Some thought that the Grinch descended on the Christmas festive spirit last Wednesday as Osborne announced his Autumn budget. The shadow cabinet waited to hear that outraged cry of ‘scrooge’ from the Westminster galleries. It is frightening that Osborne lacks the political power to impose effective austerity this year beyond trimming a few child tax credits. This will barely dent the size of the deficit. The act of kicking the can down the road is an indication of powerlessness in the face of economic oblivion .
The unavoidable negotiation of coalition government was written into the words that Osborne spoke. Tory backbenchers want decisive cuts and lower taxes and this is something that the chancellor would love to deliver. He is however beholden to Liberal democrats who want to see a softer approach on cuts with a higher burden of tax rises placed on the rich. The chancellors’ continual compromise enhances the craving for a majority government, that can take decisive action. Until then the Chancellor’s fiscal golden rules are covered by the red ink of increasing debt.
Since 2010 when the nation gave this government a mandate of fixing public finances the national debt has risen from 909 000 000 000 (909 billion) to 1 101 000 000 000 (1.1 trillion). It is increasing at a rate of 98 billion for this year. In 2010, when labour left office the debt was increasing by 150 billion per year. There is a long way to go before we can begin to pay back our debts.
Where does the further action come from? Assuming that the government maintains its 80% cuts to 20% tax increase approach to balancing the books the government would need to cut all government departments by an aggregate of 17%. This would see the educational budget slashed by 15 billion, the health budget cut 35 billion and police and crime budget cut by almost 6 billion with further cuts in other departments. In effect such measures would see the UK backsliding against European competitors and a generation lost in joblessness (already a concern) living in the midst of 3rd world standard of services.
The first barrier for the chancellor is a cultural resistance. People bewail cuts for various personal or ideological reasons. Families are living on the bread line in fearful grips of poverty . Alternatively others are stuck in an outdated Labour culture of ‘entitlement’ with limited conceptual recognition of the economic precipice that the nation confronts. This ignorance and weakness of spirit is a poverty in itself and it perpetuates through generations if nothing is done through education and cultural revitalisation.
Social security is a massive 1/3 of total government spending. It is 10 times our annual transport bill, 8 times the security bill (policing ect) and double the NHS bill. From this perspective it is the predominant department that can be cut to save the British economy. It must be done with sensitivity and care to protect deserving cases and vulnerable but ruthlessly dispensing with the entitlement culture and the savvy individuals that are organising their lives to increase their own state dependence.
Today I saw an expensive jacket far beyond my price range. Affixed there was a label ‘blown your student loan-10% off,’ Until our leaders and government really expose the UK to the medicine we deserve (living within our means) I’m sure that jackets will continue to fly off the shelves, debts or no debts.