A LOT of people have been surprised by George Osborne’s seemingly (but not really) Damascene conversion to the Living Wage but readers of this column won’t be fooled. In June, I stated that not only was austerity holding back growth but that the Chancellor knew it and predicted that in the next Budget “the Tories will now rein back on austerity claiming they have sorted the economy so no longer need to cut so deep”.

You have to admire – albeit begrudgingly – the brazen cheek of the Tories outdoing Labour on the severity of their austerity policies to win a General Election in England, then making Labour look stupid by announcing a Budget with a higher minimum wage than Labour campaigned on. They also want to be seen as offering far higher spending than desperate Labour leadership hopefuls are trying to sell to Labour members, and Labour have walked right into the trap. Not only are the Labour leadership hopefuls sounding almost Thatcherite, the Scottish leadership candidate Kezia Dugdale has written that Labour are seen as too much on the side of the needy – just in time for a Tory Budget that slashes benefits. You couldn’t make it up.

The Tories, having watched Labour destroyed by the SNP in Scotland, are now triangulating Labour policies just as effectively as Blair stole Tory policies in the 1990s. With no election to fight, why put the boot in now? It seems the Tories want the whole of the UK to ask the Scottish question: “What’s the point of Labour?” Answers on a postcard please.

The Budget also included a two per cent corporation tax cut alongside the Living Wage commitment; are they trying to steal the SNP’s clothes as well?

Let’s go back to that Living Wage commitment; you know, the one that isn’t actually a Living Wage commitment. I have to welcome the increase in the Living Wage but equally have to question why this has been set at £7.20 and not £7.85 as recommended by the Living Wage Foundation. The deal that seems to have been done with the Tory business supporters clubs (CBI and IoD) not to speak out against the wage rise will have led to the exclusion of under-25s for the wage commitment and also the corporation tax cut to 18 per cent by 2020.

To be clear, there is only one business organisation in the UK that not only supports the Living Wage but is actively campaigning for it to be implemented and that is Business for Scotland. Indeed, just last month, arch-Tory and No campaign spokesperson Bill Jamieson was wheeled out on the BBC to oppose Business for Scotland’s support for the Living Wage, claiming that Sir George Bain, the founding chair of the Low Pay Commission (it set the minimum wage), had claimed that “adopting the Living Wage would cause massive unemployment in retail and tourism and care sectors”. But now the Chancellor has quoted the Office for Budget Responsibility saying that the new national Living Wage will have only a “fractional” effect on jobs. You couldn’t make … oh wait, I’ve already said that.

The Living Wage commitment is all smoke and mirrors, sleight of hand designed to distract us from the welfare cuts that indicate that, although giving with one hand, he is taking with the other. Not only does Osborne’s pretend living wage fall 65p per hour below the real Living Wage, he has also limited it to over-25s. This is important as a large number of those working full-time and being paid less than the Living Wage are under 25, so it’s not such a hard pill for Tory business supporters in hospitality and big retail to swallow. Also,the wages for those in the care industry are set by local authorities, so expect them to be exempt when full details of the new wage laws are passed, as that would increase Government spending. You might actually think that those (often young people) who care for us in our old age and help us through dementia and loss of mobility should be the first to get a pay rise. But then, you are not a Tory Chancellor.

PEOPLE who work hard and get paid below the Living Wage can’t afford to live and if they are less well off they are not spending and not paying as much tax, so most qualify for welfare payments due to low wages. Housing Benefit, Working Tax Credits, Child Tax Credits and Child Benefit (the benefits Osborne wants to cut) are therefore essentially taxpayer subsidies so that big businesses don’t have to pay a fair wage. My calculations of just two weeks ago show this subsidy adds costs of between £800 and £850 million pounds a year to Scotland’s budget alone and over £11bn a year when you look at the whole of the UK. If he had gone the full way to £7.85 per hour then Osborne would have saved that £11bn but instead will achieve a lower benefits spend and increased tax boost worth around £5bn a year.

The IMF and most eminent economists have been arguing recently that austerity is now less important than increasing productivity, wages and investment in capital infrastructure, and that austerity will damage the UK’s recovery; true to form, the Chancellor has ignored them.

Increased productivity is the main factor in determining average living standards and the UK is lagging behind our competitors. There is not one single measure of substance in the Budget that focuses on increasing levels of productivity and business growth. Where are the infrastructure projects? The Annual Investment Allowance has been cut from £500,000 to £200,000; maintenance grants removed. Where is the investment in young people excluded from a pay rise and suffering increased university tuition fees? This flies in the face of the IMF call to invest in young people, to grow the talent pool to drive the economy in the next generation. This Budget represents a damning admission of defeat from a Westminster Government that has simply run out of ideas on how to grow the economy and so needs to make deeper and deeper cuts, when investment in growth is what’s desperately needed at this stage in the economic cycle.