Schools funding, Sure Start children’s centres and 16-19 education were spared the axe this morning as George Osborne and David Laws announced £6bn of cuts.
Earlier this morning, The Chancellor and Chief Secretary to the Treasury detailed £6.243bn of cuts in public spending that will, in the most part, take place in this financial year. As promised, departments of health, international development and defence saw their budgets protected. In addition, schools funding, Sure Start children’s centres and 16-19 education were also spared the pain of budget reductions. As a consequence the axe fell harder on a number of other departments, including business (£836m), communities and local government (£780m) and education (£670m).
Both men were at pains to point out that the majority of the savings would come from ‘reducing waste’, including over £1bn from less government advertising, use of consultants and travel allowances. The cancelling or renegotiation of contracts through more effective procurement is also due to save nearly £2bn, with £600m coming from a ‘bonfire of the quangos’.
However there are less politically salient casualties of the cuts. The abolition of the popular Child Trust Fund will save just over £300m, and the £120m generated by a freeze in civil service recruitment will hit graduate job-seekers particularly hard.
Credit must go to the Treasury team for delivering these savings in what appears to be a relatively equitable fashion across the public sector. Whether or not these cuts will help or hinder immediate economic recovery is anyone’s guess; however, it is clear that the motivation for today’s announcement is primarily to send a clear signal to international markets that this government is focused on reducing the deficit as quickly as possible, an objective that both parties now subscribe to despite pre-election disagreement.
This raises a very important question: to what extent do today’s cuts, and indeed the far deeper and more painful ones to come, reflect a view of how to rebalance Britain’s economy and find the future sources of economic growth, or alternatively simply represent a short-term approach to placating markets and particular political ideology? Given the significant cuts in the business budget, along with the squeeze in higher education spending with no apparent protection of science funding, it is not clear that these cuts are part of a broader economic plan for delivering the jobs of tomorrow.
Simply opposing government action on the deficit would be disingenuous and counter-productive. The focus for any responsible, strong opposition should be on ensuring that when cuts are deliberated or announced, their impact on the broader economy is carefully assessed. The challenge, but also the opportunity, for the Left is to develop and articulate an economic vision that is deliverable in today’s fiscal reality. On the limited evidence of today, the government is yet to decide on its own.
Editor’s update 15.28
Some other interesting takes on today’s news:
The ippr have put a strongly worded statement on the child tax fund. Co-Director Lisa Harker says:
“Scrapping the Child Trust Fund is a major backward step away from achieving greater equality in Britain. Campaigners have fought long and hard to establish the principle that the state should help families build up an asset to give all children a fair start as they enter their adult life. The spark provided by the Child Trust Fund has substantially increased parental saving since it was created in 2002 and meant children born since then will have a pot of money to help them get on in life when they reach 18. Now tomorrow’s generation are being asked to pay for the mistakes of today’s. We strongly urge the government to reconsider this step for the sake of building a fairer Britain.”
At Labour Uncut, Jonathan Todd argues that:
“In addition to decisions on growth, there are many decisions to be made on the best mix of reduced spending and increased taxation in deficit management. We should put more emphasis on taxation than the coalition, while being redistributive and imaginative, in terms of what we propose to tax. There are, for example, cases for revisiting land and carbon taxation, as Philippe Legrain has argued.”
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20 Responses to “£6bn cuts – long-term pain for short-term gain?”
Politics Summary: Tuesday, May 25th | Left Foot Forward
[…] children’s charities “angry” at the abolition of the child trust fund. Yesterday, Left Foot Forward outlined details of the […]
Lee the liberal
A few of the comments here really show just how far we are from understanding what has gone wrong and how we can fix it. A lot of the people here really need to expand their reading list; we might not get so much malignant narcissism then.
No, SJ Chandos, Marx wasn’t right. Next time you take a walk around a supermarket stop and consider how much is in front of you. We’ve moved from hunger, starvation and deprivation to prosperity, plenty and fat bellies in very little time. Capitalism has worked a treat.
Coplani, slightly better point, but no matter how you tax, you’re still diverting productive real savings to unproductive, govnt waste. VAT, NI, Income tax – it doesn’t matter how you tax, just that you tax in the first place.
Fat Bloke on Tour, nice piece on aggregate demand and the consumption function, all you need to do now is realise how wrong Lord Keynes was! Read Hayek and von Mises alongside your stuff and you’ll soon see the glaring holes in the macroeconomic case, just as I did. Start with von Mises’s short essay “the impossibility of calculation in the Socialist commonwealth” and go from there.
Fat Bloke on Tour
Lee the Looney @ 1.03
Away and bile yer heid ya muppet.
LvM is a right wing mentalist’s mentalist.
One club golf’er of the highest order.
All that was missing was a grasp of reality.
Libertarian tripe from start to finish.
Consequently best of luck for your A levels.
Either that or read up about quantifying public sector productivity.
That is if you believe in the concept of a public sector.
Lee the liberal
Fancy putting across a cerebral point, Fat Bloke, or are puerile insults the limits of your wit?
And no, I don’t believe in the concept of a public sector.
SJ Chandos
Lee the Liberal, walk around the supermarket and look at all the brands and then see here many products, even suposedly competing ones, are owned by the same multi-national corporations. Trying looking beyond the superficial and see what is beneath the surface of the apparent reality.
Capitalism has inbuilt contradictions and inequality. Marx will always be right while the same system remains in place. Capitalism has evolved from a C19th to a monopoly C21th model, but its esential structure and principles remain the same. Exploitation and poverty is inherant, whilst power and wealth is increasingly concentrated in fewer and fewer hands.
Capitalism works just fine if you are in the 2% of the population that constitues the ruling class. It is poison if you are in the rest of the population or, worst still, impoverished in a so-called’third world’ country. Tell the unemployed car worker in the west or a person, in India, Kenya or Brazil, living on the rubbish dump and working for a £1 a day that Capitalism works fine.
Let qualify your statement, Capitalism works fine for the class in power and exploiting the rest of us!