in years' time. Not in a graph stapled onto the last Budget.
2) Playing to the graphs can be counterproductive. In the aftermath of the Budget, there was a sense that the coalition had tweaked some policies to make the graphs read more "progressive". And so child tax credits were increased at the lower end of the income distribution, and cut at the upper. This is all well and good, you might think. But, as the IFS pointed out at the time, the overall effect of these kinds of changes was to place more disincentives in the way of people climbing up the income ladder. For those who regard the current benefits system as the barrier to opportunity it is, simply pushing money downwards is not the solution.
3) Soaking the rich can be counterproductive. Similar to the second point above, the coalition should be careful about targeting the rich for presentational purposes only. The 50p tax rate is the classic example on this front. If it loses money, as the IFS suggests it might, then the shortfall will need to be made up elsewhere – perhaps via spending cuts or tax rises for the less well-off. What comes dressed up as "progressive" can sometimes be anything but.
4) Labour would have faced the same problems. The main point of the FT article today is that spending cuts will hit the poorest hardest, because they rely more on public services. It's reminiscent of the point that women would bear the brunt of the Budget cuts because they're disproportionately represented in the public sector. Neither of these facts should be ignored by the government. But nor would it be fair to suggest that this is somehow a failure unique to the coalition. Labour had spending cuts of 20 percent pencilled in for the next few years – and they too would have had an impact on women and the least well-off. Cuts mean losers. The point is to work out how those losses can be minimised, or even overturned, during an era of spending restraint.



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Alex Gallagher
August 23rd, 2010 4:46pm Report this commentIndeed "Labour would have faced the same problems.., "
But Labour would have cut £74 billion in four years, a plan approved by the IMF and most economists.
Osborne wants to cut £114 billion, causing unnecessary pain... and aimed at cutting the very services you highlight as affecting the poorest worst.
"Fairness" is a comparative concept and the coalitions policies are comparatively very unfair
Braveheart
August 23rd, 2010 4:49pm Report this commentOne man's fairness is another man's £40 billion of extra cuts....
GeoffH
August 23rd, 2010 5:06pm Report this comment"The main point of the FT article today is that spending cuts will hit the poorest hardest, because they rely more on public services. It's reminiscent of the point that women would bear the brunt of the Budget cuts because they're disproportionately represented in the public sector. Neither of these facts should be ignored by the government"
Of ocurse, they should.
In the reverse situation, raising public spending, no one would be complaining that it was the poor who were disproportionately receiving the benefits.
It's just the same kind of dishonest bleating that occurs when income taxes are reduced. The rich are getting the most benefit is the cry. Yet when taxes go up, nobody complains that the rich are bearing the biggest burden.
yank
August 23rd, 2010 5:10pm Report this commentMr. Hoskin,
You need to add one more numbered point to your list, one that would bring on a significant cost savings which would affect nobody's benefits or taxes, and thus one that an overwhelmingly strong majority would get behind. A determined and well funded minority would fight it of course, but it'd sail through, if it were pushed firmly.
You ready? Here she comes.
Freeze public employee wages and benefits, and let them stay frozen for at least 5 years.
Public employees here are compensated at a rate 20-40% greater than the comparable private sector, and I can't imagine it's much different on those shores. This proposal would gradually bring them back into alignment with the real world.
Re austerity, this is truly the low hanging fruit. It is an illegitimate wealth transfer, and must be addressed.
Further, much of this transferred wealth is illegitimately funneled back through the political process, to buy favoritism. Curtail this illegitimate wealth transfer, and you kill 2 birds with one stone.
You achieve a cost savings and fiscal sanity, plus a less distorted body politic.
And properly viewed, it harms nobody. It is simply a proper realignment. A truly undeserved benefit is slowly withdrawn, and we most of us are in favor of this.
As for those few who feel harmed by this course, they can seek recourse in the private sector, and achieve their perceived value there. Good luck.
But it must be bold, and somebody's gotta stand up and say it. ALL must take the freeze, including the honorables.
Verity
August 23rd, 2010 5:11pm Report this commentI don't like that word "fairness" ... as though the government if the boss, or the parent.
They should be doing what's necessary and pragmatic and let someone else play the role of nanny.
Chris lancashire
August 23rd, 2010 5:12pm Report this commentThe Coalition needs to start making the point that soaking the rich is not only counterproductive in strict terms of the tax take; it is also in terms of attracting multinational businesses here, incentivising entrepreneurs and rewarding risktakers and job creators.
For too long this discussion has been on Labour's terms - "fat cats", "bankers' bonuses" and associated drivel.
TrevorsDen
August 23rd, 2010 5:21pm Report this commentLabour would not have cut by £74 billion. they said they would but they would have ended up not doing. Just listen to Balls. The coalition too will find it difficult, so a larger target is quite wise.
