Wednesday, 20 October 2010
The Demolition Job
It is amazing how uncritically craven the right wing press is in the face of today’s UK Comprehensive Spending Review – A concerted ideological attack on the poor and on women. Can you imagine the hysterical headlines about “Betraying Our Boys!” If Labour had emasculated the defence Budget the way the Lib Cons have? A gaffe by Chief Secretary to the Treasury, Danny Alexander has revealed that half a million job losses are set to emerge in the upcoming Spending Review - a Government strategy to cut the deficit released by George Osborne today.
The coalition's austerity drive comes despite huge waves of protest across the country from working class postmen, nurses and teachers who presume their jobs are on the line. However, despite this, Chancellor, George, formerly known as Gideon Osborne will outline the 'hard road' ahead as the Government takes on one of the biggest spending cuts in the Western World. The scale of the cuts dwarfs Britain's two most recent austerity drives, after a 1976 IMF bailout and in the 1980s, under the leadership of then Prime Minister Margaret Thatcher.
Alan Johnson MP, Labour’s Shadow Chancellor, has criticised the coalition’s Comprehensive Spending Review as a huge gamble from a government with no plan for growth and jobs.
Alan Johnson MP,Shadow Chancellor
Alan Johnson said:
“Today is the day that an abstract debate about spreadsheets and numbers turns into stark reality for people’s jobs and services. Their pensions, their prospects, their homes and their families. It is our firm belief that the rush to cut the deficit endangers the recovery and reduces the prospects for employment in the short term, and prosperity in the longer term.
“We believe we can and should sustain a more gradual reduction. Securing growth. I don’t believe that the Chancellor or the Prime Minster sufficiently understand the worries and concerns of families up and down the country. And I think those worries will have multiplied as a result of the spending review statement today.”
The full text of Alan Johnson’s speech follows:
Mr Speaker, members opposite are cheering the deepest cuts in public expenditure that have taken place in living memory. Today is the day that an abstract debate about spreadsheets and numbers turns into stark reality for people’s jobs and services.
Their pensions, their prospects. Their homes and their families.
The day that the statistics which were sitting so comfortably in the lap of the Chief Secretary yesterday, become uncomfortable reality for hundreds of thousands of families. The deficit deceivers opposite have peddled a series of myths to the British public.
The most incredible is that the biggest global economic crisis since the great depression is the fault of the previous government.
Perhaps the Chancellor will confirm three facts.
Fact one, when the global crisis hit the UK had the second lowest debt of any G7 country.
Fact two, that the last government inherited a debt interest level of 10p in every pound of tax received. And that even after a world recession, bequeathed a figure 15% lower.
Fact three, that the interest rates the UK pays on its debt have been falling since the beginning of the year.
The last CSR was in 2007, when the Chancellor was at this despatch box complaining not that we were spending too much, but that we were spending too little. He complained that we were slowing the growth in health and education expenditure. Indeed his party supported every penny of our spending plans until well after the collapse of Lehman Brothers in America set off a disastrous chain reaction around the world.
The Chancellor described his Emergency Budget in June as unavoidable and fair. It was actually unfair, as the IFS pointed out in a devastating critique within 48 hours. And it was also avoidable.
The deficit has to be paid down. But today’s reckless gamble with people’s livelihoods runs the risk of stifling the fragile recovery. The ridiculous analogy of credit card debt insults the intelligence of the British public.
If countries around the world hadn’t run up debts to sustain their economies people would not have lost their credit cards, they’d have lost their houses, their savings and their jobs. The Liberal Democrats know this. Because it’s what they argued when seeking the support of the electorate. Before the Deputy Prime Minister discovered Greece, in the period between the ballot boxes closing and the door of his ministerial car opening.
They, like us, argued that in the context of reducing the deficit, speed kills. The Chancellor repeats a list of organisations that support his swift cuts. Curiously he fails to mention the opposing views of the other nations that make up the UK – Scotland, Wales, and Northern Ireland. Perhaps that’s what he means when he describes himself as a one nation Tory.
And here’s another supportive quote.
"The measures we have taken have been commended by international bodies such as the European Central Bank, the European Commission, the IMF and the OECD. They have also won the approval of the international markets."
That was the Irish Minister of Finance last December, telling the Irish Parliament that his austerity plan was working, just four months before they slid back into recession. After months of overblown rhetoric from the Chancellor, the concerns of those watching his announcement today will be about:
• staying in work,
• staying in their homes
• and staying safe on our streets.
We are told that the expected job losses from this spending review amount to 490,000, in the public sector alone. And a Price Waterhouse Coopers report last week told us that a million jobs are at stake - because the impact on the private sector will be just as severe. Isn’t it the case that, at the same time as they throw people out of work, the government is reducing the support to help people return to the workplace?
