“ What do you think of the government's current or proposed spending plans? Are they too relaxed or too tight? „
Considering the UK's current economic status, what path should be taken: 'growth' or 'austerity?'
'We are in this together.' 'It is time to tighten our belts'. 'The only means out of this unprecedented period of economic uncertainty is through deep austerity measures, and it's going to hurt'. These are common phrases, sound bites, heard today, regarding UK's 'so-called' economic crisis - and it unceremoniously waves the Fiscal responsibility back to the public, our hard working citizens. This sort of statement is systematically spilled out of the mouths of politicians and economic spokesman as if our woeful national economic status has never been encountered before - it has: ever since the early 1800's. Blighty isn't in uncharted waters.
Our national debt is 64.2% of our GDP (Gross Domestic Product). Less than half than it was after WWI - whereby debt was 135% of UK's GDP - the 1920's was set to become an austere period, and lo and behold the decade is famously known as the 'roaring twenties' - out of nowhere, a sustained period of prosperity reaped our shores. In 1947, our national debt inflated to 238% of our GDP (almost at the level as it was in 1815 - when UK's national debt was 260% of GDP) - both were due to Napoleonic and world wars. Yet two years after WWII, during the period that national debt was 238% of GDP; Aneurin Bevan introduced the National Health Service - and funding the grandiose project, indeed reaped huge rewards - this evolved into the welfare program, both were the envies of the developed world. Huge investment aided these programs; the percentage of national debt to national GDP was secondary.
By the time 1974 arrived the national debt had lowered to 55% (close to what it is now) and that was in a 'boom' period of prosperity, again. Unemployment deemed as being at capacity and manufacturing lead the way when it came to exporting across the Channel. The UK had the confidence to produce and invigorate global markets, and this was done pre 'glocalisation'. UK's GDP growth was inevitable and its ethos emulated in our governance - 'investment in the nation was paramount'. Austere in economic terms was shunned as corrosive language - it damaged markets. A great example of this since the free-market mechanism derived; was on 'Black Wednesday' in August 1991 - the pound sterling base rate dropped below what was it's lowest default setting, and the Sterling had to come out of the ERM (Exchange Rate Mechanism); overall 27 Billion was propped up by the Tory treasury (taxpayer). Shockwaves across the developed world catapulted UK into a 'homemade' recession - economists claimed it had thwarted market confidence for over twenty years. An early warning signal to how volatile monetary mechanisms can be in a free market mechanism perhaps. You could've been forgiven to think, that 'Black Wednesday' was proof that capitalism is not a viable long term economic system - so our treasury made the finance sector the main provider of service to the developed world. Whilst simultaneously chopping up our hard graft manufacturing sector into saleable components, for the biggest bid. Now our nation is purely living on the deviations of the markets - as if a Vegas gambler sweating it out on the roulette wheel. The problem is: the guarantor is the taxpayer.
Affluence in the modern world was built on credit alone - capitalism wouldn't survive without it. Complex monetary systems capitalized via banking markets short-selling i.e. gambling, at high returns and high losses. Derivative formulas are made incredibly attractive to monetary systems for UK and banks in the US. These methods are legal and most bankers learned their trade via such ludicrous financial practices - short-selling for quick returns is all they know; the 'crash and burn' ethos is at pandemic levels - because the guarantor is the taxpayer - it's win, win - the only loser is the taxpayer. After the collapse of US's Leymann Bros and the bail-outs for Northern Rock (subsequently sold off at a 400 million GBP loss) and subsequent UK banks, whom were/still are caught up with the seismic financial black hole. Subsequently UK's debt wasn't an issue when it came to the bailout of Ireland, Portugal, and the Greek's initial bailout package - nor is UK's current economic status, not due to 'not' being able to obtain credit from the IMF (International Monetary Fund), which is used to annually prop up our ailing banking system, instead of reinvestment in the nation's people. Sustainable growth only derives from a fiscal stimulus directly to the core of innovative programs. It works, economic history trends is the proof. Economics don't change, but politics do. Sadly, the policy makers and Christine Lagarde the Chief of the IMF are too close for comfort therefore the messages from the hierarchies of finance are notably incoherent - this is due to the politicians meddling - hence, why the worldwide 'Occupy Movement' is manifesting a plethora of support in the EU.
Oppression programs in the developed world gets disdain - It filters into society and leaves behind it great 'inequalities'. Austerity destroys confidence, builds up unrest, and creates civil disorder. Last summer's riots was an appetizer. What the coalition has done is inflaming a greater class divide - Cutting the 50 pence tax. Increasing the VAT to 20% - In August petroleum will be three pence dearer. And we've only had 18% of the austerity program - worse still the difference between 'rich and poor' life longevity is 20 years! Remarkable, considering this is the UK, and 'we are in this together'. Words are cheap when it comes to the reality - proof that 'investment apathy' is embedded in the soul of the coalition - incessantly whipping its tolerant nation. This was unheard of during the period of Bevan and Brunel - when such diverse measures were implemented by UK governments in aiding visionary projects, even with a national debt of 238 - 260% of GDP? Strategic growth programs are the only option to get UK and the global economies out of the trenches. Short term political agendas should be abandoned. Austerity in a recession is economical suicide.
What a load of Cuts!
Just as I will fight for more than one measly dooyoo crown per month from my solid and occasional good work here the nation is going to go to war with the Tories over the austerity measures, the students impressing early with an excellent ruck outside the Tory head office! It been rather difficult to shake them out of their apathy and away from their Playstations in recent years to protest about anything, but increasing student fees cutting drinking money seems to have worked a treat. You won't be surprised to learn that the alleged fire extinguisher chucker was from Ruskin College, Oxford, the university set up to educate union members with minimal qualifications, the goods of the Russell Group pretenders!
