Too far too fast? We don’t need cuts at all

More cuts make everything better
Cartoon by the excellent @dochackenbush

A little over a year ago I was out on a protest against the welfare reform bill. I was doing one of several interviews of that day, explaining exactly how the welfare reform bill was going to cause serious harm to a great deal of people.

“But you do accept that we need cuts?” said the interviewer.

“No.”

“What…?”

The interviewer was lost for words. Of course we need cuts. We have massive debt! There’s no money left!

I said something about the debt being caused by banks and about corporate tax avoidance but I wasn’t prepared for the question and my answer was not convincing enough. The interviewer had clearly decided I was mad and he moved on.

A year later, as then, the opposition from Labour to the Tory / LibDem austerity appears to be a simple statement that we do need cuts, and lots of them, but that the government are cutting too far and too fast. The Labour alternative is simply to cut a little less and to take longer to do it so as not to dump it all on the people at once. I think they are wrong.

So how can I justify that? As Liam Byrne said in his famous note to his successor at the Treasury in 2010, “There’s no money left.” The national debt is at £1.15 trillion. That’s £1,146,732,208,608 right this instant as I write. The deficit – the difference between the UK’s income and expenses – is running at well over ten billion pounds per month. That is, we borrowed an extra £13bn in January. The government have been making cuts, desperately slashing expenditure on public services, welfare and the military, and yet the debt continues to rocket upwards. Even the deficit is still growing, despite what the prime minister claims. Andrew Dilnot of the UK Statistics Authority had to point out to the prime minister that our debt has risen from £811bn in 2010 when the coalition took office to £1.1tn at the end of last year.

Why then, if cuts are being made, is our debt still going up? There are several answers to this.

  • We are in recession and income from tax is falling because money isn’t being spent to tax.
  • Cutting expenditure causes a further shrinking of the economy and a drop in tax income. The Office for Budget Responsibility says that in 2011-12 austerity reduced GDP by around 1.4%.
  • Cutting costs money. Cutting services means that we simply have to spend elsewhere to undo the damage of those cuts. For example, the cuts to care at home and the Independent Living Fund results in people being forced to move into care homes which easily costs ten times as much. Ditto for the bedroom tax, which sends disabled people into care homes and makes whole families homeless who then get put up in a “bed and breakfast” (with no breakfast) at many times the cost.
  • The government aren’t actually spending less despite cutting spending on services. Among other things they are spending money saved by those cuts on administration of welfare reform in more complex testing of benefits and in administration of outsourcing most NHS services. (I prefer to call it privatisation but technically it is outsourcing even if the result either way is a private hospital.)

Cutting doesn’t work, and “cutting” the way the government are doing it isn’t cutting at all, it’s moving money around into administration of private companies to run public services and then claiming that actually more is being invested in the NHS and more benefits money is available for “the most vulnerable” and “those who need it most”.

Assuming that we accept the current growth-obsessed financial system at all then these are the solutions to recession that we need to aim for:

  • Government must borrow more to smooth over the deficit until the economy picks up and tax income rises again, so that our income matches our outgoings.
  • We need to make tax avoidance illegal and recruit more staff at HMRC to collect those taxes. Closing the loopholes and clamping down on the tax gap would raise tens of billions of pounds.
  • We need to invest in doctors, nurses and facilities for the NHS and in care for sick and disabled people, thus creating jobs and providing for our needs at the same time.
  • We need to build social housing, creating jobs in the building industry while simultaneously bringing down rents and reducing the housing benefit bill.
  • We need to bring welfare benefits back above poverty levels, which not only provides for those who need it most, the mark of a civilised society, but would also put money back into the economy when spent. For a really radical solution we could consider some form of Basic Income.

Doing all of the above would create jobs and reduce expenses elsewhere, and result in money being spent by the people and going back into the economy rather than disappearing off as a banker’s bonus sitting in an offshore account.

Author: Latentexistence

The world is broken and I can't fix it because I am broken. I can, however, rant about it all and this is where I do that when I can get my thoughts together. Most of the time you'll find my words on Twitter rather than here though. I sometimes write for Where's The Benefit too.

