The Gods must be crazy

I don't particularly mind that we are governed by a narrow class of forty-something career politicians who have devoted the entirety of their adult lives to party politics.

I just want all that effort to mean they're at least quite good at politics.

They're not. Not at all.

Take today. the government appears to be announcing three things. First, a freeze in Tax Credits for low income working families. Second, a commitment to increase benefits by five point two per cent. Third, spending a billion pounds on a youth jobs scheme which is a slightly re-jigged version of a scheme they've spent the last year saying was an expensive waste of money.

I'm trying to picture the scene in Cabinet as the PM explains the plan:

"Right then. We increase benefits by inflation, but freeze help for working families, who face the same inflation, but are suffering from flat wages. At the same time, we launch an expensive make-work scheme, whose efficacy we've previously questioned and which will mostly be a subsidy for hiring decisions that would have happened anyway. Agreed? Good."

Ignore for a moment whether any of these are a good idea. Forget whether Tax Credits are perfect. Does this make sense as a political proposition?

If this is really what they're planning, and part of me cannot quite believe it, the net impact (in a time of stagnant wages and high inflation) will be to reduce incentives to find work. 

Now, there might be a respectable centre-left argument for keeping benefits relatively high in such a scenario, but it's basically an enormous FU to working people on low incomes.

Why would the government want to do such a thing?

In fact, so stupid does it seem, I wonder if there was a Tax Credit cost bomb somewhere in the public finances. It would work something like this- large numbers of working people face a squeeze on wages. As finances got tighter, some would claim for marginal levels of tax Credits which they'd previously not applied for. Others, as inflation increased and wages stagnated, would find themselves eligible for much higher levels of Tax Credit. Both factors significantly drive up the cost of the programme. I wonder if we're seeing some sort of trend like that?

Then of course, there's the question of how the government makes Universal Credit affordable. One way is to radically reduce the welfare/benefits/tax credit bill before the introduction of Universal Credit, thus making the "no-one worse off in cash terms" pledge easier to deliver, as they've already been made worse off in the previous three years.

But all that aside. I genuinely cannot understand why on earth the apparent response of this government to the current economic situation is a jobs scheme and an increase in benefits, paid for by a further reduction in the living standards of low to middle income working people.

I'm not sure I'd support that combination if Labour proposed it.

I'm just baffled that the government is.

13 Responses to “The Gods must be crazy”

  1. Midlands Mike

    I think it was Zoe williams in the Guardian asked, are we governed by ideological zealots or incompetent posh boys.  the two are not mutually exclusive, but plainly, cameron and co are incompetent posh boys whoh have no idea how the real world works.

    • bert

      I don't think any sensible person would quote Zoe Williams as an objective observer of anything, really. She's an archetypal British liberal retard. No, delete liberal – she's just a retard.
      Ideological zealots and incompetent posh boys – yes, messrs Miliband & Balls deserve a special mention here, as the two people in British politics who fit your description better than anyone else. I wouldn't employ either of them as a toilet cleaner.

  2. Paul Newman

    I agree with you about the jobs thing, it mystifies me. On Tax Credits  it was always going to be agony reversing out of what was a bonkers idea in the first place
    The idea was to solve the povery trap not by reducing or reforming welfare but by guessed it ….throwing money at  it  .The colaition is trying to reform welfare and housing  it is also incrementally  trying to reduce the bizarre Credits system.I assume you want to  keep chucking cash into the tax credit thing and welfare as well . Cunning plan, it aint . More realistically   Welfare  should  be more reduced. Is that what you meant to suggest Hopi ? Can`t see Labour ever going for  spending less on Welfare 
    My guess is it will be when the moment is right , ( I did think it would be now )

  3. Brian Hughes

    Your opening remarks seem wrong to me.  These forty-something people of whom you write are brilliant politicians.  The proof is that they've made it into the cabinet.  Trouble is they're not much good at running complex things such as a country like ours.

    The overlap between the skill sets necessary to succeed in politics and that for being good at running things seems to be getting ever wider.  Tony Blair was an exception, he had a good smattering from each pot.  His greatest mistakes as PM came about when he let the politician in him override the CEO.

    I doubt that multinational corporations will be queuing up to employ Mr Cameron or Mr Clegg once their political careers have ended.  But Mr B isn't going short of offers…

    • Blue Canary

      Spot on Brian, there's no reason why someone who's good at playing the politics game should understand economics, social issues or how to run a major Department of State.
      However, I expect Cameron and Clegg will still get plenty of offers from multinationals – it's influence and contacts they're buying not competence. 

    • bert

      It's one of the ironies, isn't it, that we all agree politicians and government are pretty much useless at running most things. Then we start a discussion about the NHS, or education, and the Left foam at the mouth like rabid dogs in their defence of – yes – state run monopolies, where the lowest common denominator always, always come first.
      I would rather have a politican who had made it in private business, or who had at least some experience of wealth creation or real world employment – and not spent their entire existence as anal party hacks, SPADs and/or disgruntled public sector workers (or failed postmen like uber idiot Alan Johnson).
      I partially agree with Brian about Tony Blair being an exception, though – the fact that he was an electable Labour leader was the most profound exception of all (Miliband is unelectable – he just is). Cameron and Osborne are different from their Labour opposites, though – wealth creation and private money are in their blood. The State, and all of its lumbering, crass stupidity and ignorance, is Labour's brain, blood, lungs and heart (and rectum in Hopi's case).

      • Blue Canary

        "I would rather have a politician who had made it in private business…"
        someone like Silvio Berlusconi perhaps?

  4. SaneLynch

    Normally I agree with most of the things that you blog about, but this one is just ridiculous. A 5.2% increase to the dole will now mean that an adult over 26 will next year have £142.02 to spend every two weeks, rather than £135. If you really think that is going to 'reduce incentives to go to work' you are living in a dream world. Speaking as someone who has recently been workless – and knows a lot of people who still are workless – I can safely say very few people enjoy being on benefits. The way to increase incentives to go to work is to create more jobs, enforce the Minimum Wage Act on unpaid internships and raise the minimum tax threshold. A real terms decrease in the dole might punish people, but it certainly isn't going to make it any easier to get a job.
    Ps. I largely agree with you on tax credits, but think raising the tax threshold would make that much simpler.

  5. ad

    I'm not sure I'd support that combination if Labour proposed it.
    Perhaps they are trying to placate the LibDems?


Leave a Reply