Coupled with the attack on the unemployed, the sick and the public service, the Tories have just lost a big chunk of the vote, most of the five million workless vote and certainly all of the public service ballot and student vote heading back to Labour, and so already game over for Cameron, why he and his friends will get rich now with their policies.
I have given you my A-Z on what I thought might happen with the government's austerity measures and now it's my A-Z thoughts and what actually happened. This is the Tories in power and so I suppose we should have expected the worst but I did not expect a full on attack against the poor and needy, the people that never vote for them, why it was good to see the students finally mobilise in London and hold them to account. When the expenses fiddling, second and third job holding Tory MP's intend to employ private companies to push disabled people into work for the reward of £100 per claimant signed off, people get pissed off and its time to make our voice heard. The pole tax rally broke Thatcher and the students cans see off Cameron. Freedom of information acts and good networking can reveal al sorts of secrets. Let's get him! These austerity measures are NOT about cutting the deficit, which needs to be done, make no mistake but war on the poor they so detest. If they wanted to save jobs they would have put up income tax. They didn't put up any tax, especially the banks tax bill.
A is for the Arts!
A flat 30% cut across the board has been announced and should see the end to absurd funding levels to things like opera and the New Tate. If art is so cool and important then let the people who like it pay for it. Private money should pay for all of it. Great music, art, writing and film that matters comes from apathy and hope not bored middle-class people in East London sticking vacuum cleaners together in an expensive studio shed! Somerset county council have slashed their arts budget by 100%! How can taxpayer's money create great art? Somerset doesn't think so.
B is for the "Big Society"
Don't expect to hear that phrase much more from Cameron. It was just a pre-election sound bite because they didn't actually have any policies to run on that would win votes, cuts cuts cuts not what the electorate wanted to hear. Obama did it with 'Yes You Can' and 'Change', and we now know that really meant you can vote in a black guy because it will make you feel better and lets see how it goes from there...
C is for Council Funding
The real pain we will feel is the flat 30% cut in council funding and the block on council tax rises to cover that shortage is the real problem. The councils can't get more money so will have to cut big, huge slashes and swipes to services and housing stock the grim reaper would be proud of coming up. It's over four years but it will mean around half a million job loses. Public services tend to employ people of all race and gender and it extremely democratic and so it will hurt ethnic groups particularly badly. 60% of black people that work in London are in the public service. The Tories want to crush public service as they feel it promotes failure, most public service work looking after the unemployed and non profitable and expensive elderly.
The attack continues through the planned centralization of the secondary schools budget, a move to fund the pupil not the state sector school anymore, taking away a further £30 billion from the council's coffers. The Tories are doing this as they say councils don't spend all that allocated money-their biggest chunk of cash-on schools and so skimp on education to fund other services. What the Tories really mean is we just don't want you to have any money spare to save jobs elsewhere. This is brutal stuff.
Westminster Council has seen a rare growth industry opportunity though, about to spend two million quid employing yet more traffic wardens whilst axing 500 jobs elsewhere on front line services. The council raises an incredible £30 million annually in parking fines from a mind-boggling 686,310 tickets handed out last year alone, Westminster no bigger than a small village in Berkshire though. They currently employ an army of wardens with 171 mostly black African immigrants prowling the streets in pursuit of incentive driven tickets to meet the minimum wage. Westminster have lost out recently because of new terror laws that dictate its illegal to clamp so many vehicles in the borough, vehicles, of course, that don't move from their original obstruction when clamped so blocking streets if there is another terror incident. This in vestment will cover that loss with a tickertape of parking tickets to come.
D is for Debt
Even after these measures hit the deficit will still be higher in four years time, all very depressing. The nation's debt, the money we all owe, is nearly 5 trillion pounds! People are trying to pay down their credit cards to the banks but the banks are not lending that back to business, they say because they need to recapitalise to get their reserves up to stop another impending collapse. I don't see an easy way out of this, guys. If the interest rates go up then its game over and with currency wars brewing it could happen in 2011.
E is for Education
With up to 100% funding cuts in arts, humanities and social sciences degrees to come it's the end of the social degree, the three year piss up where affluent middle-class kids can study something in a distant town that is suitably easy so not to put too much stress on their drinking skills a distant memory for most. It was no surprise that those same students and lecturers on those courses chose Tuesday to protest in London as it didn't impede on the weekend drinking build up.
Nick Clegg, and the Liberals, are totally f**cked, electorally, after chasing votes by promising not to vote for fees after touring the country and signing pledges to that effect pre-election. I'm surprised how gullible students were to believe that and go out and vote on that issue but it also shows how lazy and selfish students can be as far as the democracy goes that they wouldn't have voted much if student fees weren't an issue. The current protests may well be rich Rick Mayalls having fun but it could get much bigger than that.
The missing funding is supposed to come from the increased tuition fees but this is really a move to get rid of whole universities and technical colleges. Wolverhampton University is to lose nearly all its funding as its one of those new universities not offering enough needed courses and unless it can attract non grant rich or overseas students it will have to slim right down. 70% of the overseas EU student default on their loans and so we can expect huge numbers of affluent Chinese and Indian students taking the places of those who don't fancy paying back 40 grand over 40 years. To be fair the fees are not up front and if you earn less than 21 grand in your first job you only pay £30 a month, the cost of a decent broadband and TV package and so not a huge hit. In truth overseas workers and graduates are much cheaper and that's the way the Tories are going. It is expected that most universities will charge the full nine grand fee from 2012 because they wont attract enough students on the lesser degrees.
