“By [April] 2012, only 12% of the planned cuts to welfare spending and only 12% of the planned cuts to spending on public services (comprising 34% of the cuts to investment spending and just 6% of the cuts to non-investment spending) are forecast to have been implemented...”
So estimates the Institute for Fiscal Studies, a right-wing thinktank whose former chief Robert Chote now heads the Government’s Office for Budgetary Responsibility.
The scale of the 88% to come startles even the hard-hearted authors. “Over the next few years, the UK currently has the fifth-largest planned reduction in public spending as a share of national income [among relatively well-off countries]. Only Iceland, Greece, Estonia and Ireland are planning larger cuts...
“If the current plans are delivered, spending on public services will (in real terms) be cut for seven years in a row. The UK has never previously cut this measure of spending for more than two years in a row... Over the seven years from April 2010 to March 2017, there would be a cumulative real-terms cut of 16.2%, which is considerably greater than the previous largest cut (8.7%)... from April 1975 to March 1982”.
They can find no figures for any well-off country previously attempting such big and prolonged cuts. “None of these countries has, for the periods for which we have data, cut this measure of public service spending for five consecutive years”.
In previous reports, the IFS, right-wing but free of compulsion to dress things up, has shown that the Government’s “tax and benefit changes are regressive rather than progressive across most of the income distribution”. It has estimated that the median income in the UK will drop by 7% between 2009 and 2012, with child poverty on the rise.
Continued cuts from 2012 to 2017 will mean even worse regression, while bosses’ and bankers’ salaries and bonuses continue to soar.
The report raises no questions about social justice, only about whether the cuts are workable.
The authors are far from sympathy with the anti-cuts movement. They go out of their way to pan even the Labour leaders’ “too far, too fast” criticism of the cuts. Without rapid and deep cuts, they argue, “the interest rate that foreign investors charge the UK government for financing its borrowing would have risen and most likely risen so sharply that a fiscal tightening would in fact have been forced on the UK government”.
Whether that is true is another question. Yet more questionable is whether governments should really be shredding their social provision for fear of each others’ “investors”, or whether on the contrary working classes across the world should be uniting to tackle those “investors”.
Even the IFS blinks, seeing a case now for “a short-term fiscal stimulus package to boost the economy” [i.e. more public spending], albeit public spending which would flow more directly into profits.
“A cut to the main rate of VAT, a reduction in employer National Insurance contributions and a boost to investment spending plans all seem sensible choices”.