The Coalition government 2010-15 effectively won the economic argument that the British welfare budget had ballooned out of control in the Labour era (1997-2010). This intellectual and political victory produced the brilliant rhetorical flourish from the Chancellor ‘We’re all in this together’. Additionally Osborne created the mantra ‘hard-working taxpayers’ as a contrast to those who ‘lived’ off the state and laid in bed whilst hard-working taxpayers went to work. Osborne went on to differentiate between welfare recipients using a political calculation: How grateful are the recipients and will they support the Conservatives in the electoral process? This has led him to attack child benefits and to enhance state pensioners.
As there are numerous benefit categories in Britain, Osborne could have simply pressed the emergency button in 2010 and all benefit payments would have been frozen. This would probably have commanded general, and popular, support as it would be seen as even-handed and ‘fair’. Instead Osborne politicised his choice. His ‘austerity’ programme became an ideological weapon creating a smaller state. Osborne is intellectually committed to reducing the size of the state. He is carefully using the targeted welfare reductions to achieve that end. Osborne fully understands the political cost of reducing the principal element of the welfare benefit bill which is old age pensions. They cost 41% of the welfare budget. Any attack on the benefits received by British pensioners is political suicide and so they remain not only protected but with enhanced benefits. British pensioners have been wooed throughout the Osborne chancellorship.
In the period 2010-15 British pensioners have seen the basic pension rise by 18.74%. Additionally there is a transport card giving free bus travel* anywhere in their respective country (England, Scotland, Wales or Northern Ireland). They also receive £200 (tax free) for winter fuel costs and a free TV licence (over 75s). In the immediate pre-election period (2015) Osborne introduced his so-called Pensioner Bond, which paid an interest rate twice the commercial rate. This was only available to the over 65s. This unashamed bribe cost about £600m in additional payments beyond what would have been the case if the commercial rate had been in place. Pensioners with £10,000 available for investment received 4% whereas the commercial rate was 2%. This was wildly popular with pensioners. Osborne’s party enjoyed huge support from the over 65s in the 2015 election, winning a narrow victory.
Children are not a priority in Conservative Britain. The increase in Child Benefit in the period 2010-15 was 1.97%, just under a tenth of the increase handed out to pensioners. Gordon Brown’s** war on child poverty has been reversed by Osborne. There will be an inevitable increase in child poverty. That increase in poverty is the price of Osborne’s entirely accurate if morally dubious political calculation. That calculation is that British pensioners vote reliably and no other demographic sector does. British children, in poor households, will have significantly reduced life opportunities further restricting social mobility. Reduced social mobility*** is manifestly damaging to the overall prosperity of the British economy going forward.
Politicising welfare benefits is odious. Such benefits are part of the social contract between citizen and state. Claiming that benefits are unaffordable whilst simultaneously using benefits payments to enhance party political advantage is amoral, having the stench of political corruption.
*In London this extends to free rail travel.
**Chancellor 1997-2007; Prime Minister 2007-10
***Richard Wilkinson and Kate Pickett The Spirit Level: Why equality is better for everyone 2009; see also Danny Dorling Inequality and the 1% 2014