The EMA (the Education Maintenance Allowance) is also going and that means no cell phone credit to vote on the X-Factor for a hell of a lot of 16-18-year-olds, they too joining the London protests.
F is for the Family Silver
If it's not bolted down the Tories will sell it, and probably to their friends. The first big sale is the Channel Tunnel rail link, built with £6 billion pounds of taxpayer's money and sold for just £2.1 billion to a German company. One suspects we will be hearing more about this as it stinks to high heaven.
G is for Gaol
While 50,000 victims of crime left waiting two years or more for compensation owed through a government scheme we know full well prisoners are compensated as soon as they ask for it, be it for free drugs or their plane ticket back home to Bucharest, this bizarre decision to let them vote the latest of many crazy human rights nonsense going on. Scotland, who seem to enjoy making everything free regardless of the cost, a perverse illusion created by the Scottish First Minister to make it look like Scotland can live on its own means and so be independent of English taxes paying for all this so to win votes, has seen its latest vulgar spend being on brand new TV's to pacify its growing prison population. Alex Salmon used a green loophole law that says all new TV' should be ergonomic and clean and so he bought 7,000. You have to ask why the muggers are getting comfy cells and the victims are getting nothing.
Foreign prisoners, under Labour, were offered a plane or ferry ticket to leave Britain after they had served their sentence, the ploy to save on deportation costs. If they went willingly there would be no issues over their original host country to accept them and ugly scenes of dragging them and their kids on to private prison planes. But the Tories said they would stop the payments if they got in. Well they are in and they haven't got rid of the payments. In fact the prisoners now get a plastic card loaded with £500 if they leave and a further grand loaded on to the card if they don't return after three months, if they can prove they are paying rent etc in their host country and starting over. The payment is now THREE times higher than what it was under Blair and Brown. There are around 11,000 foreign lags in jail here and 5,535 were deported in Labours final year from May to May, 36% of those paid the £500 to go home. It cost 45 grand to keep every foreign prisoner here for one year, Jamaicans and Nigerians still toping the list for long term sentences.
H is for Housing Benefit
If you're unemployed for one year your housing benefit will drop 10% thereafter. The Tories want to bring down this huge public bill of around $40 billion a year and the Plimsoll line of no more than £400 rent help per week help will immediately evict 86,000 families, most of those unemployed or in low skilled jobs in London. Most of these guys are ethnic minorities, strategically placed asylum seekers through favourable Labour councils, looking to build their vote, gerrymandering of sorts. If the Tories get to disperse them outside of the M25 it will be gerrymandering by them too. The Labour party have already moved to block this legislation, as the high courts have the cuts in social housing build which completes the pincer movement. I think most would agree no one should get big rents paid for free because certain ethnic communities want to stay together in inner-city London but this will get ugly. The party is over for London's housed and well fed poor. The Tories are enjoying putting fear in the hearts of the people they hate.
I is for Immigration
At the same time the Tories want to force the British unemployed into work: jobs without workers for workers without jobs, they are still allowing thousands of people into the UK to work those same jobs. Ok, they can't do much about the Poles and Eastern Europeans but they can everywhere else across the spectrum, especially South East Asian and African immigrants where most of our imported long term unemployed comes from.
The Tories pledged to slash immigration but there is no sign of it. They have cut back on some specific skilled labour that has seen the national health suffer in emergency wards but this is mainly because newly trained British doctors would rather be cushy locums on 100k a year than stressed out ER docs with no shagging and drinking time. What seems to be happening is however skilled the immigrant let in, most end up in menial jobs the underclass won't do. There are currently 450,000 of those crap jobs available, which suggest the Poles no longer want to do them. An example of this apathy towards immigrants and crap jobs done by immigrants could be seen in a Southend chip shop. The owner advertised for a person to work behind the counter and stipulated they must be able to speak Romanian because there's another Romanian working there. The owner inserted the Romanian bit after a string of disinterested applicants were sent from the job centre but didn't want the job, the problem you will have with the three strikes and your out rule. But it caused a huge stir from local residents with the usual crap that 'them bloody foreigners are taking our jobs' stuff and so the advert withdrawn. But, you guessed it, nobody turned up for an interview. That right there is the problem with trying to put people in crap jobs.
A recent Channel Four documentary exposed what the Tories are really up to with their points based and visa immigrant policy. Anyone who lives in Leicester will be well aware it's laced with illegal sweatshops where mostly Indians on student visas go there just to work illegally because they can't get work visas and not actually attending college or uni with their student visa. All the high street brands are being supplied by these places through sub-contracted labour and the jobs pay as little as £2 per hour. It doesn't take a great leap to say the workers are tacitly being allowed in to fill those jobs, the secret so open. One of Cameron's closest advisers on cutting public waste is Sir Phillip 'tax dodging' Green of the Arcadia Group, he who owns many highs street chain stores. His goods were being made in these sweatshops through that sub-contracted labour that he avoids blame or censure by because it's sub-contracted and its clear the clothing industry can't deliver the prices it does without sweatshops around the world, be it here or child labour abroad. Maybe the deal Cameron recently struck in India to let in another 50,000 Indian 'students' was for Mr Green's profits to increase, the profits which are filed under Greens misses name in Monte Carlo and so no personal tax accrued. Therefore it does not surprise me that the right to have a slave in the U.K. has only just been made illegal as late as April this year due to a quirk in the law. There are still 26 million slaves in the world today, far more then there was before abolition in the 1800s, the key driver for cheap clothing in our stores.
