Osborne ‘fails to grasp realities of welfare reform’

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  By a Newsnet reporter

Speaking while on a visit to a supermarket distribution centre in Kent on Tuesday, Chancellor George Osborne defended his controversial benefit cuts and tax cuts for the highest paid.

The Chancellor’s speech was immediately criticised by SNP Work and Pensions Spokesperson Dr Eilidh Whiteford MP, who said that the Chancellor “fails to grasp the realities of his welfare reform.”

Mr Osborne used his speech to claim that benefit payment are so generous that “people feel better off on the dole”, adding that the “benefits system is broken and it penalises those who are trying to do the right thing”.

He added: “Once it becomes the norm in an area not to work, welfare dependency can become deeply entrenched, handed on from one generation to the next.”

Mr Osborne claimed that the benefit cuts and other measures, such as the raising of the personal tax allowance, he has announced will result in nine out of ten working households being better off by almost £300 a year.  Mr Osborne did not include the households of unemployed people in his calculation.

The Coalition government is introducing the biggest changes to the benefits system in decades.  As well as the bedroom tax, which reduces housing benefit for those deemed to have a spare bedroom, the government also plans to introduce Universal Credit, to replace Jobseekers Allowance and other work related benefits.

However the changes to the benefits regime have come under sharp criticism from the Resolution Foundation, which says that increases in the personal tax allowance will do little to help those on the lowest wages, as the increase in the allowance will result in a cut to Universal Credit.  The Resolution Foundation also notes that Labour’s plan to introduce a lowest tax rate of 10p will do nothing to solve the problem.

In a report published on Tuesday, the Foundation says:

“Under Universal Credit, tax cuts will not, in large part, reach low to middle income working households. This is because Universal Credit is calculated on the basis of net income, meaning that any tax cut that boosts a household’s income also reduces their UC support. Put another way, any tax cut will give with one hand and take away immediately most of the gains with the other. No party has questioned this basic aspect of UC’s design.”

As well as defending the swingeing cuts to benefits, the Chancellor also mounted a strong defence of his policy of tax cuts for the best paid.  The Chancellor claimed that the cut in the top rate of taxation from 50p to 45p, which benefits those on salaries of more than £150,000 annually, was an “economic essential”.

Mr Osborne said:

“If we’re serious about Britain succeeding in the world, it’s an economic essential.

“In a modern global economy, where people can move anywhere in the world, we cannot have a top rate of tax that discourages people from living here, setting up businesses here, investing here, creating jobs here.”

The Chancellor hit out at voluntary organisations and churches which have criticised the government’s benefit cuts.  Mr Osborne dismissed the criticisms as coming from “vested interests” who were reacting with “depressingly predictable outrage” to what he insisted were necessary changes.

“…These vested interests always complain, with depressingly predictable outrage, about every change to a system which is failing. I want to take the argument to them. Defending every line item of welfare spending isn’t credible in the current economic environment.”

He added:

“Defending benefits that trap people in poverty and penalise work is defending the indefensible. The benefit system is broken; it penalises those who try to do the right thing; and the British people badly want it fixed. We agree – and those who don’t are on the wrong side of the British public.”

Mr Osborne’s speech also came under criticism from an unexpected quarter.  The expensively educated Mr Osborne typically speaks with an upper class accent, known as Received Pronunciation or RP.  However while addressing supermarket distribution centre employees in Kent, the Chancellor’s normal accent became markedly more demotic, pronouncing British as “Briddish” and want to as “wanna”.

Chris Joslin, a jobseeker from Surrey, posted on Twitter:

“Am I imagining the toning down of George Osborne’s RP accent? If he’s seeking to project a ‘man of the people’ persona, he’s failed.”

Commenting, SNP Work and Pensions Spokesperson Dr Eilidh Whiteford MP said:

“The Chancellor’s speech today had the right-wing rhetoric, but George Osborne fails to grasp the realities of his welfare reform. Our poorest and most disadvantaged are bearing the brunt of the Tory/Lib Dem coalition’s austerity measures.

“As the Bedroom Tax comes into force, 105,000 households across Scotland will lose an average of £600 a year. Working age benefits rises will be cut in real terms for the next three years, which will reduce the total income of Scottish households by around £210 million by 2014-15. Child benefit is frozen for the third year in a row, and Scotland’s council tax budget will be cut by 10% – a cut which the Scottish Government and Cosla are making good from their limited resources.

“We need a welfare system which reflects Scotland’s values, helps working families and protects our most disadvantaged people. A fairer welfare system for Scotland can only be achieved with a Yes vote in 2014. We need our welfare policies to be decided in the Scottish Parliament rather than Westminster, where our MPs have little ability to prevent such damaging measures.”