But hey ho ... lets take Alex's figures at face value. 40 billion difference over 5 years is 8 billion a year on a budget planned to be some 700 billion in 2014-15.
Thats just over 1%. You can scream blue murder if you like, but that is not the devastating difference you imply Mr Gallagher.
The more debt is paid off the less we spend on interest repayments. The reality is the country cannot afford its previous level of spending (that 114 billion structural figure could not be repaid by growth) and simply berating cuts by saying Pavlov-like they are 'unfair' is crass.
It was grossly unfair of Labour to spend (and waste) money we did not have.
Praxis Juncture
August 23rd, 2010 8:36pm Report this commentFairness is the biggest battle of all. The most important feature of the current discourse is that the low income remain at the core of the agenda. However, it wont be long and we'll be moving away from the effects of the budget and to the distributed effects of the so-called 're-balancing'. It is here that we'll get the real measure of this government.
normanc
August 23rd, 2010 9:18pm Report this commentIt's a sad indictment of our political system that we now have 3 party's fighting over who can be the most 'progressive'.
Progress, in my eyes, is shrinking the government and the amount of money it consumes.
Nevermind, in 10 years we won't have a choice.
Norman Dee
August 24th, 2010 12:32am Report this commentI think an incident at my last place of work sums it all up, on reading the compay bulletin which pointed we had made a £10k profit the previous month, the resident "red" asked why we didn't share the profit amongst the staff. When asked if he would have a whip around amongst the staff if we made a £10k loss next month he replied, "if we make a loss that's managements fault and not our problem"
The Maksed Marvel
August 24th, 2010 6:32am Report this commentIf you're using the terminology of Labour and the Socialists, you've already lost the argument. "Fairness?" Even worse: "Progressive"? These are emotional concepts, not based on reason. And they are inherently destructive, because the end goal is equality not of opportunity but of outcome.
Are there no Conservative adults any more?
David Bouvier
August 24th, 2010 11:11am Report this commentThe problem I have with your article Peter is that you thoughtlessly conflate "fairness" and the idea that "the cuts" should "benefit the least well off".
"Fairness" must include different kinds of calculation of justice than just income distribution regardless of effort and behaviour. It is not fair to confiscate an ever greater proportion of the better offs incomes, though it could help the poor.
Fairness requires that those of us who support ourselves can substantially retain our just rewards, while also making provision to look after those who justly need our support - a group correlated but not perfectly correlated with "the least well enough".
The provision of minimal support for those undeserving of support remains a sensible law and order investment to deal with "brigandage" as they put it in 1601.
You also seem to imply a rachet where every incremental change must benefit the least well off. But unless you accept that a degree of income equality is fair the logic of this is redistribution to the point of ecnomic collapse.
Contrary to the "The Masked Marvel" fairness is a sound conservative word that has been used to dispatch their loaded term "social justice" from the political conservation. And the left is keen to try to load the same baggage onto fairness - with I fear too much assistance from posts like this...
Perhaps we can come up with a list of "Is it fair that..." questions that make it clear that support for the poor is not the alpha and omega of fairness.
Major Plonquer 1
August 24th, 2010 11:45am Report this commentNow we even have writers from the Spectator getting their knickers in a twist. How on earth can anything be both 'progressive' and 'fair'.
Fair surely means that EVERYBODY pays their fair share - it's not called a fair share for nothing - to help run the country. Fair can not possibly mean some pepple pay more than others. The word 'fair' has been hijacked by the left and now means it can only be fair if they don't have to pay their way and the rest of us have to carry them.
In a PURE sense, the ONLY system that could ever possibly be objectively described as 'fair' would be a flat tax - everybody pays a percentage of their income. If you make ten times as much you pay ten times more.
Funny I don't see that on anyone's agenda.
Now cut it out and stop pretending you learned English fron Neil 'fair deal' Kinnock. If you must use a word in your writings please make sure you use it correctly. That's what you're paid for.
Ian Stewart
August 24th, 2010 1:13pm Report this comment"Fairness" would, I presume, mean admitting that the vastly wealthy have had a tax-holiday since about 1985?
It is the middle-income bracket, and the poor who actually pay for everything in this country - via income tax and VAT. The tiny powerful minority, who deposit money globally (and in which case have no national loyalty) only want fairness towards themselves. Whither Patriotism?
David Bouvier
August 24th, 2010 10:04pm Report this commentSimple Ian - fairness and efficiency are not the same as patriotism
Alexander Pelling
October 20th, 2010 3:27pm Report this commentFairness means nothing; it is a rhetorical flourish devoid of content, like 'goodness' or (heaven help us) 'the right thing to do.' Its purpose is to imply that those who oppose you are committed to unfairness; to badness; to doing the wrong thing. I used to think that the people of this country were smart enough to see through rubbish like that but these days I am not so sure .
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