J is for Jobs
Labour were clearly creating the so-called non jobs in the public service mainly because there are not many jobs to create in the private sector any more. Once you lose your manufacturing base then what's left? We are going to have to get used to high unemployment and temporary work as the system is stacked too much in favour of the relentless big corporations now, always trying to cut wages and pensions so they can increase their off-shore balances. The top 100 chief execs in the U.K. have seen their salaries raise an incredible 50% already this pay round. If the Tories don't allow any public service sector growth when employment picks up then expect a consistent 4 million unemployed as Britain's population hits 70m million. We now know most new jobs in the last ten years have been tailored to cheap immigrant labour as those guys have taken 87% of them, everything from care assistants to computer workers increasingly going to foreign nationals here. Surely that will be the case over the next ten years?
The London Olympics sums up the problem on providing jobs here, the people employed there today as diverse as the final medal table will be in August 2012. 95% of the tourist merchandise is made abroad and most of the jobs and contracts went to in-sourced labour, even Turkey getting more souvenir deals than Britain. The Union Jack bed-spread, the most British of the gifts, was made in Pakistan, public enemy number one. The bulkiest contract we did get was the only one we couldn't outsource, that of minting commemorative coins. The East Londoners didn't fancy the physical construction work either and unemployment actually rose in Hackney and Haringey over the last three years. Surely the young men that would rather shoot each or the other lot that prefer religion over employment should have been trained in construction jobs ready for the Games build?
K is for Kids
The child benefit thing still looks a mess. The middle-class are not too bothered about losing this one if it helps to give more money to the government to keep the street lights on, many councils starting to turn them off at night now. But its nonsense that two parents earning 44 grand each get child benefit and one on 45 grand doesn't. That has to be tweaked or included in this new benefits credit.
K is for Knowledge
Its not only full-time study that will be slashed but further education, the ability to get qualifications while you are still working. Many local colleges will have to close and many people my age that didn't go to uni wont be able to move up in their jobs through night courses, hard engineering not soft this time around in education.
L is for the Law
The police are facing big cuts and so the fat ones will actually be forced back on to the beat. But once that copper in London was prosecuted for giving the drunk a whack on the shins they lost all real authority to react for me. They are then criticised for shooting that posh bloke in London and then battered for not shooting the not so posh cabby in Cumbria quick enough.
The idea that they DONT enjoy doing reams of paperwork that ties them to a warm office in the winter and away from the thugs is absurd, of course. They love it! That's why they get fat. I say give them more power and let them clip thug's ears once again. We know the jails are full so the deterrent must be played out on the streets before the thugs get to the courts. I respect the police but have seen the boobies on the beat get smaller and fatter over the years and they look like they are not up for what's needed on the streets. In Northampton there was one of these community wardens in the town centre and some big burley Romanian guys were trying to get scam change for fake fivers in all the shops and with the passers-by, but getting aggressive because we all twigged the scam. I asked the warder to check it out and he f**ked off into a shoe shop! Baring that in mind it's no surprise most councils are going to cut the wardens from the wage bill first.
M is for the Military
The bizarre decision to can the Ark Royal and Harrier fleet will not only finish off Mrs Thatcher as the black cloak of death wraps around her as dementia eats away her tiny remaining sanity but leave the Falklands and most of the Commonwealth wide open to attack. As my kindred spirit '1sttothebar' points out on here we make over £200 billion a year from Commonwealth levies and rents, and now that we don't have any means of getting out to the colonies to collect them then they may not want to pay up anymore as the Queen has her power dissolved over the Commonwealth. The admirals are furious (presumably the ones that will be added to the 14 that don't have a boat to sail but hang on in there with grace and favour armchair jobs) and may even have to lay off a butler or two..
N is for NHS
The Tories want to break the back of the NHS through backdoor cuts so to part privatise through the more profitable bits. They said it was ring-fenced but you can forget that. The already have the private providers lined up. As we saw with dentistry if you have a toothache and there is no NHS dentist around then you go private or live with the pain, a no lose situation for a government costs on healthcare. If you break your arm you will pay, the mentality to come. The Tories have so far cut baldness treatment and fake breast enlargements! They will be back with the chainsaw soon.
O is for overseas aid
A few eyebrows were raised when the Tories didn't cut overseas aid, effectively raising it in real terms. Those in the no on aid understand most of that money is used for bribes or trade 'incentives' to get the third world to spend on British exports. Dictators live well in third world countries because we keep them in Rolls Royce and Learjets with this money if they keep trading with us and let us have their resources cheaper and quicker (see slave and bonded labour). We gave India £800 million and they bought ten Hawk trainer Jets in return in 2006 for their space program. As we saw with Obama and Cameron on their cringing charm offensive in China - clearly there to sell arms and munitions, mainly because Obama and Cameron had given them wars to worry about on their doorsteps.
China would rather like all of the new Russian Republics oil and gas to feed their huge economies, why we are still in Afghanistan to secure the new TAPI pipeline that will go straight trough Helmund Province to the Indian Ocean, by-passing Russia, who tend to whack up their prices and then cut you off if you don't pay up on time, as Georgia and the Ukraine discovered recently for their pains. The world is awash with natural gas but the price is so high because the market is rigged, mainly because of the politics involved when you import more gas than you export and so nowhere to store it.
P is for pensions
The Treasury plans to raise four billion pounds a year by cutting tax relief on pensions for about 100,000 higher earners. But he may have gaffed by including war widows in that equation. Soldiers tend to die young and so the pension payout is a big one to the wife and kids over their lifetime. To solve this huge military handout the government should stop fighting wars over cutting frightened young mums pensions.
