He is wrong

1 Jun 2013

On Monday the Chancellor of the Exchequer announced further spending cuts for 2015, ensuring his legacy as the worst Chancellor in modern British history will be kept intact and that he will be able to retain the title as Britain’s most useless politician for the foreseeable future. The cuts, which will see Local Councils, the Ministry of Justice and the Northern Ireland Office hammered yet again are not only ill thought out but will see tremendous inefficiencies grow. There is an alternative; a change that would see both the economy grow and the deficit ultimately fall. An alternative that sees growth and jobs put before cuts. An alternative that no one, even George Osborne, can afford to ignore.

 

George Osborne this week revealed the departments which were inevitably going to bare the biggest brunt of the sixth round of budget cuts for the year 2015/2016. At the forefront of another unnecessary slash will be the Department for Communities and Local Government and the Ministry of Justice, alongside the Foreign and Commonwealth Office and the Northern Ireland Office. As The Times reported, although disputed by the government, Court buildings and Tribunal operations could soon be privatised in a push to “save funds”. In total, departments like Environment and the Home Office will see a third shaved off their 2010 expenditure. The government must recognise that enough is enough, and that any further cuts will change the landscape of public services completely. Not only will inefficiencies grow in local councils – which will have to deal with increased pressures as demand continues to rise at the same time as available resources fall – but organisations like the Northern Ireland Office will simply buckle under increased pressure. It is a fallacy to believe that privatisation or increased outsourcing to the private sector can offset any losses in the public sector. Not only is the private sector more expensive but is ultimately harder to regulate that the public sector, as accountability is removed. In addition, the erosion of pay and conditions as great British offices of state are chiselled away at will ultimately create a culture of low morale, low productivity and resentment, as groups such as the Local Government Association block pay rises and increments are removed from workers already suffering from below average pay. Because that is what George Osborne is really doing. He is removing expertise from our government and replacing it with the ideology that cheaper is always better. He is wrong.

There is an alternative to Osborne’s plans, including the radical reform of the tax system and the creation of a stronger government. Osborne has committed to no tax increases in 2015-2016, as reported in The Guardian. A fairer way of rebalancing the books would see the introduction of new tax rates: a 50p/£ rate and another higher rate of 65p/£. This would not only allow for the safeguarding of key government spending, but could also be used for a temporary reduction in VAT. Like under the Darling plan of 2008-2010, a reduction in VAT – even if temporary – can restore both confidence and spending to the high street. The increased tax rate could also protect key benefits. More should be done however to save money in unnecessary areas. The United Kingdom should end its addiction to Nuclear Weapons and Defence Spending that is amongst the highest in the world to safeguard others areas of spending such as the Foreign and Commonwealth Office and DEFRA. A more dynamic chancellor would look not solely at reducing spending or moving money from departmental to long term infrastructure spending but increasing tax too. Tax isn’t something the government should be afraid of raising, but look to as a key instrument in creating a recovery.

The green shoots are a long way off and the light at the end of the tunnel has not yet been lit. Our councils, our courts and our country’s presence worldwide cannot take further unnecessary cuts. The Chancellor cannot simply fall back on to default mode of attacking government spending. It is time to create real change, to fix our broken economy. It is time for a Plan B, but for it to work Mr Osborne needs to realise that, so far, he has failed. 

By James Wand

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