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Will the Lib Dems veto welfare cuts?

7 October 2012

1:27 PM

7 October 2012

1:27 PM

If the Lib Dem conference was all about proalition, the Conservatives seem determined to at least start their conference in a less coalicious frame of mind. This morning Chancellor George Osborne made very clear on Murnaghan on Sky News that he would not introduce either a wealth tax or a mansion tax: measures Nick Clegg has called for as the price of the Lib Dems supporting further welfare cuts. Osborne said:

‘I don’t think either of those ideas are the right ones. I don’t think a mansion tax is the right idea because, I tell you, before the election it will be sold to you as a mansion tax and then after the election a lot of the people in Britain are going to wake up and find their more modest homes have suddenly been reclassified as a mansion.

‘So we’re not going to have a new mansion tax, nor do I think it’s sensible to have a wealth tax in the sense of a sort of tax on your wealth levied annually. Other countries have tried that and it hasn’t worked, and it’s driven enterprise and investment abroad.’

He insisted that the rich would be making ‘a contribution to closing the budget deficit’ and that ‘they must bear the greatest share’. But both he and David Cameron, who appeared a little earlier on the Andrew Marr Show, were clear that the Tory side of the government is still eyeing the welfare budget.

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To help ministers out, the Free Enterprise Group is this week publishing a pamphlet arguing that jobseeker’s allowance should be cut after six months and again after a year of a claimant remaining on the dole. But though this would make some savings, I suspect Iain Duncan Smith would be deeply unhappy about the idea. It is very similar to a cut that he dropped from the Welfare Reform Bill back in 2011 which docked 10 per cent from the housing benefit payments of anyone who had been on the dole for more than a year. At the time, as well as bowing to concerted pressure from the Lib Dems on the matter, Duncan Smith explained that benefit payments were already going to be cut for anyone who turned down a reasonable job offer, while this cut kicked those who might still be desperately doing everything they could to seek work. He may find himself rehearsing this battle as the Treasury looks for further savings.

Lord Oakeshott, one of the most enthusiastic promoters of the mansion tax, is unsurprisingly cross. He says: ‘Are we in coalition or Conservative government today after they rubbish the mansion tax just passed by circa 300 – 2 at Lib Dem conference? A disastrous own goal by the True Blues: they protect Squeezed Millionaires, not the Squeezed Middle.’

The Lib Dems’ former Treasury spokesman in the Lords also points out that Osborne was originally in favour of the mansion tax, saying: ‘The mansion tax is the only tax Cameron’s rich relatives can’t dodge – that’s why he blocked it in the Budget although Osborne was up for it.’ And he agrees that the £10 billion of welfare cuts are dead in the water, saying ‘as we saw on Lords Reform and boundaries, it takes two to tango in coalition and two not to veto’.

But Osborne’s remarks today haven’t set off a chain reaction of fury from those around Nick Clegg as you might have expected. They were talking tough over the summer about their plan to block the £10 billion of cuts needed to the welfare budget. But one senior party source tells me today that the party could still reach a settlement where welfare cuts go ahead so long as Osborne really is able to offer a credible package which involves the rich paying more.

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Show comments
  • Stevej

    After 40 years of paying tax,NI and pension I had to give uo work to care 24/7 for my severely disabled wife. Now I am the Govts target..£55 carers allowance…penny for penny my pension taken off benefit..Uprating of my pension fiddled by Osborne..local alarm services removed…Where is the “we will support those who do their bit for society” ?

  • dalai guevara

    It continues to amaze me that in times when inequality is on the rise in Anglo-America (as measured by the IHDI), some people still focus on how to milk the bottom end. Yes, welfare fraud exists, but how much in comparison to tax fraud on the other end of the social spectrum?

    • james102

      If you look at the middle class in the USA and factor in
      inflation their standard of living has barely increased in a generation.

      It is really only the top one percent that has seen any
      massive increase.

      • dalai guevara

        Bingo. Same applies to derivative Britain.

  • 2trueblue

    Oakeshott is intolerant and intolerable.

  • 2trueblue

    Oakeshott is intolerant and intolerable.

  • 2trueblue

    Oakeshott is intolerant and intolerable.

  • Archimedes

    “I tell you, before the election it will be sold to you as a mansion tax and then after the election a lot of the people in Britain are going to wake up and find their more modest homes have suddenly been reclassified as a mansion.”

    It’s a little odd the way Osborne chose to phrase that. It seems a bit like an acknowledgement that the Conservatives will not be in government after the election?

  • Archimedes

    “Are we in coalition or Conservative government today after they rubbish the mansion tax just passed by circa 300 – 2 at Lib Dem conference?”

