Why the spending review is the right way forward

28 Jun 2013

Since rising to power in 2010, the Coalition government hasn’t had a huge amount of luck or success in working through their legislative programme AND keeping confidence at the same time. Examples of this include the initial reforms introduced by the government which many thought were over ambitious, such as the increase in tuition fees and reforms to welfare spending. Other demonstrations of this are the public sector cuts which have been made and the Budget 2012 (which many opposition MPs relished and many government MPs would rather forget). But with three years gone and two years to go, has anything actually helped, or has the last three years been all about activity and less about achievement?

 

Well, one indicator about how successful a government has been is the economy, and for the purposes of this article we will focus on this. If the economy is thriving and expanding, then surely a government is successful, and if the economy has sluggish growth then their policy is failing? Well, this was the ‘norm’ before 2010, but like the Coalition changed the culture of modern British politics, it has also changed the ‘norm’ on the economy. I won’t try and re-heat old articles or speeches by any party leader, but the reason why we are in this mess is because the banks who were ‘too big to fail’ - did fail, the casino style banking which was a ‘balanced risk’ was an extremely ‘unbalanced risk’ and the ‘sure bet’ investments became ‘unsure bet’ investments. As a result, the global economy plunged into the depths of economic doom and it brought the UK down with a huge crash. The next bit is debatable – were Labour to blame? I personally take the view that although they didn’t crash the banks personally, Labour are to blame because it was them who decided that banks were too big to fail, that the sure bet investments and casino banking were beneficial to the economy and that we were able to deal with bust as we did boom. Their failure has riddled the UK economy with a huge deficit and a very unsettling financial future. The current government has been doing what they needed to do – cut the deficit. If you look at it from a Coalition point of view, they are merely trying to make fairer the unfairness caused by the previous Labour government.

Of course, the government has had to make difficult decisions and, as a result, the austerity measures hurt. They hurt many people, and sadly the ‘many’ are the poor. I would personally say that it is time that the government finally walks rather than just talks about how these measures are designed to provide a fairer economy, achieving this by taxing the rich competitively to make sure everyone is pulling their weight. Cuts to services look like an attack on the poor, and ‘tax cuts’ on the rich demonstrate how we need to look for balance to prove that we are making sure that we can all live within our means as a country. The government also needs to make sure that the future for our economy is less rocky than the past. Recent figures show that the 2008 crash was worse than we thought and even though we avoided a double dip recession last year, we still have had sluggish growth since. But, if you look at the economy as a whole since the Brown government, things are not the best now but better than then – we are seeing borrowing DOWN gradually from 2010, we are seeing unemployment DOWN gradually from 2010 and employment UP gradually from 2010, and the recent spending review has, in my opinion, outlined the right way forward for the economy – more control of spending but more spending in infrastructure to create jobs and growth – it might not be new money but it is MORE money in infrastructure. This can help Britain to be the manufacturing, construction and production giant it once was. 

I think the spending review hit the nail on the head when it said that we need to look at the wastages of capital in society. Many may disagree with this point but I agree with the Chancellor when he says that rich pensioners, who can afford to sustain their own living expenditure, should lose state provisions like bus passes and the Winter Fuel Allowance and perhaps even the state pension. With deep economic constraints, we cannot continue to give them these benefits because they waste money which others need more. Of course, if a wealthy pensioner falls into poverty, then they should have their benefits reinstated, but when there is an imbalance, you need to balance it. That is the key principle here, a principle that is still vital. 

The government doesn’t always get it right and I understand that – I know from my own experience that benefits for people like my brother, who has an illness, should be kept not reduced. But the government has got a plan, whereas all I can see from the Labour opposition is lots of half-baked ideas but no actual policy. The vibe I get from the Labour front bench now (with two years until the next election) is that although the duvet of the party leadership may have changed with Miliband instead of Brown, but the mattress is still the same. The same politicians who were in the previous cabinet are leading their economic ‘policy’, and the same Labour words are criticising the government without actually having a credible plan in return.. 

This makes me slightly uncomfortable that in 2015 we could go from a government with a plan (even though it may not be liked by everyone) to a government with no plan. And as a young person who will be able to vote in 2015, I am worried about the sustainability of economic growth. I know this point is not favourable and, as I say above, I may not always agree with the government on everything (particularly with the huge Foreign Aid budget and the deep ‘over-reform’ on some things) but this government is doing its best to ensure sustainable economic prosperity – even Labour admitted that they would continue with austerity as it is the only option for the UK. It is tough, but with more financial prudence than the last government, this country can hopefully see the best days ahead.

By Sam Kenward

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