Q is for the Queen and Quango's (same thing)
The Civil List will remain frozen for five years. But luck would have it that wind farms built on their land, subsidised by the state, could bring in up to £30 million a year in revenue, about the current Civil List handout per year. A no brainier would be to have that money fund the Royal Family! I wonder what Prince Phillip would look like with his braces hooked on the turbine?
The government will abolish, merge or reform 481 semi-independent state agencies, the quango's, but has not said what savings this will produce or how many thousands of jobs will disappear. These things tend to be buffers set up by political parties to protect ministers making decisions they would be accountable for so political by their very nature, and so no wonder the Tories want to baseball bat all the Labor ones. The Tories will just keep the ones that will side with them and rename them. It's not a big save but it will put a few people out of work in those so-called non jobs.
R is for Road tax
A utility company ripped up a busy road in Northampton without proper planning permission, causing all manner of jams for a month. The council fined them a grand total of £80! The days of road tax going towards roads is long since gone and anyone who has tried to insure their kids first car would have been astounded at the recent rises to that insurers, many 23-year-old and under's having to pay a thousand pounds plus for their yearly premiums. Potholes, the right to sue other driver involved in road crashes, along with uninsured drivers and these so-called 'smash for cash' insurance scams (done mostly by Asian gangs in the NW) are the reasons for the rises, so say the insurance companies say. The paradox sees the cost too much for young drivers and so don't get insurance and so up and up the premiums go! Rather contradictory, with all this talk of high student fees, one-in-five students can still afford to run a car at university.
S is for Secrecy
The Tories want to probe your bank and building society accounts every month, not every year, as it was under New Labour. Shame they didn't do that more thoroughly with the banks chief executives so to stop the bloody crash in the first place! It's apparently to coordinate anti fraud measures to catch people working whilst they claim benefit, but other nefarious activities by citizens, like your BNP or Fetish Anonymous membership fee renewal, likely to be exposed this way. That unseen cleaning job for a few hours here and there that sustains the black market welfare economy is going to be shut down and so left to illegal immigrants without bank accounts to fill them, ironically cleaning the corrupt bank office space by night. Tax havens that hold the Chancellor of the Exchequers current Osborne family trust so to avoid tax off shore haven't been closed down. The banks new yearly two billion tax has also been allowed to be written off by the Tories as tax and so they have paid nothing as yet, the Tories fearing the big banks will leave London if they are hit for big taxes, ones they really do owe us. But they are most of the countries profits right now so its go easy time. The Tories say they will be part of a coordinated world-wide effort to shut down tax havens but the problem is half of them are British dependencies dependent of that's status, meaning we had to actually bail out those islands during the banking crisis, all very ironic. If we wanted it to end tax havens then we missed our chance
T is for Tax
VAT will be up to 20% in the new year, a big earn for the government but a big cost to pass on to small businesses. Rather surprisingly there was no real income tax cut to get some real more money into the economy and kick-start the party. At the moment the economy is like Laurel & Hardy trying to start their little black Ford model T with that handle at the front.
U is for Unemployed
The threat to force the jobless and sick back to work is a threat rather than the likelihood, drumming it into people's heads that once the economy turns and there are jobs available you must take them. In that way the Tories can claim the get tough rules are the reasons there are more people in work and maybe some people will find work that wouldn't normally do. In America you get six months welfare and then it runs out, an amazing amount of claimants finding work there and then when that money runs out, the Tories point here. Yes this attack is about easy targets and trying to hold on to the middle-aged Tory vote they may haemorrhage through student fees in Tory constituencies by getting tough on benefit scroungers but it's also about bringing down the intolerable welfare bill on the countries finances. I don't think many people will be forced to work, or indeed lose their benefits for three years if they turn down job offers, but it will certainly increase the use of stress and anti depressants by 2013, the year it comes in. I do like the aspect of it where you can work and claim at the same time so you will always earn more working than being unemployed. I think that will really help to bring down the five million numbers.
No, this is really about using private companies to deal with benefits, rather ironically, sacking DWP and benefit staff in the process. I suspect they will sack far more of those workers in job centres than they will get the long term unemployed into work. If they can't deport foreign benefit claiming terrorist supporters then how are they going to get a mum with 6 kids in work!! Targeting the sick and disabled to make political capital, is just wrong if you ask me.
V is for Volunteers and workfare
We have a council run factory in Northampton that is staffed totally by disabled people. They are highly productivity and respected and on a fair minimum wage. The council sold it last week to a private company and under the new rules of trying to get people off Incapacity and Disability Benefits and into work, the new company can technically have them for nothing from now on under the workfare rules. That's how I see things going with that five million chunk of people out of work, a sizeable chunk of cheap labour for private companies that spring up under the Tories. They have workfare in America and the likes of Wal-Mart and McDonalds make huge bucks out of it.
W is for Winter Fuel Allowance
The moment George Osborne didn't announce any cut to the winter fuel payment to rich people you knew his measures were essentially political, trying to hold onto as much as the core Tory votes as possible for the coming and forced election. The older and more comfortably off you are the more likely you are to vote Tory, some 60% of the regular electorate over 50. The Tories quite fancy a second term already. Let's not let that happen guys.
X is for X marks the spot
There's no doubt that the austerity measures have been targeted at the poor and like I said, that is huge chink of voters and so the next by-election in Oldham should be interesting, the angry students set to sabotage every Liberal Democrat seat from now on in after they got burnt over tuition fees, a book about to be released set to reveal the Liberals were going to ditch their opposition to those fees some two months before the election. If the unemployed and sick come out in protest about being pushed back to work then there's another ton of pissed off voters prepared to bring down the Tories. However much damage the Tories do over the next few years there is no way there will be a second term.
