Ed Miliband: coalition is squeezing the middle not the deficit

Miliband will say that Britain needs a recovery for working people if the government is to 'squeeze the deficit and not the middle'.

Miliband will say that Britain needs a recovery for working people if the government is to ‘squeeze the deficit and not the middle’

The failure by the Conservative-led coalition to tackle the cost-of-living crisis has cost the country £116.5 billion, leading to higher borrowing and broken promises on the deficit, Ed Miliband will say tomorrow (Monday).

The figure, equivalent to £4,000 for every British taxpayer, is based on new research from the House of Commons library and published by Labour.

The research shows that, because of the government’s failure to tackle the structural problems behind the cost of living crisis, income tax receipts have fallen short of forecasts by £66 billion, National Insurance contributions are £25.5 billion lower than expected and spending on social security is £25 billion higher than planned.

As well as highlighting this, at an event in Nottingham on Monday Ed Miliband is expected to say that for millions of families this is a ‘ joy-less and pay-less recovery’:

“For a very long time, our country has worked well for a few people, but not for everyday people.

“We live in a country where opportunities are too skewed to those at the top, where too many people work hard for little reward, where too many young people can’t find a job or apprenticeship worthy of their talents, and where families can’t afford to buy a home of their own.

“For all the government’s boasts about a belated economic recovery, there are millions of families still caught in the most prolonged cost-of-living crisis for a century. For them this is a joy-less and pay-less recovery.”

In highlighting the consequences of the government’s failure to tackle low pay, stagnant salaries and soaring housing costs, Miliband will say that Britain’s public finances have been weakened by coalition policies. He will also talk about how addressing the so-called ‘cost of living crisis’ and paying down the deficit are not mutually exclusive:

“Building a recovery that works for everyday people is the real test of the Autumn Statement.

“But that isn’t a different priority to tackling the deficit. Building a recovery that works for most people is an essential part of balancing the books.

“The government’s failure to build a recovery that works for every-day people and tackle the cost-of-living crisis isn’t just bad for every person affected, it also hampers our ability to pay down the deficit.

“Britain’s public finances have been weakened by a Tory-led government overseeing stagnant wages which keep tax revenues low.

“Britain’s public finances have been weakened by Tory policies which focus on low paid, low skilled, insecure jobs – often part-time or temporary – because they do not raise as much revenue as the high skill, high wage opportunities we need to be creating.

“And our public finances have been weakened by higher social security bills to subsidise low paid jobs and the chronic shortage of homes.” 

In making the speech, Miliband will draw on new research commissioned by Labour from the House of Commons library, which shows that the total shortfall in income tax receipts over the Parliament between what was forecast in November 2010 and the latest forecast and outturns is over £66 billion, taking policy changes since then into account (click the graph to zoom).

Income tax receipts

The OBR has attributed a shortfall in income tax receipts since 2010 to “lower wages and salaries” as well as “lower self-employment income and the effect of income shifting related to the reduction of the additional rate of income tax to 45p”.

Labour will also highlight the fact that receipts from National Insurance Contributions are expected to be £25.5 billion lower than forecast in 2010.

National Insurance

Despite the supposed ‘get tough’ approach of the government when it comes to welfare, the number of people needing to claim housing benefit has risen by over 400,000 between May 2010 and May 2014, with the growth of low-paid jobs resulting in more money being paid out in social security to people in work.

Housing benefit

Tax credits

As a result of all of this, the Tory-led government is now on course to borrow around £190 billion more than planned in 2010. It has also now borrowed more in four-and-a-half years than the last Labour government did in 13 years. As Miliband will say:

“The result has been David Cameron and George Osborne missing every single target they set themselves on clearing the deficit and balancing the books by the end of this parliament.

“Their broken promises, their abject failure, are not an accident. They are the direct result of an outdated ideology which says all a government has to do is look after a privileged few at the top and everyone else will follow.

“That is why this government has done a great job of squeezing the middle, but a bad job of squeezing the deficit.

 “The test this week for David Cameron and George Osborne is whether they recognise that Britain will only succeed and prosper for the long term by tackling the cost-of-living crisis and building a recovery which works for the many, not just for a few.

“Or whether they will just offer more of the same old ideas that have failed them, failed everyday working people, and failed Britain over the past four years.”

James Bloodworth is the editor of Left Foot Forward. Follow him on Twitter

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