Quite a lots happened this year, in fact its all gone in a flash really. Nothing earth shattering but enough to keep me fully occupied until now. Mostly my time has been taken up with music and not much else. Two trips to France that were quite enjoyable and a few memorable moments otherwise. My life is fairly predictable in most ways though, and compared to a lot of folks these days its not to stressful, but having a limited income means that you are forced back on to your own resources much more as there is a lot that you simply cannot do. Most of my socializing revolves around playing gigs and the pub.
Away from that I don ‘t get out much really and spend far to much time on the internet which is a marvelous way to waste time. Now that I have no real interest in IT & tech (I haven’t had any paid work in months) I do feel a bit at a loss. This last month I seem to have fallen in to a mild depression and have not been very productive, though I have been keeping up a routine of practicing to keep my technique together and hopefully improving.
It is an incidental sentence, but it brought me up short. By 2018, general government consumption will be proportionally no larger than it was in 1948. So declared the Office for Budget Responsibility in its report accompanying the autumn statement. The work of three generations in building the sinews of a state that support systems of health, transport, education, environment, policing, science and the rest is to be summarily withdrawn over the next five years. It is a landmark moment in our national life.
Next year the coalition – deputy prime minister Nick Clegg supporting Cameron and Osborne – is aiming to legislate that the reduction of the deficit on this scale and speed should be a statutory obligation. Stunningly – apart from some allegedly effective new measures against tax avoidance, and asking non-residents to pay capital-gains tax on the sale of their homes – all of the work is to be done by cutting spending, by a cumulative £75bn in ways yet to be specified.
The IMF, after assessing the experience of 107 countries between 1980 and 2012, recommends that, after a credit-crunch deficit, there should be a balance between tax increases and spending reductions. In Osborne-land over the next five years more than 95% is to come from spending cuts – a global first in self-harm.
I worried in my column last week that the principal risk of the recovery – induced by Osborne actually introducing measures contrary to those he is supposed to believe in – was that his apparent economic success would seduce him into actively damaging prescriptions. So it has come to pass. The OBR shares my view that all we are witnessing is a cyclical snapback of the economy driven by a recovery of demand. This should not be the excuse to shrug off the calamity of irrational total austerity, and hack away at the state with abandon. But sure enough that is what is now promised. It is a deliberate challenge to the Labour party, but importantly also to the Liberal Democrats. I am not sure that, once the enormity of what is proposed is grasped by his party, Clegg will be able to persuade it to sign up to such a dark vision. He had to take the coalition agreement to a special conference of party members before he could formally agree to it. Already key figures aware of what is proposed, I’m led to believe, feel the whole party, as in May 2010, must be involved in another decision of parallel importance. I don’t think he can win any such vote. And what future would there be for the coalition – or indeed him – if it did come to that? Osborne’s calculation is that he and his party are on the right side of the argument. A jihad against government, backed by a rampant centre-right press, is capturing the popular mood. For alongside the proposal to create a 1948-scale state is another highly toxic proposal, at least for any Lib Dem worth their salt: to introduce a cap of just over £100bn on welfare spending, excluding pensions and the jobseeker’s allowance. Any last element of Beveridgean underpinning to the British approach of supporting the least well-off is to be removed. All there will be is a limited pot into which the needs of Britain’s disadvantaged will be shoe-horned. No Lib Dem can support this, surely.
The story is that this is all in support of “hard-working” people, as the Treasury declares on its webpage – bizarrely reducing a great state institution into a mouthpiece of Tory central office. The assumption is that the public and social institutions built up over the last 70 years are unnecessary and held in the same contempt by “hard-working” people as a highly ideological Tory party. It is a bet that only politicians insulated from the reality across Britain could make.
Some of the intense pressures on government departments are already surfacing. Leaked papers from the Department for Business show its cumulative spending cuts are at least £1.6bn, with more unspecified for 2018/19. Two proposals are privately under active consideration: one is to turn £350m of grants to students from less well-off households into loans, which I doubt will be cheered by their “hard-working” parents. The other is to cut the science budget. Indeed any ambition to lift research and development spending from its current 1.8% of GDP to the 3% benchmark spent by the world’s best can be abandoned. We are to stay in the second or even third division.
It will be the same across the board. From flood defences to class sizes, from the capabilities of our regulators to the effectiveness of our police, from assistance to the elderly or the scale of our performing arts – everything is under threat. And this is unrelieved by any attempt to look for tax revenue to mitigate the impact, as every other country does and is advised to do. Instead, more asset disposals are proposed. The east coast mainline, generating £209m of surplus on £700m turnover, will be sold despite its fabulous returns to the taxpayer. The same will take place with EuroStar. To give up such great financial returns along with the benefits of ownership is daft. The new owners will demand even higher returns on their investment, with only enfeebled regulators left to protect “hard-working” people from being skinned. Ownership matters.
As the IMF argues, the knock-on depressive effects of spending cuts on such a scale is much higher than a more balanced approach involving tax increases, especially when the banking system is still palpably weak. The next 18 months will see a clawback of some of the ground lost over the last six years. There could be a substantive follow-through for the rest of the decade. Instead growth will be much more subdued as the next wave of the jihad kicks in, all to create a 1948-scale state and a giant leap backwards to a 19th-century system of poverty relief. Is this the civilisation, and wider economy, in which “hard working” people want to live and work – and where so much risk is transferred from social institutions to the individual.
The autumn statement is a seminal event. The obligation is on the Labour party, and the Lib Dems, to make the counter case. Great politicians must have vision, and back it with argument and evidence. Miliband and his shadow cabinet must be brave enough to set out what kind of state and social settlement they want, and how best to lift the stagnating productivity of British workers, which is at the root of the “cost-of-living crisis”. Lib Dems need to ask themselves if they really want to be allies in creating the regressive, punitive civilisation Cameron and Osborne have in mind. Back to 1948? Or onward to something smarter, fairer and more generous? It’s decision time.
David Cameron and Ed Miliband will face embarrassment this week when it is announced that MPs will be paid an annual salary of £74,000 from 2015 despite their calls for “cheaper politics”.
The independent parliamentary standards authority, Ipsa, is to reveal its decision to increase salaries by 11% despite a lack of support from the prime minister and the leader of the Labour party. MPs’ salaries will then go up annually in line with national wages.
To pay for the increase, Ipsa is imposing greater pension contributions on MPs and clearing up discrepancies in the expenses system. A Whitehall source said the “across the board” reform would not cost taxpayers more.
Funding for the salary increase would come from cuts to MPs’ pension schemes that go far deeper than published proposals.
Ipsa was given full statutory control of MPs’ pay and pensions in the wake of the 2009 expenses scandal.
Under the rules, parliamentarians do not get a vote on its recommendations but they automatically become law. Ipsa’s decision will prove politically difficult for Cameron and Ed Miliband.Earlier this year the prime minister said the cost of politics should fall under the salary review and the above-inflation rise will be seen in sharp contrast to the 1% rise in public sector pay packets.
Miliband has said he will not accept a pay rise and legislate to reduce MPs’ annual wage rises, which would inevitably mean the disbandment of Ipsa as an independent body.
Only the deputy prime minister Nick Clegg has accepted the independence of the decision.
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