Wednesday, October 20, 2010

Welfare state eviscerated

Overall, public spending is being cut by about a fifth in this spending review. Let's have a quick look:

*£7bn additional cuts in welfare spending. That's a huge figure. Total welfare spending including income replacement benefits and social exclusion spending is £60.4bn. If it's coming out of the whole, it's more than 10% cuts. If it's just coming out of income replacement benefits, it's closer to 26% cuts. Judging from the BBC's coverage, it's mainly coming out of income replacement benefits. Either way, it's going to be extremely messy if you're disabled, on the dole, or on low incomes.
*7.1% a year reductions in council spending for four years, which I think is a total of 28.4% cuts - that's your libraries, rubbish collection, street lighting, paving, all the basic quality of life stuff, savaged. Social housing is to be 'reformed', which basically means torn to pieces.
*7.1% cuts a year in the Department of Business Innovation and Skills, which deals with higher education, investment in R&D, consumer protection, trade issues, etc. Over four years, I guess that amounts to 28.4% cuts.
*40% cuts to higher education are included in that figure. This was anticipated by the Browne review, which basically recommended tearing up funding for teaching, while keeping most research funding.
*3.4% cuts in the Department of Education, with 40,000 teaching jobs lost.
*Higher rail fares, which will raise by 3% above the rate of inflation until 2012, presumably to make up for a shortfall in investment. Rail fares in the UK are already among the highest in Europe, especially in London - where the system is going into chaos under Boris Johnson.
*Retirement age to rise to 66, thus saving on pensions in the long-term. The Hutton review, which has already recommended cuts to public sector pensions, is cited in support of this measure - thanks again, New Labour.
*490,000 public sector job losses are expected, and if this government's track record is anything to go by, that's an optimistic assumption.

There are also a whole swathe of cuts coming in environment, justice, the foreign office, and the department for energy and climate change. Apart from everything else, this is not a green budget. Let's also take a quick look at police and defence. The police are going to lose 16% of their budget over the next four years. That's quite shockingly high to my mind, more than I would have expected, and it takes a risk with the police's political support for the administration - which I would have thought they would want to safeguard in a potentially turbulent era. The MoD is going to lose 8% of its budget - way lower than the 20% initially flagged up, probably due as much to US pressure as to pressure from the military brass itself. But it does mean fewer troops, and a delay in the replacement of Trident. For Cameron, this probably means not a break with the 'special relationship', but much more dependence on the US.

Well, that's it. The Tories, of course, have tried to sell this as 'progressive' in that they claim it will affect the rich more than the poor, and are massively overselling a puny bank levy which they claim will raise £2.5bn a year. No one is going to buy the progressive sell, beyond the dippiest of Liberal loyalists. I await a fairly comprehensive trashing of this dubious cover from the Institute of Fiscal Studies or a similar think-tank. The situation could not be clearer: either we stop them or they finish us off.