They’ve already cancelled the Future Jobs Fund. Now, whilst the Work and Pensions Secretary tells us that the system must ensure that people are better off in work, the changes to Working Tax Credit announced today will have the opposite effect.
Reducing childcare support for working parents adds to the problem. This isn’t a strategy for jobs. It’s a recipe for unemployment.
On housing the Chancellor has announced the retreat of central government from any role in building new affordable homes. So I ask the Chancellor can he tell the House, how many jobs will be lost in the construction sectors as a result of his decision to all but end capital funding for housebuilding?
And on crime which has fallen dramatically over the last 13 years - how on earth can the government think they are in tune with people’s priorities when a substantial cut in the Home Office budget is bound to result in police officers being taken off the streets?
Spending does have to be reduced. But the frontline services on which people rely must be protected. The public do not want to see teacher numbers fall, fewer police officers on their streets, or hospitals short-staffed. So we support moves to protect schools and the NHS.
However, it seems clear that the Deputy Prime Minister has failed to meet his pledge that the pupil premium would not be funded from within the schools budget – a clear case of robbing Michael to pay Liam.
On the NHS, the small re al terms increase will be more than swallowed by the waste of £2 to £3bn on a top down reorganisation they promised in the election not to undertake.
And while we’re on the NHS, will the baseline for the Department of Health resource spending be reflected in the actual 2010/11 budget? Mr Speaker, without growth the job of getting the deficit down becomes impossible. A rising dole queue means a bigger welfare bill. And less tax coming in.
A cost of at least half a billion pounds for every 100,000 people thrown out of work by the government's approach. So to get the deficit down the starting point must be jobs, jobs, jobs. And that is the core of the difference between us and the government.
The Ministry of Justice tells us that they will see 14,000 staff go. Does he agree with the department’s assessment that the vast majority of those, 11,000, will be from the frontline?
Can he confirm that £230m of taxpayers funds have been earmarked for redundancy costs in that department alone? What is the total scale of redundancies expected across the public sector? What will the total redundancy bill be?
Thanks to the Chief Secretary we know that the Treasury has provided him with estimates. He should share them with the House. I welcome the Chancellor’s decision to revisit his plans for capital spending and support for science. The Business Secretary has rightly fought to partially protect the science budget, and to put more money into regional development.
It’s true that he had to switch overnight from opposing any graduate contribution to their education to support for unlimited fees, but such contortions are nothing new for the Rt Hon Member and his colleagues.
But given the warning signs in the UK and global economies, we believe the case for going further on infrastructure is clear.
The banks that benefit from the ending of the bonus tax, and the cut in Corporation Tax, can well afford to take more of the strain. This additional would mean that vital infrastructure projects could go ahead – keeping people in work now, and creating the environment for growth in the years to come. And we call again on the government to change their perverse decision on Sheffield Forgemasters.
It is right that the government looks for savings from the welfare bill. Where changes are fair, proportionate and encourage work we will support them as we have shown in respect of incapacity benefit, a reformed gateway for Disability Living Allowance and on up ratings. We will look at the other changes announced today.
But there is nothing fair about Child Benefit changes that leave a single earner on £45,000 losing thousands of pounds, while a family on £80,000 gets to keep every penny.
As things stand the government is looking for a bigger contribution to reducing the deficit to come from children than from the banks. That can’t be right.
Will the Chancellor confirm that his change to Child Benefit equates to a 6p increase in income tax for a single earner family on £45,000? Perhaps because of the consternation caused on this issue he has dropped plans to remove child Benefit for older children. Can he rule this our completely, or is it still under consideration?
And, while we accept that Housing Benefit should be reformed, how can anyone on the benches opposite suggest that removing 10% of the rent for a family’s home from someone who has been looking for work for 12 months is fair?
Can the Chancellor confirm that the poorest will bear a greater burden than the richest – with the middle squeezed even further? And that women are shouldering three quarters of the cuts? Does he still claim that these measures are progressive and fair?
Mr Speaker. There is an alternative to this slash and burn approach. This Spending Review is not about economic necessity, it’s about political choice. The Chancellor argues that Labour would have done nothing about the deficit. But he goes on to say that his cuts are no worse than ours. He can’t have it both ways. But he’s wrong on both counts.
The government is removing almost twice as much from departmental budgets as we think is wise, before we consider the further welfare reforms he has announced today. It is our firm belief that the rush to cut the deficit endangers the recovery and reduces the prospects for employment in the short term, and prosperity in the longer term. We believe we can and should sustain a more gradual reduction. Securing growth.
I don’t believe that the Chancellor or the Prime Minster sufficiently understand the worries and concerns of families up and down the country. And I think those worries will have multiplied as a result of the spending review statement today.