5 thoughts on “Too far too fast? We don’t need cuts at all”

  1. If you listen to last week’s addition of ‘any questions’ on Radio 4, one speaker, I couldn’t tell who, detailed exactly how the government could generate some thousand billion pounds; I was astounded. Being that this is the case, there is absolutely NO need to cut at all!!

  2. there are many reports that show nothing was as bad as the government said. And yes they slide over any blame that can be laid on banking world.
    When making cuts to the arts there was clear proof offerred up that such funding generates more money in long run than paid in.

  3. “Assuming that we accept the current growth-obsessed financial system at all…”

    And if we don’t accept that perpetual ‘economic growth’ is possible, and that, unlike the last great dpression, we can’t ‘buy’ our way out of it by burning (no-longer plentiful and cheap) fossil fuels in great quantities?

    What then?

    What if our civilisation is at or near its peak, and from now on it’s in decline (punctuated by a few bumps)?

    What then?

    And what if the oligarchy has figured this out and has decided to funnel as much of the planet’s and economy’s resources into their own pockets as quickly as possible as a response?

    What then?

    I think it’s time to take from the rich and give to the poor.

    Time to redistribute wealth and for us to learn to tread lightly on the earth.

  4. I think you need to give cutting Cameron some lessons. I am not joking either! What this country needs is a realistic, new political party that fights for, and not against its own people. I think in this present fat cat society you would get a lot of support for a Robin Hood type party. It is about time we all got together and really fought back.
    You make a lot of sense and put it across in a way that is easy to understand. I can never figure out why the government has to make everything sound so complicated.
    Closing the tax loopholes as you stated, stopping ludicrous salaries and bonuses and sharing the wealth more fairly would make for a far more equal society. Why not also change the income tax banding? There is a massive difference between 32K and 150K so therefore why not reallocate the tax bandings? Surely it would make more sense to have a tax free allowance for those earning up to 15K, 15, 001K to 35K paying a new basic rate of 10%, 35, 001K to 55K paying 20%, 55, 001K to 75K paying a new rate of 30%, 75, 001K to 100K paying 40%, 100, 001K to 150K paying 50% and those earning 150, 001K + pay 60%. This would help to distribute the wealth more evenly. Have a ‘watchdog’ to regulate the energy companies and put a stop to these ridiculous bank charges. Banks should have to give you say 3 days notice to get your account back in credit before imposing REASONABLE set charges. Alternatively, we could all pay a monthly fee to have a service where your bills are seperated from your disposable income therefore negating the need for the vicous cycle of bank charges that the less affluent can often find themselves in.
    Everyone in society has a right to be treated fairly and without discrimination. Many people have fought long and hard to create the equality that existed until this non – elected joke of a government ‘fell’ into power and now all their hard work is unravelling fast. We cannot let this continue, the present government is condemning us to a life of injustice and poverty not seen in this country for decades.
    We also need to take control of immigration. Apply the same laws that Australia for example has. If there is a lack of a needed profession in the contry then people can apply to work here. They must show that they have ways of supporting their families which will not put an unnecessary burden onto our benefit system. But we must not forget that there are millions of young people out of work in this country. Many not being able to afford to go on to further education. This is where a formal level of education and vocational training becomes vital. Our young people shouod not be able to leave school without a certain standard of education and life skills being achieved. This would also put paid to the idiotic behaviour of some young people if the only way to get out of school is to pass the set standards. The young people that are insistent on getting into trouble should be sent to boot camp style operations instead of prison. The government needs to take control and responsibility for todays society and all its problems. It has changed due to the numerous ludicrous and ill-considered policies that they have developed. Parents cannot guide their children correctly when they are being swayed by outside influences in todays society. These changes to policies designed to help parents guide young people to become responsible, members of society will in turn produce ambitious adults willing to create and grow businesses or work hard in paid employment. Creating a fair, just and equal society with better distributed wealth will lead to a happier and more prosperous environment in which we can all live and care for our neighbours.

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