David Cameron's mind-forg'd manacles

At Prime Minister's Questions today, David Cameron repeatedly stated that if the government did not cut tax credits, then that money would have to be cut from education or the NHS. But that is not true. There are many more choices open to the government, which it simply refuses to consider.

Firstly, spending cuts are only deemed necessary because of the government's determination to eliminate the budget deficit in a rigid time frame, a time frame which they themselves invented. They are driving through cuts which will cause considerable suffering, in order to meet an arbitrary and unnecessary target of their own making. William Blake's 'mind-forg'd manacles' spring to mind.

Whilst the choice Mr. Cameron presented was false, there are of course, real choices to be made. And every time there is a choice to be made, the government repeatedly chooses to take from the poor and give to the rich. That is why they have chosen to cut the support for people too ill to work, but increased the allowances for inheritance tax. That is why they planned to cut tax credits for low paid workers whilst cutting corporation tax for big businesses.

The inheritance tax change benefits a small number of people who are not poor, and our corporation tax is almost the lowest in the G20, so the Chancellor could have left it as it is or even raised it to nearer the average - but he made the choice to cut it.

An excellent blog by Jolyon Maugham QC, a tax specialist, analysed the figures on tax credits and other measures in the Budget and the Conservative manifesto, and showed how the government is invariably choosing to take money from the poorest and give to the wealthy.

One measure which the Conservatives constantly cite as a way in which they are helping the poorest workers is the raising of the personal allowance for income tax. But this measure actually benefits those on middle and higher incomes the most.

And whilst measures on tax credits and income tax may gain their fair share of media coverage, other less publicised measures are quietly being taken by Mr. Osborne which line the pockets of the prosperous and cost the public purse significant sums of money. Remember the 'shares for rights' scheme which Mr. Osborne announced in his 2012 conference speech? He portrayed it as something which could benefit ordinary workers, who could become part owners of the companies they worked for, declaring, "Owners, workers, and the taxman, all in it together."

But as Jolyon Maugham points out, this quickly became yet another way for the wealthy to get wealthier, citing "a friend at a very grand firm indeed who said that he was spending all of his time constructing shares for rights schemes for private equity and MBO clients. But none, he said, for ‘normal’ people."

This is just one example of how, by countless and largely unpublicised measures such as these, the state is generous towards prosperous individuals and businesses whilst cutting support for the poor. In an important study for the Sheffield Political Economy Research Institute, Kevin Farnsworth calculated that "corporate welfare in the UK is worth between £93 billion and £180 billion per year. The lower figure is enough to wipe out the UK deficit for 2015. The higher figure would make a significant dent in the national debt."

He points out that "business tax strategies increasingly undermine the tax base. The most consistent demand of business is that corporations need lower taxes and lower regulations in order to compete in the world. Businesses may need the state, but their actions suggest they are less and less willing to pay for it which inevitably means higher taxes on (regular) citizens and/or further cuts in social welfare."

The Prime Minister said he was cutting tax credits in order to move towards a "high wage, low welfare" economy. What we are actually getting is a low wage, low welfare economy which is generous to businesses and wealthy individuals whilst being punitive towards the poor. And all ostensibly justified by a self-imposed deadline to eliminate the deficit which even the IMF considers unnecessary.

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© Bernadette Meaden has written about political, religious and social issues for some years, and is strongly influenced by Christian Socialism, liberation theology and the Catholic Worker movement. She is an Ekklesia associate and regular contributor. You can follow her on Twitter: @BernaMeaden