[12 September 2011] - The banks are not complaining much. Nothing happens until 2019, and as far as today's politicians and bankers are concerned, that might as well be the next millennium. The Vickers proposals are a reform Labour failed to make, but in the matter of banks v the people, the banks still did quite well.
The ringfence between their casino and retail arms will be set by themselves. Nothing has been done about bonuses or the absent link between pay and performance; divided in two, banks will now have twice as many directors with bonuses. Nothing has been done about the huge profits investment banks skim off all transactions – while they resist a tiny transaction tax. No banker has paid a price, not even in remorse.
Public anger at bankers is easy to rouse, but no effective voice has yet turned that inchoate fury in a political direction. While Labour plays safe and sober, the government redirects indignation against benefit scroungers, rioters, Gypsies or any handy scapegoats. These are dysfunctional political times, when opinion polls show disproportionate wrath at the worse off and worse behaved while grand larceny from above goes unchallenged. The Institute for Fiscal Studies report shows how those on middle incomes and below – and indeed of 90 per cent of households – have had their pockets stealthily picked over recent years while the top few percent have siphoned off the nation's wealth. And most households are destined to lose yet more as inequality accelerates.
But because we must always travel in hope, we must believe that one day people will look back on this era in disbelief, observing it from some wiser future. It may be a wisdom gained the hardest way, as they shake their heads in perplexity at how we could have unlearned the lessons of the 1930s.
What signally failed then is being done all over again, by the Tea Party's obstructionism in the US, by dithering lack of unity of interest among EU leaders – and by our own prime minister and chancellor, boasting that the UK has screwed its economy down with the toughest austerity of all.
You can see the alarm among most economists and financial players as we teeter on the brink of an unfathomable further disaster, with predictions of a flat decade or worse. Last week George Osborne boasted to IMF chief Christine Lagarde: "We will stick to the deficit reduction plan we have set out. It is the rock of stability on which our economy is built." He might instead have listened to these words: "Stability by itself is not enough – after all, graveyards are pretty stable places." Who said that? He did, in 2007. Now we are in that graveyard, burying the hopes of the next generation.
The IFS has spelled out with renewed authority what has been brutally plain since the coalition took office. Not only are we not in it together, but children and young people are taking by far the heaviest hit. It makes no sense, socially, financially or politically. Traditionally, societies in trouble say "Protect the children first", adding the blindingly obvious, "for they are our future".
Set aside the arguments on how far belts needed to be tightened, or how much Osborne's appetite for cuts has crippled growth. After a precipitous 6.5 per cent drop in GDP these would anyway have been hard times. But ask how the pain should be shared. The bottom fifth of families will suffer 12 per cent losses over the next four years, in tax, benefits and public services.Children lose most in tax credits, frozen child benefit and extra child care costs, most disabled children losing all credits. That is what a gigantic £18bn cut in benefits means.
Hardly a week goes by without another report on children's services being cut – the loss of Sure Start centres or lost after-school and breakfast clubs, and a third of families have stopped paying for out-of-school activities. Youth services went first, with summer holiday schemes shut in the places where the riots erupted, places where youth unemployment reaches 40%. Shocking figures show Neets – that is, under-24s not in education, work or training, rose by an unprecedented 18 per cent this year.
Cautious charities wary of politics now sound the alarm: the Children's Society warns that 80,000 children will be homeless unless the cap on housing benefits is raised, with 200,000 being pushed into poverty. Programmes such as Every Child a Reader, the Connexions careers service and teen pregnancy schemes are vanishing. The pupil premium is less than the money it replaces, moving funds from poorer to richer areas, with no obligation on schools to spend it on poor children. Social workers' caseloads long ago burst the bounds of possibility. The number of young offenders being locked up has just risen by 8 per cent. Charities and professionals facing cuts are frankly incredulous at the idea that amateur mentors and cabinet ministers in their free time will fill the void in help for profoundly dysfunctional families.
Older children are losing their education maintenance allowance this term; the future jobs fund and the jobs guarantee are gone. Next year £9,000 tuition fees add to the sense that everything is stacked against the young. How will they ever grow up if they can't earn, or afford impossible rents, let alone mortgages to start families? All this still fails to express how one hammer blow after another falls mostly on the same young heads, over and over again.Â
Here is just one small emblem of the ignorance or callousness of current policy-making. Yesterday's public accounts committee report warns of chaos in the new universal credit for families. In the fantasy realm of this policy, 80% of benefits will be claimed online, compared with the current 17 per cent. Yet most poor families have no internet or money for internet cafes.
This neglect of the young makes the financial deficit pale beside the cost the future social deficit. In unemployment, crime, mental health and social breakdown, the damage done will cascade on, down future generations. I doubt many voters know or would approve the price that children are paying as cuts are camouflaged by empty Cameron words of concern. What's needed is a campaign by children's charities to shame the government and to make these facts known. Quiet despair grips those who see it happening, but where is the voice of real outrage? So far, Labour has failed to be that unequivocal voice. These are dismally disjointed times when the cost of the bankers' recession is financed out of children's futures.