Y is for Yemen
Rather noticeably our Prime Minister has yet to mention the phrase the "War on Terror" in a public speech. The Yemen is now the new Afghanistan, pretty much overnight, but Iraq almost forgotten. A rather dodgy looking postal bomb threat and some tenuous link to the Yemen from this silly girl that tried to stab the Tory MP to death has moved the Yemen into the most wanted spot, all that in the month the airlines ganged up and told the government to relax airport security. Cameron has his terror threat to keep us fearful by freshening things up with the Yemen but no one believes it anymore.
The idiot Bush's memoirs claim water boarding helped prevent the rather spurious planned attacks on London in 2003, one year before they were actually supposed to happen, which is rather odd, the intelligence 12 months late! The airports love all this fear and Luton have come up with a novel way to cash in by offering a premier fast track queue that gets you through security and baggage quicker if you pay a £5 queue premium fee at the airport. But a whistleblower has revealed the check-in girls are told to get the normal queues to grow to encourage people to buy the five pound tickets, which I presume you have to queue for. Luton also introduced a fee of £3 last year to use trolleys and a £1 fee to drop off passengers in front of the terminal, presumably to stop terrorists like those guys at Glasgow airport. Then again the terrorists could just pay a quid and then drive through the plate glass window?
Whatever the rhetoric on terrorists they have yet to detach the absurd Abu 'the hook' Hamza from his British Passport, meaning he and his family can keep claiming benefits in the UK, currently £700 per week for his wife and six kids while he festers in jail here. The Americans want to deport him but may think twice if they see his current welfare bill! The Egyptians swanky six bedroom house in London is currently going under extensive renovation on your tax bill to allow the kids to have more space. The Tories forcing the sick back to work on one hand and then bending over backwards for terror thugs like him is rather sick. There are thousands of terror supporters across London of various political groups and they are allowed to flourish because they are housed, fed and tolerated and not forced to work. It's believed most of the Somali pirate operation is now run from South London and a big chunk of the funding for the ongoing Sudan genocide coming from there.
Z is for Zebra crossings
Lollipop men and women across the nation are to be asked to do it voluntary, evidence enough that that Big Society is a cover for volunteers being asked to do once paid council jobs. Suck on that!
What do you do when you've been living beyond your means for years and you're up to your ears in debt? Well, you could:
(a) Declare yourself bankrupt and default on your repayments, aiming to wipe the slate clean and start over. The trouble with that approach is that you might just find it difficult to persuade anyone to lend you money ever again, and you might need them to do so.
(b) Try to borrow still more in order to keep spending as before. The trouble with this approach is that, as your debts mount ever higher, lenders will start to doubt your ability to repay and demand far higher rates of interest from you to compensate for their risk in continuing to support you.
(c) Cut your spending drastically in order to balance your books and reduce your dependence on borrowing in the future. The trouble with this approach is that if you cut too drastically you might not have enough to live on in the meantime.
The issue is, of course, a bit more complicated at a national level than at a personal one, but the above is a fair approximation to the quandary that faces Britain financially today. Strange as it might seem - and little though you might guess it from the heated rhetoric from politicians and the popular press alike - there is not a huge divergence in how the three main parties propose to tackle the problem. They are all suggesting a compromise between (b) and (c) in the short term, with the intention of moving towards (c) in the longer term while hoping that the transition can be achieved without the interim pain becoming unbearable. One difference lies in the pace at which they propose to make the transition. Another lies in the items of expenditure which they would cut most severely, though even here there is less divergence than you might imagine.
With the British economy still in fragile health following its recent near-death experience, however, relatively small differences in policy now could make a big difference to the outcome later, so it is worth examining these divergences in detail, as an aid to considering whether the government is indeed doing the right thing.
* First cut is the deepest *
The Conservatives want to move most quickly. It is notable, however, that not even such a notorious hatchet-man as Chancellor Osborne wants to balance the books in the coming year, or even over the four-year span covered by the public spending review announced on October 20th. He wants his cuts in planned expenditure to reduce the current annual deficit of £149 billion by £81 billion by 2014-15. So even he expects the national debt, which currently totals £950 billion, to go on rising, albeit at a much-reduced rate than over the past few years. An actual reduction in the cumulative total is not expected even by him until after the period under review. Admittedly, taking forecast inflation into account, his planned cash increase in spending of 6% over the period could be read as a real reduction of 3%, but even then it will make little impact on the overall burden of public debt.
So even this hawkish helmsman knows that he cannot halt the momentum of the vast vessel of British government profligacy any time soon, no matter how much he might wish to do so. One can imagine several reasons for the Conservatives' relative impatience: ideological distaste for public spending in the first place; the example of 1980-82, when Thatcher's government was warned by economists that sharp cuts in public spending during a recession was a recipe for disaster, a disaster that did not in the event transpire; and political calculation, reckoning that it would be more advantageous to endure the pain of belt-tightening sooner rather than later, in the hope that the economy will be on the rebound come the next election and he can start promising a more expansive future after it.
It is impossible for an outsider to tell whether Lib Dems have been able to exert any influence to stay the Conservative hand, but if so it would appear to be rather little, in terms of speed at least (they might have been more influential where priorities were concerned). Collaborating with the Conservative programme has required something of a U-turn, or at least a C-turn, on the part of the Lib Dems, whether C stands for Cable or for Coalition. This you could interpret either as perfidy or the exigencies of teamwork or the responsibility of office, depending on how you choose to look at it. Naturally, they say that they didn't previously know how parlous was the plight in which Labour had left the public finances and therefore how urgent was the action needed. Well, they would say that, wouldn't they? Who knows, it might even be true. Unquestionably, Labour did leave a mess behind them and their irresponsible indifference to having done so reduces both the sympathy that can be felt for them and the degree of credence that can be placed in such alternative plans as they are offering.
