Could George Osborne have something up his sleeve, a rabbit to pull from the hat, a magic fiscal firework that causes us all to ooh and ah with excitement?
The Chancellor gives his autumn statement today and we are wallowing our way through economic gloom and doom. Austerity is really starting to bite, or maybe folk just feel it more in the approach to Christmas, mentally calculating how much they can afford to spend and continually coming up short.
The Euro crisis still threatens to engulf us all with markets see-sawing every week; the UK economy has ground to a standstill; youth and long term unemployment are at their worst levels in a generation; and the only things rocketing are fuel and food prices.
As if we needed any more good news, the OECD warned that our economy had begun to slip into a double-dip recession and that unemployment in 2012 would rise to 9% and stay there. It has revised its economic growth forecast for the UK downwards and is now predicting that it would be sluggish and marginal all the way to 2013.
So what’s a Chancellor to do?
Despite the puff on the wires this morning that he is about to announce plans for growth, his cupboard is pretty bare. Having set sail on the good ship Tory slash and burn, any attempts to change course will be slight. They are a stubborn lot, these ConDems, and want public spending and the deficit cut, for poorly disguised ideological reasons as much as any ill-informed economic ones.
Of course, he does have choices but they are less than palatable. Take his foot off the neck of poor and vulnerable people, and low income families, and apply some restraint to the rich. Nope, not a strategy with much appeal to Osborne and his cohorts.
Indeed, the much touted plan to lean on private sector pension funds to invest in capital infrastructure involves a sickening quid pro quo: higher rate tax relief for such pension funds goes untouched, meaning those who earn the most benefit the most from pension payments, ensuring they are better off in old age. The Treasury has estimated that such a move would save £7 billion a year, a not insubstantial sum. But no. Instead we’ll get a few billion bunged into house building and new roads, for which loans, of course the pension funds will be rewarded with a decent rate of interest. They will gain as much as they give.
At least the idea of cutting the top tax rate appears to be off the agenda for now. Yet, maintaining it at 50% appears to have made little difference. Fat cat directors and city types were under fire recently for awarding themselves pay rises averaging 49% in the last year; the average pay of FTSE 100 directors is an eye-watering £2.7million each; meanwhile, low income families are squeezed by pay freezes and rising prices; and of course, bankers’ bonuses continue to rise exponentially, even though they are doing little to help struggling businesses or indeed, ones that want to develop and expand.
In amongst it all, there was a gem of a programme last week on BBC 2, fronted by Ian Hislop. When Bankers were Good was a fascinating study of the history of retail banking in the UK and how those who got rich on the early pickings had more of a social conscience (though they had plenty of other flaws). The most striking section was on the Rothschilds and Lord Jonathan Sacks, Chief Rabbi, explained why they were compelled to apply a considerable portion of their wealth for charitable purposes.
Tzedakah, it’s called. Almost untranslatable from the Hebrew into English, said Lord Sacks, because it means not only charity, but also obligation. “I give not because I can, but because I must.” It is an admirable concept that is fundamental to the Jewish faith and way of life.
It is not something bankers and rich people – as a rule – tend to think or practise anymore. We have reached a pass where few step in, few volunteer, few take on their responsibilities, until the state makes us. Everyone knows their rights, not so many exercise responsibility. The rich, more than most. Tax us and we will flee. Remove our privileges and we will be unable to create wealth. Rein us in with regulation and we will fail.
The rich contend that they need to be free from encumbrances such as contributing equitably to the common good through tax and following state sponsored rules in order to service the economy. So they get their end of the deal, and we get zilch. The only wealth they are generating is their own.
The current Lord Rothschild was asked why he continues to give his wealth away. Because there is only so much I can spend it on, so much I need for a comfortable life, was the gist of his reply. If only the current wealthy had the same approach but they work to the maxim that you can never have enough – stuff, experiences, luxury. The only compulsion they experience – or so it seems for the majority of them – is to keep on accumulating for its own sake.
We would all do well to learn and practise a little of the art of giving to others less fortunate than ourselves and importantly, consider ourselves under obligation to do so. But the top earners in our society, and in particular the bankers, who are actually only in a job because the taxpayers bailed them out, need to, more than most.
Time for Tzedakah? I think so. And if the fat cats won’t adopt it willingly, I’m happy for it to be imposed.