    Right, so it’s OK for the Lib Dems to announce a new policy, without backing from the majority of the government, at their party conference, but it is beyond the pale for the majority of the government to announce the scrapping of an unsupported policy at the Conservative conference?

    I really hope that, one day, all of Oakeshott’s incandescent rage will conspire to cause a catastrophic localised explosion…that no one will pay very much attention to: Pop! Puff!

    • telemachus

      Remember Oakeshotts principled stand
      Over George Osborne’s softness on the banks Oakshott broke ranks to condemn it.
      ‘Lib Dem Lord Oakeshott has resigned from the front bench over it, saying, “If this is robust action on bank bonuses, my name’s Bob Diamond.”’
      *
      If we all keep the pressure on, I think we cansplit the coalition

  • Widmerpool

    Well done that Boy! Is it too much to expect that after 3 years plus of
    Grandstanding Vince Cable may at last have been shut up over the Mansion Tax. A
    real slap in the face for Vince -enough for him to defect to Labour now and for
    Industry to get a younger more pro business Industry Secretary here’s hoping!

    • telemachus

      Forget it
      If Cameron wants to cut he will need to acquiesce to some soaking of the rich

  • dalai guevara

    If welfare was means-tested, who could possibly argue that in times of massive infationary pressures that payouts should fall?

    • alexsandr

      you have forgotten who has to pay. I am afraid taxpayers havent got bottomless pockets.

      • dalai guevara

        Correct, when a council tax bill for a two bed flat is virtually the same as for a five bed house, then I will second your point.

        • toni

          Given that a council tax bill for a bedsit/1 bedroom flat is the same as a two bed plus garden house, then I will treble your point.
          More bands needed at the top and bottom end.

          • james102

            But should we look at what services are provided by LAs?I
            know council tax does not cover much as they are mainly grant funded but do we
            need the free newspapers? Do we need the
            equalities units and training?

            • dalai guevara

              Do those who have no kids….fund schools?

  • james102

    The debate needs to be simplified. It is just about the
    proportion of the total economy that the state takes.

    The Conservatives should explain the consequences of us exceeding
    the amount spent on welfare and other state functions in relation to the size
    of our total economy and taxation levels. Labour and the LibDems, representing
    a more socialist viewpoint and having more public sector employees and welfare recipients
    as supporters, need to make the argument that the proportion should grow and
    taxation increase to meet it.

    Both camps need to explain the consequences of funding the
    state by borrowing against future taxes .Total debt should include public
    sector pensions and schemes funded under private sector financing of public
    sector projects and any other off book commitments.

    • telemachus

      Cameron is
      wedded to screwing the poor and needy and has promised yet more welfare cuts if
      the Tories win the next election. He is also obsessed by benefit scroungers(so
      called)

      However official
      figures suggest welfare fraud (mostly claimed by the poor and desperate) costs
      around £1.3 billion, a fraction of the billions lost to tax avoidance and
      evasion (mostly the preserve of the rich). But these are arguments Labour
      appears incapable of making.

      • james102

        Come now, just between us, and off the script, none of the
        parties want to grind the poor and needy into the ground, they are just facing
        a situation where the size of the state cannot be funded unless it consumes a
        higher proportion of the economy. This is not politically acceptable because
        the economy itself will shrink if taxes are increased and the increase debt
        option is no longer available as total debt is unsustainable.

        Welfare fraud is rife, but more important it is one of the
        few areas that can be dealt with without a political cost.

        It really does not matter which party or combination of
        parties win the next election, we are in for a decade of savage cuts because we
        have been living beyond our means.

        The ‘we’ includes most of the west.

        • telemachus

          Agree with much
          But there is a caring way to do it

    • dalai guevara

      You are in danger of being misunderstood. If economic output shrinks by 30% (please include devaluation and you will get to my figure), do you suggest to reduce welfare by 30%, just to keep ‘all equal’?

  • Fergus Pickering

    If Oakeshott is for something it must be no bloody good.

    • telemachus

      Lord Oakeshott speaks the unpalatable truths the Tories do not like to hear

      ‘We have taken far too many bullets for coalition policy while the Tories have dodged them’

      • Archimedes

        The reason the LibDems have taken so many bullets is because they never expected to be in government, so they idiotically promised unrealistic things, which they then had to admit were undeliverable.

        • telemachus

          They should apologise then just like in the treacle party political broadcast
          They should learn from Gordon’s moral compass

          • launcher

            The evil that is in the world almost
            always comes of ignorance, and good intentions may do as much harm as malevolence if they lack understanding.

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