Spending cuts: A new coalition against bad economics
Tomorrow the Government will announce unprecedented cuts in public spending – deeper than any of us can remember. They will bite deep into our social fabric – and hit some of the poorest and most vulnerable members of our society.
They want us to believe that they have no choice and that this is economic necessity. Yet economic experts across the spectrum warn us that the cuts are too deep and too rapid. The warnings come from the White House, the US Treasury department, Nobel prize winners like Paul Krugman and Joseph Stiglitz, key members of the Bank of England monetary policy committee, the chief economics commentator on the Financial Times, and yes, even the Mayor of London.
At worst the cuts will plunge us back into recession. And at best they will condemn us to lost years of high unemployment and growth so weak that the deficit may well stay high.
This is not economic necessity, but a political choice. Bad economics is serving a political project that has never been put to the British people at an election.
In Westminster today, we’re bringing together a huge range of people who say that ministers must think again. It involves people whose jobs and livelihoods are directly threatened, from those who depend on quality public services, and from those in the private sector whose jobs are as vulnerable to the cuts as anyone working for a local council.
Above all, we’re starting to hear a new and much broader coalition than that which makes up the Government. A coalition of the concerned, a gathering of those who say that these cuts offend our deep British sense of fairness. Not everyone in this coalition will agree about everything. There may be different priorities, different emphases – but certainly all involved fear for our country’s future if the deep, rapid cuts go ahead.
However you tweak or spin such massive cuts they will inevitably hit the poor and those on middle incomes the hardest. Those at the top who can easily afford to plug any gaps will hardly notice them.
The truth is that there are alternatives. At every point in the development of its policies, the Government had choices.
The Government deliberately chose to meet 80% of its target by spending cuts, and not by tax. And that means making Britain a more unequal, more squalid and nastier country, as a deliberate policy.
Instead we should back fair taxes – because those who did best from the boom should help pay for the bust they created. Whether it’s a Robin Hood Tax on the banks, a crackdown on the £25 billion of tax avoidance by the City and the super rich, or measures to close the corporate tax gap, there are positive choices that a Government committed to fairness could make.
Ministers deliberately chose a timetable for deficit reduction that is so tight they probably won’t meet it. Because the great myth in this debate is the more that you cut, the quicker you reduce the deficit.
The biggest contribution to reducing the deficit in any conceivable plan comes from economic growth. It’s a hard-working country that can generate the tax that can fill the deficit gap, that can create the jobs that a lost generation of young people need, and that can meet the challenges that we face as a society – from moving to a low-carbon economy to eliminating child poverty.
What ministers plan is not inevitable. It’s their political choice and it’s our democratic duty to wage the strongest political campaign of our lifetimes for a change of course. And it starts today.