5 years into aus­ter­ity, UK pre­pares for more cuts

Kuwait Times - - BUSINESS -

LON­DON: Af­ter lay­ing off nearly half its staff over the last five years, scal­ing back street clean­ing and re­ly­ing on vol­un­teers to work at some of its li­braries, the Lon­don bor­ough of Lewisham is get­ting ready for what could be much more painful spend­ing cuts. Of­fi­cials in Lewisham’s town hall, like those across the coun­try, know they will have to shoul­der much of fi­nance min­is­ter Ge­orge Os­borne’s re­newed push to fix Bri­tain’s bud­get.

Os­borne is due to an­nounce on Wed­nes­day the de­tails of a new spend­ing squeeze which, ac­cord­ing to In­ter­na­tional Mon­e­tary Fund data, ranks as the most ag­gres­sive aus­ter­ity plan among the world’s rich economies be­tween now and 2020. It is also a gam­ble by Os­borne, a lead­ing con­tender to be the next prime min­is­ter, that vot­ers can stom­ach more cuts.

He re­jects ac­cu­sa­tions that his in­sis­tence on a bud­get sur­plus by the end of the decade is a choice, say­ing Bri­tain needs fis­cal strength to fight off fu­ture shocks to the econ­omy.

As in the first five years of his aus­ter­ity push­which Os­borne orig­i­nally hoped would wipe out the bud­get deficit-he plans to spare Bri­tain’s health ser­vice, schools and for­eign aid bud­get from his new cuts and will in­crease de­fense spend­ing. That means that cuts for un­pro­tected ar­eas of gov­ern­ment, such as lo­cal coun­cils, will be all the deeper.

Kevin Bon­avia, a coun­cil­lor who over­sees Lewisham’s bud­get, said the bor­ough had just agreed to merge com­put­ing teams with an­other one on the other side of Lon­don as it seeks to make more sav­ings in its back-of­fice oper­a­tions and pro­tect ser­vices.

But vot­ers are likely to no­tice the cuts more in the years ahead than they have done so far. Rub­bish bins may no longer be emp­tied weekly. De­liv­ery of cooked meals could be re­placed with help for peo­ple in need to do their own on­line shop­ping. Lewisham will also have to find sav­ings in the way it pro­vides so­cial care for the el­derly and chil­dren, which ac­counts for the lion’s share of its spend­ing.

“We are al­ways try­ing to ra­tio­nal­ize. But we have to do it at pace now, and when you do it at pace, you can make mis­takes,” Bon­avia, a mem­ber of the op­po­si­tion Labour Party, said.

It’s not just La­bor politi­cians who are wor­ried about the lat­est spend­ing squeeze. The Con­ser­va­tive leader of a coun­cil in Ox­ford­shire re­cently wrote a blunt let­ter to Prime Min­is­ter David Cameron to spell out the chal­lenge of fund­ing care for the el­derly and chil­dren af­ter Cameron had com­plained about cuts to front­line ser­vices in the area, where he has a fam­ily home.


Bri­tain’s po­lice de­part­ments and the jus­tice sys­tem, which runs courts, are also likely to bear the brunt of fur­ther cuts. Ben Pri­est­ley, an of­fi­cial with pub­lic sec­tor work­ers’ union Uni­son, said the num­ber of po­lice com­mu­nity sup­port of­fi­cers (PCSOs) — who typ­i­cally work most closely with lo­cal peo­ple but can­not make ar­rests-had been cut by 27 per­cent since 2010 and some re­gional forces might have to lay them all off. “The penny will grad­u­ally drop for the pub­lic,” Priestly said. “We might only see po­lice of­fi­cers when they speed by at 60 miles per hour with their blue lights flash­ing.”

Os­borne ac­knowl­edges that his spend­ing cuts will be painful. But he also says that Bri­tain is learn­ing to do more with less. He points to sta­tis­tics which show crime has fallen by more than a quar­ter since 2010, de­spite a 23 per­cent cut in the in­te­rior min­istry’s bud­get since then, and sur­veys which show stable or ris­ing sat­is­fac­tion with lo­cal ser­vices.

As well as the de­part­men­tal spend­ing cuts that he is due to an­nounce on Wed­nes­day, Os­borne has to tweak his plan for big sav­ings in Bri­tain’s wel­fare bud­get af­ter an orig­i­nal pro­posal to scale back tax cred­its for lower-earn­ing house­holds was re­jected in a rare re­bel­lion by the up­per house of par­lia­ment.


Some econ­o­mists say the scale of the aus­ter­ity plan is too am­bi­tious to achieve in its en­tirety. “We are pretty con­fi­dent that the gov­ern­ment man­ages to get the deficit down but it will be at a some­what slower pace than the gov­ern­ment plans,” said Kathrin Muehlbron­ner, se­nior vice-pres­i­dent of sov­er­eign risk at rat­ings agency Moody’s. A big­ger risk for Os­borne is that vot­ers start to feel the spend­ing cuts more acutely and re­ject his case for them. — Reuters

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