Wednesday, 20 October 2010

George Osborne's Spending Review - death by a thousand cuts

You wouldn’t let George Osborne near a Samaritans’ switchboard. The man doesn’t do caring. There was no “I feel your grief” from the Chancellor as he unveiled nearly 500,000 job cuts in his Spending Review today. The pace he delivered his killer-blows bordered on the glib.
His opposite number Alan Johnson struck the more appropriate tone even though the massive deficit Osborne attacked was of New Labour’s making and its policy only differs on the timing and not the extent of the cuts.
It will be days, maybe months, before the full impact of Osborne’s review becomes clear. Some things though are already apparent. There is little to promote growth in the UK economy, which will be necessary if the private sector is to create enough jobs to absorb those being shed in the public domain.
It is also plain that despite Coalition claims to the contrary the poor – in the shape of those receiving welfare benefits - will be clobbered disproportionately compared to those higher up the economic ladder.
However, much else is uncertain and I wouldn’t trust any number-cruncher who is didactic about the consequences of the review after just a few hours’ analysis.
Run-of-the-mill Budgets can take a couple of days for the small print to be assessed. First economists do their sums in the light of the doorstep of official notices that back the Budget Speech. Then the Chancellor of the day expands/corrects what he meant to say. Meanwhile the media revises its reaction by the time the Sunday papers come round.
The pain contained in Osborne’s review will emerge even more slowly because local government is shedding much of the blood.
Then there is the law of unintended consequences. Likely at least one major issue will have to be re-thought. This is an almost cast-iron certainty given that ministers seemed to be horse trading over the cuts right up to the 11th hour. Hasty legislation often turns out to be bad legislation.


  1. Yes GC, says Jaffa. All is doom and gloom. Also do not believe in this miraculous 4 years that the chancellor is offering up to us as the time it will take to turn things round. I would pay more attention to the Bank of England's Mervyn King, who suggested that we are in for a very 'sober' coming decade. 7 years of 'plenty' followed by 7 'lean' years? It is far more serious than that.

  2. The Tory goal is to show by election-time that the UK is on the road to recovery and therefore deserves to go it alone as the majority party. GC

  3. Tell me what the alternative is to the cuts? Increase taxation? This may save those poor unfortunates in the short term but will depress the productive sector's recovery more. Look at what happened in Canada in the 90's. PM Martin cut and cut. There was pain for some but the deficit was erased and growth allowed the social programmes to be restored.
    Capital spending to improve our infrastructure will be helpful as will the building of more housing, These should help to increase employment and soak up some of those made redundant.
    I believe that the radical measures coming through now will help to maintain a almost permanent Tory Party in power for decades to come. The Budget was a political one as well as attempting to achieve a deficit reduction. Their "client state" shrinking and their past policies being seen to be cynical exercises in maintaining power, the Labour party will suirely fail to recover.

  4. Here is not the place to examine at length the differences between the Canadian economy in the 1990s and today's Britain. Paul Martin had a much smaller deficit to slash; a large working majority in government; a long period of public consultation; a federal political system; and a powerful neighbour on his doorstep.
    Let's face it what the Tories propose is unprecedented; if it works they'll deserve their time in office. GC


What do you think? GC