Cuts debate takes shape
By Peter Wozniak
Arguments for and against the spending cuts are intensifying in today’s newspapers, as the comprehensive spending review looms.
Lord Wolfson, a Conservative peer and the chief executive of Next, has drafted a letter signed by 35 business leaders urging the chancellor to press ahead with an aggressive programme of spending cuts.
Further detailing his arguments in an article in the Telegraph, Lord Wolfson claimed that the cuts will not have the disastrous impact that some have suggested.
“None of us want to make light of the challenges ahead, but £20 billion is still less than 1.5 per cent of UK GDP, less than we would expect the economy to grow by in a normal year,” he claimed.
The businessman suggested a private sector recovery will “easily” soak up the job losses in the public sector, adding: “The redeployment of people from the public to the private sector will mitigate the economic impact.
“In fact, if people move to more productive jobs, it could boost economic performance.
“There are still 500,000 vacancies in the UK and there are a total of 30 million jobs in Britain.
“This suggests that the economy is up to the task of absorbing the expected 100,000 annual job losses from the public sector.”
At the other end of the debate, Mark Serwokta, the head of the Public and Commercial Services union (PCS), has attacked the government’s cuts programme as over-zealous – and completely unnecessary.
“There does not need to be a single penny cut from public services – or a single job lost.
Our situation has nothing to do with public spending,” he wrote in an article in the Guardian newspaper.
“The collapse in the finance sector, due to greed, caused a sharp recession and higher unemployment, tax revenues shrank dramatically, and the welfare bill increased.”
Mr Serwotka claimed that George Osborne’s plans were entirely ideological rather than economically grounded and stated the deficit could be recouped simply from curbing tax evasion and avoidance, as well as from the nationalised banks.
Mocking the coalition’s commitment to progressive politics, he added: “It’s not fair to end the universal provision of child benefit, it’s not fair to transfer the cost of university education on to individuals, and it’s not fair to hike rail fares.
“If the Tories want to see a ‘big society’ in action, they won’t have to wait long – it will be protesting on their doorstep on Wednesday evening.”
The two sets of arguments are a precursor to an impending and protracted battle between the government and unions.
Labour has so far adopted a halfway position based on Alistair Darling’s plans to cut the deficit by half in four years, with new shadow chancellor Alan Johnson outlining the opposition approach to the economy in a speech today.