Labour want to move most slowly, which again could reflect ideological preconceptions, self-justification for their behaviour in office, or political calculation. New Shadow Chancellor Johnson is echoing Darling's rhetoric about halving the deficit (the annual deficit rather than the cumulative level of indebtedness) over four years, with a view to arriving in seven years where the Conservatives aim to be in four. The Balls tendency in the party has let it be known that they would like to move more slowly still, which is perhaps one reason why their man wasn't made Shadow Chancellor. But even the Darling/Johnson timescale allows a great deal of wriggle-room over the period, as well as the wriggle-room implicit in the fact they will not be in power to implement their plans in any case. We will never know whether or not, in practice, they would have been able to stick to them.
But then we don't yet know whether or not the coalition government will be able to stick to theirs.
* Cutting both ways *
If you are of a frugal disposition and dislike having debts hanging over you, you may be wondering why none of the main political parties is suggesting that we start living within our means right away. In fact, why the government doesn't actually cut spending straight away rather than just reduce the rate of increase in it.
The answer is of course that hardly anyone thinks our sickly economy strong enough to stomach such strong medicine. Many medicines, after all, are poisons when taken in too high a dosage. The private sector would be unlikely to expand quickly enough take up the slack that would be created by a sudden withdrawal of debt-fuelled public spending, especially with many companies relying on public contracts for much of their revenue. Unemployment would rise, consumption and consumer confidence fall, corporate profitability come under pressure and tax revenues fall in consequence, whilst the welfare bill rose inexorably. The public sector deficit might even widen rather than contract as planned, requiring still more cuts and creating a vicious circle, a vortex dragging us all down towards a disastrous depression. To paraphrase an old joke, the operation might be a success but the patient die during the course of it.
Conversely, if we took no action to reduce public spending, our levels of debt would become unsustainable. No one can predict exactly when this might happen; some academic studies suggest that a crisis point tends to be reached when national debt approaches 90% of GDP; others suggest it can happen earlier. Our national debt is currently rather over 70% of GDP and rising, and even that doesn't take account of "off-balance-sheet" liabilities incurred under such sleight-of-hand schemes as Private Finance Initiatives. Such numbers support the argument that we are not far off crisis point. Advocates of a more gradual approach to reducing our national debt argue that there is no sign of bond markets shying away from gilts - UK government bonds - which would be the first sign of a crisis. On the contrary, gilts can still be auctioned at historically low yields, even at yields below the current rate of inflation, which arguably makes borrowing an attractive option. Moreover, the repayment schedule for outstanding UK government debt is benignly weighted towards the medium-to-longer term, making an imminent implosion unlikely. All of this is true, but the gilt market's relative buoyancy may reflect a confidence among investors that the chancellor has matters in hand, and bond markets can turn rapidly once confidence is lost - as in the recent case of Greece, for example, or as in the case of Britain in the mid-1970s - with dire consequences for the interest governments must pay and on their level of debt thereafter. And on the resultant requirement for retrenchment. Vicious circles can revolve in more than one direction.
It is a matter of judgement - in other words, anyone's guess - as to whether the government is steering the right course between these two threatening maelstroms. My own judgement, or guess, for what it's worth, is that a relatively swift reduction in debt is desirable, and the government is broadly right to pursue it despite the associated risks. In this, like the Lib Dems for whom I voted, I have performed something of a C-turn. My reasoning now is that to follow this course allows more manoeuvring room if things go wrong. If the economy suffers a sharper reaction than anticipated there will be a better chance to loosen fiscal policy after this initial show of resolute retrenchment than there would be to tighten later if that became necessary in the face of a gilt market panic and a run on sterling, as might well happen under the slower-moving scenario. This is, in fact, a judgement as to which is the lesser of two prospective evils - an unappetising basis on which judge anything, but perhaps the most realistic basis here.
* The least unkindest cut of all? *
Beyond the question of the pace and extent of the cuts there is that of where they will fall: which programmes will feel the pinch most severely and which will feel it hardly at all.
Some types of government expenditure are even set to rise. Tellingly, the one due to rise most sharply - by 55% between now and 2014-15 - is interest on government debt. As the Chancellor never tires of reminding us, we are currently paying £120 million in such interest every day - £2 for every man, woman and child in the country. So even on the most optimistic reckoning, expect that to be £3 a day for every one of us by 2014, £84 a week for a family of four. Are you sure you can afford your mortgage or your rent as well, let alone your credit cards? Admittedly, it's a crude measure, but personally I find this the most persuasive fact in the government's favour. Elsewhere, the plan is to increase spending on Overseas Aid and the EU, in both cases to meet prior commitments, though just within the last few days Mr Cameron has been doing his level best to restrain the latter. "Green energy" is also favoured, which is good, though if you read the small print you'll find that much of this means nuclear decommissioning, which may be unavoidable but is green investment in only the most negative of senses. Unlike interest though, none of these is, or is likely to become, among the biggest items of expenditure, and therefore their overall impact is slight.
