Constitutional crisis? No, it’s a crisis of state-enforced poverty!

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29 October 2015

The result of the vote in the House of Lords on Monday night, against Osborne's tax credits plan, was no surprise. But still, it set the cat among the Commons' Tory pigeons. And that was a pleasure to see.

Yes, even if all that the Peers actually did, was to ask for a 3-year delay in implementation of Osborne's measures for the worst-off. But this is the first time the Lords has ever voted down a financial bill. And Osborne is outraged, claiming it raises a "constitutional issue"! Ironical as it may seem, he is now pointing to the "unelected" status of the Peers - which did not prevent him from threatening to create 100 more of these "Lords and Ladies" to regain a Tory majority!

However, even that would not undo the damage: several Tories in both houses went out of their way to criticise publicly the Bill's "lack of compassion" and some even joined the vote against or abstained. No doubt this is a division of labour among the "nasty" Tories and the "nice" Tories - the latter having the task of trying to keep Cameron's "workers' party" flag flying - so that the votes they intend to capture from UKIP don't go up in smoke.

Osborne is now saying that he may be able to come up with some measures in his Autumn Statement, to "soften the blow" of the £12bn cuts in welfare spending - of which the tax credit cut is meant to yield £4.4bn. So will he take this money from the rich, who can very well afford it? Absolutely not! He will just skin "his" working class cat in another way, loyal servant of capitalism that he is.

Maintaining low wages

It must be said that Jeremy Corbyn was quite right in PMQs to say that the vote in the Lords was not a crisis for the constitution, but a crisis for the 3.3m already-poor families who stand to be affected. Because they are already in dire straits.

Today, 1 in 4 workers are paid less than the living wage and 6 million aren't earning enough to cover their basic costs. The cuts to tax credits would mean 3.3 million families would lose on average £1,300 from their incomes in the first year alone!

The level at which working tax credit is meant to be withdrawn falls from the poverty-level of £6,420 a year to a pauper-level of £3,850. No wonder even Tories shed a few tears on the fate of the poor. How can any family live on such a low annual wage? Child tax credits would also be cut severely, and limited to 2 children - a measure which also affects the middle class, of course.

But the real targets for Osborne's cuts are precisely those "under-employed" whom he helped create, by his and his predecessors' "deregulation" thus giving bosses a free hand to use and abuse workers on zero-hours "contracts" and pay peanuts. This makes it all the more ironical that Osborne, longstanding fan of Scrooge wages, should maintain that these tax credit cuts are "needed" in order to achieve his "low tax, low welfare, high wage economy"!

One would have thought that any fool - even a Tory one - would realise that nobody could possibly swallow such lies! Of course, Osborne's aim has nothing to do with "creating" high wages and everything to do with making the working class - and in this case its poorest section, pay for the tax breaks he is directly awarding to his rich friends and City masters: the lowest corporation tax since its inception in 1965.

And who can possibly believe that the bosses, out of the kindness of their hearts will top up wages themselves? Let alone that all of them will even observe the so-called "National Living Wage" due in April?

There has never been effective enforcement of the minimum wage. Why should this change now? And anyway, the NLW does not spontaneously transform into a real living wage just because of its name! It will be only £7.20/hr - just 50p above the present minimum, and only for over 25s (Living Wage Foundation's"NLW" is £7.85 outside London; £9.15 inside!). One has to wonder if Osborne is stupid enough to believe that the electorate is stupid enough to believe him!

The myth of "high" employment

Even the illiberal Institute of Fiscal Studies has said that it would be "arithmetically impossible" for the increases in the minimum wage to outweigh the cuts in tax credits. "Never before has there been such a clear case of giving with one hand and taking away much, much more with the other"!

The IFS said categorically that the £4bn extra income resulting from the rise in the minimum wage would fail to balance £12bn in welfare cuts.

Osborne's claim that he is "against" the state subsidising Scrooge bosses by paying tax credits, will just make his nose grow longer, like Pinocchio. If he really wanted a low welfare, high wage economy, he would legislate for bosses to pay a minimum income to families, not an individual minimum wage. Because as any worker knows, the Tories' labour market "success" story is due entirely to under-employing "the many" by paying a pittance for only a few hours, rather than providing full-time, full-wage jobs. You are officially "employed" if you work just one hour a week!

Of course, for the working class - it's neither tax credits nor "living" wages we need - but a world economy organised, not to make profits for a few, but to provide for the needs of all - using the abilities of all. It is called communism.