Osborne has accidentally exposed how ridiculous his austerity cuts were through his post-Brexit Budget threats

He once said taxing the rich wouldn't actually bring in any more money - so why is he threatening to jack up inheritance tax to cover a £30bn "black hole"?

Joel Benjamin
Thursday 16 June 2016 12:03
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For the last six years, George Osborne has been insisting that in order to tackle the UK’s current account deficit (the annual difference between what the country earns, and what it spends) and reduce the national debt, there was only one option: to cut public sector spending via austerity. And of course, most of those austerity cuts were enacted on the poor, many of which came out of the benefits system. Meanwhile, the richest and the oldest members of society got off pretty much scot-free – because Osborne claimed there was no use in raising the top rate of tax, since rich people would find a way of avoiding paying for it anyway.

At the other end of the political spectrum, we find Yanis Varoufakis, who labels Osborne’s cuts ideological “class war.

Osborne’s steadfast belief in cutting public spending has formed the basis of the Tories’ so-called “long term economic plan”, repeated ad nauseum in the media in the lead-up to the 2015 General Election.

Fast forward to George Osborne’s Brexit budget warning about an ‘emergency Budget’ this week, and the Chancellor, who shared a platform with his predecessor Alistair Darling, seems to have quickly changed his tune.

Osborne is quoted as saying that if faced with a situation where Britain votes to Leave the EU, he would be left with ‘no choice’ but to raise £30bn via emergency taxes and cuts, stating: “No Conservative Chancellor wants to raise taxes, least of all me, but you cannot have chaos in public finances, and you have to deal with the hole that would emerge if we quit the EU.” He went on to make threats about increasing inheritance tax.

Labour leader Jeremy Corbyn responded immediately to the trumped up threat, stating Labour would block a post-Brexit austerity budget, supported by a group of 57 rebel Tory MPs who would not support the move which threatens ring-fenced NHS budgets, along with schooling and defence spending.

12 months ago, James Meadway, writing for the new economics foundation, pointed out that George Osborne had “inherited a mess from the last Government (his own), noting spending cuts did not work last time, and would not work again.”

Osborne, who warned the public repeatedly that Labour would raise taxes if elected, has now directly contradicted his own previous statements ruling out future tax hikes to MPs, made in the Commons in May 2013 where he said: “I am clear that tax increases are not required to meet spending targets.”

So George Osborne is publicly acknowledging that austerity cuts to public spending do not work, whereas raising taxes does, and is now actively preparing the ground for tax hikes and a return to the same “tax and spend” policies for which he has constantly attacked the Labour party.

Nigel Farage and Sir Bob Geldof clash over Brexit flotilla

While the fear of a Brexit result in the EU referendum clearly has the Chancellor in the mood to slaughter previously sacred cows, further honesty regarding public finances would be welcomed.

UK elites maintain the pretense that European laws, such as the Maastricht Treaty “Stability and Growth Pact” keep us locked into restricting public spending and permanent austerity budgets. The inconvenient truth is that the UK negotiated an “opt out” clause on Maastricht and the European Monetary Union - meaning the only thing keeping us tied to austerity budgets is George Osborne and the interests of the City of London financial firms he represents.

Osborne can’t have his cake and sell it too: either he admits that austerity really has been ideological and unfair on the poor, or he abandons his “emergency Budget” threats and admits that taxes under a Tory government wouldn’t go up for the richest in the event of a Brexit.

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