In 2010, David Cameron, Nick Clegg and George Osborne said that there was one simple test by which the Conservative-Liberal Democrat coalition government should be judged. The test they chose was “to balance the books and get the debt down by 2015”.
Last week, in his Autumn Statement, George Osborne confirmed that the government would fail this test. Borrowing and debt figures have been revised upwards and the economy is shrinking. But, instead of a change of course, Osborne confirmed we’re going to get more of the same failing policies.
Over the last two years our economy has grown by just 0.6% - compared to the 4.6% the government promised, 3.6% in Germany and 4.1% in America – and this year is now predicted to contract. Growth forecasts have been downgraded yet again for this year, next year and every year up to 2016.
Nearly 1 million young people are out of work, long-term unemployment is rising and the claimant count is forecast to be 275,000 higher by 2015. Prices are forecast to carry on rising faster than wages for at least another year.
George Osborne was forced to confirm that he will not meet his fiscal rule to get the debt down by 2015, and that his pledge to balance the books by 2015 will also not be met until 2018 at the earliest. Borrowing and debt figures have been revised up this year and for future years. The government is set to borrow £212 billion more than they planned – more than the plans the government inherited and condemned at the time for not going far enough. The reason why borrowing and debt has been revised up is because slow growth and high unemployment means tax revenues are down and the benefits bill is up.
The government has decided that people on low and middle incomes should pay the price for their failure. They are pressing ahead with a £3 billion tax cut for the highest earners in the country – worth an average of £107,000 for 8,000 people earning over £1 million. Yet at the same time people on low and middle incomes are being hit hard with higher VAT, the granny tax, and real terms cuts to tax credits, jobseekers allowance, child and council tax benefits.
What kind of government believes that low-paid working people will only work harder if you take away their tax credits and make them worse off, but millionaires will only work harder if you give them a tax cut to make them better off? One that fails the test.