The politics of belt-tightening
An analysis by Michael Blastland on the BBC web site explains how difficult deficit reduction, the primary promise of the coalition government, is going to be. This comes at the time when defense spending cuts are making big news as well.Are the pips squeaking yet?
Put it this way: every £1bn is the equivalent of taking away services or money worth £1,000 from one million people, every year.Osborne prepares to unveil cuts
Which one million people would you have in mind?
And that's just the first billion. There are another 84-ish to go. Which is why the politics of cuts grows nasty. The Chancellor says we are all in it together, invoking a sense of collective sacrifice. Your country needs you, says David Cameron, pointing our way.
But I see no volunteers. Instead, the one collective effort on view is to duck - and point elsewhere. The "middle" points at the "scroungers" at the "bottom". The "bottom" points to the broader shoulders higher up. Both point to the "top". And the "top" says it pays for everything already and should get something back.
Well, it could be worse. Actually, it will be worse. There are bills not yet fully in the equation, like that for long-term care as the population ages…
The squeeze seems to come from every side. Where will the money come from?…
At the root, though, is a simple problem: arithmetic. Eliminating what's known as the structural deficit in the next few years, as the government aims to do, requires cuts or tax rises worth about 12% of total government spending in today's terms… Twelve per cent of government spending is equal to about six per cent of national spending.
It sounds manageable, until you remember that spread in equal proportion across the population, six per cent - for someone on £40,000 - is the equivalent of lost money or services worth nearly £2,400 every year…
So there are three possible - and perhaps obvious - answers to the question: "where will the money come from?"
1. Either it won't, and there'll be lower standards of living for everyone
2. It will come from a decline in services people receive
3. It will come by waiting, and hoping for increased national prosperity in the future will give us back what we've now lost, and we will all share in it
4. Sorry, did I not mention a fourth option? Option four is the most likely - a scenario which combines options one, two and three
A few months ago, I interviewed Howard Glennerster, a professor of social policy, who said that the numbers were unachievable unless the government also took aim at the middle classes.
He predicted precisely the current confrontation: "The challenge is to threaten the interests of the median middle class voter on whom the Conservative party and the Liberal Democrats depend. Only by challenging their core vote, it seems to me, can they deliver."
Chancellor George Osborne will shortly reveal the biggest programme of cuts in the UK for decades, in his long-awaited Spending Review.
Average budget reductions of 25% to most Whitehall departments are expected alongside welfare cuts, following months of negotiations with ministers.
Reports suggest nearly 500,000 public sector jobs will go by 2014-15…
Ahead of Wednesday's announcement, Deputy Prime Minister Nick Clegg has warned of a "hard road to recovery" for the country.
In a letter to all Lib Dem MPs, he said decisions being taken by the coalition government were "tough" but "right" and he was "determined to ensure it is a road that leads to fairness too"...
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Labels: economics, politics, UK
posted by Ken Wedding @ 6:29 AM
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