The same cannot be said of the National Health Service, the budget for which is to be "ring-fenced" to rise in line with inflation throughout the period. Since it is the second largest item of expenditure, after Work and Pensions, this ring-fencing increases substantially the savings that need to be found elsewhere. Of course, the NHS is a sacred cow in Britain and threatening its budget is politically hazardous to put it mildly, but personally I am extremely sceptical about the wisdom of protecting its funding. Labour threw money at it indiscriminately throughout the past decade without any commensurate improvement in performance, and you only need to spend a little time in an NHS hospital with your eyes and ears open to know that they are not run efficiently. I am far from convinced by the government's proposals for shaking up, yet again, the organisation of this unwieldy beast, but I do believe that sooner or later some government has to force it to deliver more and better service for the vast fortune that is spent on it. Simply cutting its funding might concentrate a few minds wonderfully.
The element of Work and Pensions represented by Pensions has also been largely protected. The date for raising the qualifying age for state pensions is to be brought forward, but is still beyond the horizon of the current review - too far beyond in my opinion. If life expectancy continues to rise even what is currently envisaged does not look at all affordable. Meanwhile, pensioners' perks are to be retained, without means' tests. Even as a pensioner, this seems to me to be mad. I can't think of any good reason why my fellow citizens should provide me with a bus pass, which must be expensive to administer even if I seldom use it, or give me money supposedly for winter fuel that I'm free to spend on booze if I prefer. If the basic state pension is regarded as inadequate, why not just increase it for those without other sources of income and discard these ear-marked extras? Similarly, the free TV licence for the over-75s - not needed by the well-to-do and unfair on those who do not watch TV.
By the same token, I am all in favour of cutting child benefit for higher-rate taxpayers, although the government could have done a better job on the detail of how the change will be applied. However, this move really won't save all that much money. The real savings to be made in the welfare budget are to come from a squeeze on benefits for the jobless and those unable to work because of sickness or disability. Beyond simply saving money, the aim is clearly to reduce both benefit fraud and welfare dependency, but whether this aim can be realised is far from certain, especially if unemployment rises again as a consequence of reduced public spending. Past governments have had similar ambitions in this notoriously intractable area without much notable success.
Defence, after a doughty rearguard action, is to have its budget cut by 7.5% in real terms. The separate, parallel Strategic Defence Review that outlines how this is meant to work looks rushed and contains some nonsenses (still no decision on Trident, for example, a new aircraft carrier without any aircraft to carry), but the overall figure doesn't look too silly. Certainly we will still need our armed forces in an unpredictable world, though whether we need them to be able to "project power" in such unpropitious places as Iraq and Afghanistan is another question. I rather hope there will be another Defence Review before too long with a better claim to being Strategic.
Education is to lose 10% of its funding in real terms over the forthcoming period, but within this overall figure there is a sharp distinction between spending on schools and that on universities. Schools are to some extent protected: although new school building is to be scaled back, current spending on school teaching will be maintained. University funding, by contrast, is to be sharply cut, with a lot of the detail of how this is to be applied still uncertain. They could make a mess of the detail, but in principle, I am not against the policy, being sceptical of the recent orthodoxy that we should produce more and more graduates in less and less exacting disciplines. It is far from clear that this confers much benefit on society in general or even on the individuals concerned.
The Home Office budget is to be severely reduced, with smaller numbers anticipated for the police, immigration and prison services as well as the curtailment of plans to build new prisons. There will certainly be strains in maintaining policing while reducing police numbers, and it wouldn't be surprising if there were a lot of resistance in the force to implementing what is being demanded. I hesitate to anticipate how that will play out. I do, though, welcome the intention to reduce the reliance on imprisonment to maintain public order. Anyone who has studied the issue knows that just bunging more and more people into prison is no solution, but successive governments have been too scared of a simplistic, populist reaction from the tabloids and the public to take a more enlightened approach. Kenneth Clarke, at least, is showing not only enlightenment but an admirable determination not to run scared, for which I applaud him.
Most heavily cut of the major categories of expenditure is to be the subvention from central to Local Government. Councils are going to be hit hard and whilst the blow is to be mitigated by Whitehall having less say in how they operate, they will still have to find their own savings by scaling back staff and services. In the longer term, they will have the option of raising more revenue themselves through local taxation, but Council Tax for this year is being frozen. The latter constraint looks odd, and out of keeping with the underlying principle of local accountability. It seems to me that it would be better to make councils more responsible both for planning and administering their own programmes and for persuading their constituents to foot the bill; let us hope that this is what the government are aiming to bring about in future.
Beyond individual departments and individual programmes, there is a general intent to improve civil service efficiency, restrain public sector pay and reduce administrative costs, predominantly by shedding staff. As one who believes that the public sector accounts for too high a proportion of the British economy and the public service too high a proportion of British employment, I see no objection to this in principle, however difficult implementing it may prove to be in practice.
* Cutting to the chase *
There are certainly questions to be asked about the priorities that the government has assigned itself in this spending review, and one could quibble forever about the detail. There is also an argument that the deficit could be reduced by increasing taxes rather than by cutting spending. The underlying philosophy, though, is surely right. In the long run we can't earn a living in the world by being debt-financed consumers, whether that debt is personal or public; we have to pay our way. The cuts, however well or badly devised or timed, are a necessary step towards meeting this imperative.
By its nature, the Public Spending Review is a statement of intent rather than a schedule to which the government can promise to adhere exactly. Underlying it are many assumptions - about inflation, employment and the global economic environment to take just a few examples - that may or may not be borne out by experience. The journey from where we are now to where the government wants us to be in four years' time could well be fraught. Quite apart from the economic hazards already outlined above, there is likely to be social unrest as the cuts take effect: strikes, maybe even riots a la française. It would be easy for the government to be blown off course, maybe impossible for it not to be. I have already used the cliché of steering between two maelstroms, but maybe a better one would be that of tightrope walking without the net. Let us hope it doesn't also prove to be without the rope.
© Also published under the name torr on Ciao UK, 2010