From the TUC

Two tests for the budget

21 Apr 2009, by Guest in Economics, Labour market

This is some of what I have just said to the annual STUC conference in Perth.

“There are two tests that unions will apply to Wednesday’s Budget – one short-term and the other looking further ahead.

 “Our first test is whether it does everything it can to create and sustain jobs.

 “Beneath the latest unemployment statistics announced tomorrow lies an unfolding human tragedy. Not just the homes repossessed and the families uprooted. Nor just the livelihoods and living standards decimated. But the horizons downgraded, the aspirations diminished.

 “In short – the risk of another generation being lost to the scourge of mass unemployment. So let us remember the catastrophic social costs of the 1980s and 90s recessions, and let us resolve – never, ever, again.

 “You know, there are people on the right who believe the most urgent task facing the Government is not to tackle the tragedy of joblessness, but to cut public debt by taking an axe to public spending. Their argument is straightforward – and it certainly plays well with much of the media.

 “But these slash and burn merchants conveniently forget to tell the full story. The biggest drain imaginable on public finances is mass unemployment. Every person on the dole costs the rest of us £8,100 a year. We have to pay for their benefits and we don’t get the tax that they would pay if working. And that’s before you consider the wider price to be paid – the cost of rising crime, of declining public health, and of leaving communities to fend for themselves.

 “I’m deeply concerned by reports saying the Government believes it can find £15 billion of ‘efficiency’ savings from the public sector. Of course we are in favour of the efficient use of resources and I don’t doubt that there are some sensible changes that can be made – reviewing the PFI programme for example.

 “But the idea that there are £15 billion worth of painless cuts is quite mistaken. To claim this is to play into the hands of the small-state right who lose no opportunity to attack the public sector, its staff and their pensions.

 “The best way of reducing the public sector deficit is by doing everything we can to ensure that the UK economy recovers as quickly and successfully as possible. The more long term damage the recession does to our wealth creation, the harder it will be to recover the taxes now in decline.

 “That is why not just unions, but employer groups too, are calling for subsidies for short-term working. These can help keep skilled workforces together and ensure that businesses to ready to take advantage of the recovery when it comes.

 “Of course governments must over the long-term ensure that they can run sustainable public finances. But if we let the country’s productive base waste away now through a short-term refusal to let the deficit grow, it will be much more painful to get the public finances in order with millions on the dole and whole industrial and service sectors hollowed out.

 “Our second test looks long term. What does the Budget have to say about the kind of society and economy that we want to create out of the recession?

 “Again the union message is clear – we don’t want to go back to business as usual. We don’t want to go back to the idea that the market always knows best and that deregulation is the only game in town.

 “We don’t want to see inequality grow as a new class of super-rich float away from the rest of us – a group who think tax is for the little people. We don’t want to see the fight against poverty or against climate chaos put to one side until the economy is right. 

 “I want to see the Government show the same determination in protecting working people from the worst of the recession as it has in protecting banks from the greedy excesses of their bosses.”