THE BITTER FRUITS OF COALITION

19 November 2014


The reactionary changes made by the Tory Libdem government are now becoming clear. I am going to look very briefly at four recent comprehensive reports that show the fruits of the coalition government are bitter indeed. Do read the reports.

The changes in tax and benefits
Research by Paola de Agostini, Holly Sutherland, John Hills of the University of Essex and the London School of Economics, Were we really all in it together? The distributional effects of the UK coalition government’s tax-benefit changes (November 2014), has looked at the impact of the changes in direct taxes, tax credits, and pensions (but not indirect taxes such as VAT) on different income groups in Britain since May 2010, the last general election.

The verdict is clear: money has been shifted from the poorest to the well-off. “The reforms had the effect of making an income transfer from the poorest half of households (and some of the very richest) to most of the richest half” (page 19) – without improving the deficit.
No, we are not all in this together. The Tories and Libdems have beaten up the poor.

Tax and benefit changes #fail

The failure of the coalition’s student fees scheme
The Higher Education Commission has just published Too good to fail – the financial sustainability of higher education in England (November 2014), its report on the sustainability of the present funding of higher education in England, including student tuition fees. The quick verdict: “the current system is unsustainable” (page 63).

The Libdems before the 2010 election had loudly and flamboyantly promised to abolish student fees. Once in government they tripled them.

On student loans for the fees the report produces some startling statistics of failure:
“According to the Institute for fiscal studies (IFS) students will graduate with an average of £44 035 of student debt” (page 11)
“The IFS estimates that 73 percent of graduates will not repay their debt in full, compared to just 25 percent under the old system” (page 11)
“For every £1 lent by the government to students for HE [higher education], 45 pence will not be repaid” (page 12).

And the really bad news is that the Financial conduct authority (FCA) now insists that student loan debt is taken into account when people apply for a mortgage. The dismal effect will be to prevent many former students getting one.

The report has sixteen recommendations to make the system sustainable. The rustling noise you hear is the Tory Libdem government squirming.

Student fees #fail

Child poverty and low pay

The Commission for social mobility and child poverty has published two reports: Escape plan on low pay (by the Resolution Foundation, November 2014); and State of the nation (second annual report (October 2014).

On low pay Alan Milburn, the Commission chair, comments on Escape plan: “The majority of Britain’s poorest paid workers never escape the low pay trap. Too many simply cycle in and out of low paying jobs instead of being able to move up the pay ladder. Any sort of work is better than no work but being in a job does not guarantee a route out of poverty”.

I’ve written about child poverty several times. The latest report shows that the Tory Libdem government has not built well on Labour’s struggling achievements. On child poverty State of the nation says the present policy and ambitions are failing, the child poverty target will be missed. Policy and implementation should be recast and it advocates the progressive aims of closing the school attainment gap between poorer and better off pupils – a majority of poor children do not get five GCSEs; ending youth unemployment; achieving a universal living in Britain wage by 2025; and in the private housing sector making longterm tenancies the norm for families with children.

The Commission calls on all the parties to explain how they will protect the poor from damage by austerity and further cuts.

Child poverty #fail and low pay #fail

The four reports make bleak reading for bleak November.


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