Why all the cuts may not happen
After five months of waiting, today we have the Comprehensive Spending Review announced by the Chancellor of the Exchequer George Osborne. The headline figure is £81 billion of cuts in order to eliminate the deficit by 2015. You can see the details here.
My own position is that the Coalition Government is cutting too much too soon with insufficient consideration of fairness and an inadequate take from taxation. But the die is now cast.
Today what I want to record – and we may revisit this posting in years to come – is these cuts are plans and the full scale of the planned cuts may not be achieved. Why do I say this?
- The UK economy is terribly fragile and expectations that the private sector will take up the slack released by public expenditure cuts could prove to be overly optimistic. Growth may stall and unemployment – especially long-term unemployment – may rise to politically unacceptable levels. In these circumstances, the Government may choose to suspend, or at least slow down, some of the cuts.
- So far, the British public was been quiescent. Not for us the rioting of the Greeks or the French. The evidence of polls suggests that much of the British public has been persuaded that the cuts are necessary and should be supported in general. But the mood may change dramatically when it is your hospital or your job or your benefit. Something – perhaps surprising and unpredictable – could spark off social unrest on a scale of the poll tax riots and force the Government to back down somewhat.
- It may prove impossible to achieve some of the cuts in practice, either because the efficiency savings which were assumed to be possible cannot be delivered, or because the practical obstacles to change are greater than anticipated, or because the costs of the changes wipe out a significant proportion of the expected savings.
- As we near the next General Election, MPs in the parties making up the Coalition Government will fear for their seats and start to think more pragmatically. Maybe they will judge that the electorate has suffered enough and it’s time to lighten the mood with suspension of some cuts, some extra investment, some lifting (or at least a promise of easing) of taxes.
Of course, by then the public sector will have been savaged and millions of lives devastated, while institutions will have disappeared and vital skills lost. Watch this space …