As we get nearer the General Election, we will hear more and more from Conservative and Liberal Democrat politicians about how much they have “made things better”. In particularl, they are fond of implying that the working poor are now better off. The Chancellor’s Autumn Statement once again confirmed that this is not true. The key graph is here:
The Treasury have changed their methodology, but the overall result is the same: most people are worse off as a result of the changes made by this government, even before taking account of the drop in average wages which has occurred under their tenure. Although it looks as though the top quintile are hit harder, it is important to note that this is because of the changes to income tax introduced by the previous Labour Government. Once you discount for the new top rate and the loss of personal allowances over £100,000 this group break even. Contrast this with the bottom two quintiles and the picture is clear: this Government has targeted the working poor.
As Neil Kinnock so eloquently explained when he spoke at Llandudno Junction Labour Club last month, there is a real alternative – an activist government using the power of the state to improve people’s lives. This current coalition government has proved that their economic theories don’t work – despite the massive cuts which are damaging health, education and other public services, the deficit has reduced by little more than it would have under Alistair Darling’s plans. Why? Because in a low-wage, part-time economy the government receives less income from taxes. An investment-led recovery would do far more to reduce the deficit as well as providing jobs and homes for people who need them.