Contraction, cuts and coalition chutzpah
I responded to an invitation to send a letter about the coalition’s spending review last week by sending this to the London Evening Standard (which, as far as I can discover, didn’t publish it):
George Osborne’s cuts represent a triumph of panic and reactionary ideology over economic literacy. Saving money by reducing the inflated prison population (Ken Clarke’s idea, not Mr Osborne’s) is the one good move in an otherwise thoroughly ill-conceived package. The priority should be jobs and growth: both depend on stimulating demand in the economy, which only government spending can do while the private sector remains prostrated. Instead, Tory policies will actually throw thousands more out of work, perversely reducing instead of stimulating demand, requiring higher spending on unemployment and other benefits and reducing tax revenues, thus increasing the deficit which so irrationally obsesses Messrs Osborne and Cameron. Swingeing cuts in welfare hit the most vulnerable the hardest; housing benefit cuts will cause numerous evictions of families who’ll have nowhere else to go, especially given the cut in affordable house building. My old department, the FCO, takes a 24% cut (mainly because public opinion won’t defend it): will Mr Hague readily accept a 24% or any other reduction in the service it provides to ministers? The greatest threat to our country is not a cyber-attack, nor al-Qaeda, nor climate change, but a Tory-led government determined to slash the welfare state and the public sector while they have a dishonest, class-based pretext for doing what they have always wanted anyway.
20 Oct 2010
Actually, there was one other positive feature of George Osborne’s spending review statement, a dog that didn’t bark in the night: there was no backsliding, so far anyway, on the government’s pledge, inherited from Labour, to continue to increase UK development aid for poverty reduction in developing countries to the UN target, 0.7% of GDP, by 2013. This is a modest enough target but if we hit it on time we shall be the first major western country to do so, joining Denmark, the Netherlands, Norway and Sweden. Owen Barder’s blog post on the subject, saluting the political courage of the coalition leadership in sticking to its guns on maintaining progress towards the aid target while almost everything else apart from bankers’ bonuses is being cut to ribbons, includes an interesting graph showing how UK development aid has generally been increased by Labour governments and cut, sometimes sharply, by Conservative ones. This is one break with tradition to be welcomed without reservation, assuming that the pledge is not blown onto the rocks by emetic barracking from the Daily Mail, the Daily Express and the primitives on the far right of the commentariat and the Conservative Party. Still, we shall have to keep an eye on Tory ministers’ apparent inclination to divert large chunks of UK aid to conflict-related countries such as Afghanistan, Iraq, Yemen, Sudan and Somalia, at the expense of more peaceful and better governed countries whose need for help in poverty reduction may be even greater.
But the overwhelming impact of the Osborne spending review statement has to be negative: not only for the reasons summarised in my abortive letter to the Evening Standard, but also because of the unremittingly party-partisan character of the Chancellor’s statement. Conservative and even LibDem ministers and spokespersons are evidently under instructions never to open their mouths in front of a microphone or a reporter’s notebook without reciting the spurious mantra about the “mess inherited from the Labour government”. It calls for a special chutzpah, especially for a Tory, to seek to blame the Labour government for “reckless over-spending” before the banking crisis and recession, when the Tories in opposition had promised that a future Conservative government would not just match Labour’s public spending levels but actually raise them. It takes unusual audacity to claim that through reckless and profligate spending throughout its time in office Labour had run up and bequeathed to its successors unprecedented levels of public debt, when public debt after Labour had been in office for ten years was 49th highest in the world, lower as a percentage of GDP than, for example, that of Switzerland, the Netherlands, the US, Portugal, France, Canada, Germany, Hungary, Norway, Belgium, Greece and Japan (see more supporting facts and figures here). It requires extraordinary nerve to castigate the Labour government’s rescue, first of the banking system and then of the whole economy, by pumping billions of pounds into both, inevitably incurring massive debts and an enormous budget deficit, when the Tories in opposition opposed both emergency actions at the time but have never explained what preferable alternative they would or could have adopted, nor acknowledged that Gordon Brown’s prompt and determined actions were welcomed, praised and replicated by governments throughout the western world. It’s shameless to seek to discredit Labour’s record for its failure adequately to regulate the financial sector in the period before the crisis when the Conservative opposition at the time had consistently clamoured for more de-regulation, not tighter controls. Hindsight is a fine thing, rewriting history rather less so: the Tories have elevated both to a fine art.
It’s disappointing to see an obviously intelligent and capable Chancellor of the Exchequer in his first major parliamentary performance cynically sacrificing honesty to party advantage in the way George Osborne saw fit to do last week. In doing so he has thrown away any hope of a serious, objective, bipartisan approach to the country’s financial crisis inherited by the coalition, not from the Labour government but from the very bankers who bank-roll the Conservative party and whose interests Conservative governments unfailingly represent. Alan Johnson, Labour’s shadow Chancellor, made all the right points in rebuttal of Osborne’s defamatory accusations. But the grounds of rebuttal are mainly technical and sometimes impossible to condense into a simple pithy reply, while the Tory slanders are a many-headed Hydra compressed into a single mendacious but easily remembered sound-bite. No wonder that Labour’s answers to this deliberately phoney charge-sheet have so far failed to gain any real traction, especially when coalition ministers naturally exploit their ministerial status to get maximum coverage for their multiple fictions in the print and electronic media. There’s no obvious solution to this for Labour except to keep on gamely repeating the facts and figures in rebuttal – and increasingly to go onto the attack by exposing the rank injustice and the recklessness of the coalition’s crazy gamble with ordinary British people’s lives and fortunes. If Labour can establish the reality of its priority for jobs and growth over the government’s irrational but self-serving obsession with the deficit and debt, the public mood may eventually begin to move towards it as the harsh reality of the coalition’s slash-and-burn strategy begins, alas, to hurt.