The Chancellor’s new plans for cuts will push spending on public serviced to a level unseen since 1948.
The last time I think George Osborne spoke and the nation heard what he had to say was September 2013. At the party conference for the Conservatives last year, the theme of his speech was evident.
Don’t forget what a shambles New Labour made of Britain. Ed Miliband is not fit for politics. And it is the Tories who have brought the state of this country back to par, just in time for Baroness Thatcher to notice.
But the most telling and memorable mood he was in was of accomplishment and, with his hindsight, complacency. The final paragraph of his address brought home that accomplishment: Osborne’s Recovery.
We rescued the economy together. We’re going to recover together. And together, we’re going to share in the rewards. For the sun has started to rise above the hill. And the future looks brighter than it did, just a few dark years ago.
But it’s January now. George has sobered up, and travelled to a Sertec factory in Birmingham to deliver a sombre message detailing a future full of hard truths and further storms ahead. He uses metaphor quite often, a bit euphemistically as if we’re in for something we’ll hate, but it’ll work out in the long term. Because we are.
Those “hard truths” mean cuts in spending. £17bn this coming year, £20bn next year and over £25bn further across the two years after will be taken out of the economy should the Conservatives win the next election. What we’re hearing for the first time is that £25bn across the 24 months will be cut, and that half of that money will be taken from working-age benefits.
Osborne stated that if by the end of the next parliament, we are to stop borrowing money and start paying it back (while government spending falls by 2.3% per year) then “you are going to have to find billions of pounds of welfare savings, and I think that is what this country needs to do, personally”.
The Institute for Fiscal Studies analysed Osborne’s autumn statement, and implied most of these figures, but this is the first conformation from the Treasury.
The explicit argument is that The Plan which was pushed for in the 2010 general election must continue. The deficit must be cut. Taxes must not rise. Spending must be reduced.
The implicit message is that the British economy is still not totally stable, and that the next election should not be the moment to return power to people who see the state as a tax collecting, service buying system.
And the public are getting wind of that. Labour have got alarm bells attached now, most probably because of every other major political party has personally and completely turned against them.
Trust in the left has been worn down over the past five years, and it’ll take more than shiny spending policies like wraparound childcare and a price freeze on energy to win the people’s confidence. Responsibility, sensibility and all-round prudence with the public purse have got to be sold, talked about and displayed in policy before 2015 to stop the grudging shift (as recorded in recent polls) to Ukip, and to the notion that cuts are frustrating, expensive, and downright painful… but needed.
Back to the Chancellor, though: to get his message into the right ears, this weekend it was David Cameron who vowed he would keep what he calls a “triple-lock” on pensions. This means having pensions rise steadily, corresponding with inflation, wages, or 2.5% per year, whichever is highest. To be told that the Conservatives will get the most out of your pension for you will surely be favourable with all those influential OAP voters.
And there’s the political move involved: polls published this weekend conducted by the former Conservative vice-chairman Lord Ashcroft told us that 46% of undecided voters say they’re seriously considering the Conservatives or Ukip. This will help the Tories shine a little brighter.
However, those pensions take up half of the entire benefits budget. This means the £12bn of welfare saving I mentioned will, as Osborne has confirmed, be taken from working-age claimants.
After all, he has also insisted that none of that money could come from higher taxes, for that’ll scare wealthy taxpayers away, leaving the people of Britain poorer. I would call the irony delicious, were it not so shameful.
The reason for such austerity, such austerity unprecedented in recent times, such austerity which we’ve experienced for four years and will continue to experience until 2030, is because growth since the economic crash has not nearly been as visible as expected. We have not seen such a prolonged period of fiscal weakness since before even the depression of the 1930s.
And despite spending cuts and further spending cuts, coupled with raised taxes, borrowing is still expected to be at historically high levels of over £100bn this year. Osborne tells us he is trying to get that number lower and lower until it’s zero over the next six years by cutting public spending further and without any tax rise. And let’s be clear, the spending cuts are monumental:
Even without the further cuts in welfare I’ve mentioned, total spending on public services will be 20% less in 2019 than it was in 2010.
The Office For Budget Responsibility has warned Osborne that such cuts on such scale would take spending on public services to a level lower than at any point since at least 1948.
I understand austerity. I support austerity. Anything other than austerity would be reckless. Yet Osborne’s mindset on this issue, the economy, his job, is so short-term that he’s trying to squeeze all the hard times into a one, perhaps two-term parliament. Another decade of curbed spending and better tax policing without cutting the services, help, lifelines, healthcare, police, libraries, housing and pittances of the poorest in our society so brutally might be easier for us all.
Whatever the nation wants, there are no easy solutions. Serious and sensible discussion of balance between austerity, tax and spending should be the stuff of debate and discourse until the next election. Perhaps someone, somewhere will throw up a fix. But I don’t think it’ll be George Osborne.