Austerity is over, claims Treasury minister despite Osborne cuts
Lord O’Neill attacked as peers warn public sector faces ‘severe pay restraints’ for years to come
THE age of austerity is over, a Treasury minister has declared, despite impending cuts to government departments of up to 40 per cent.
Lord O’Neill, a former Goldman Sachs chief economist, said that from an “overall fiscal perspective” austerity has come to an end. His comments in the House of Lords drew criticism from other peers, who warned that public sector workers face years of “severe pay restraint” over the next five years.
Lord O’Neill, who joined the Government as Commercial Secretary to the Treasury after May’s general election, said there would be public spending cuts of £37 billion over the course of the parliament. He told peers at the start of a debate on the Budget: “There is still a view in some quarters that we are still in an age of austerity. But from an overall fiscal perspective, with strong employment, and recently above-trend growth, this is surely no longer the case.”
He added: “As a point of principle no year will see overall cuts as deep as 2011-12 and 2012-13.
“As a second point of principle we will be making our spending cuts in a fair and balanced way.”
Baroness Kramer, the Liberal Democrat former minister who attacked many aspects of the Budget, asked: “What of public sector workers – the nurses, teachers and police who carried on despite severe pay constraints through the recession?
“How can they possibly cope with severe pay restraint for another Parliament? There is still a view in some quarters that we are still in an age of austerity. When I hear you say this is not an age of austerity, are you saying it to them?”
George Osborne, the Chancellor, said earlier this week that Britain’s economic recovery will be put at risk unless the Government continues to deal with the national debt. He said: “Over the last parliament the Government delivered the reductions in public spending that it committed to and more than halved the budget deficit it inherited. We honoured our promise to increase spending in vital public services such as the NHS and schools, and our reforms improved the quality of public service delivery.
“Employment is back to near record levels, crime is falling and public satisfaction with the NHS is rising year on year. More children than ever are now in a good or outstanding school. But we are still borrowing £1 for every £10 we spend and national debt remains at its highest level for 50 years. If we do not deal with this debt, we run risks with our economic security.”
Mr Osborne said that by the end of next year, the Government will have saved £98billion by cutting the public sector. However, he said it was “time the performance and public satisfaction in many public services continued to improve”.
Mr Osborne used his Budget to freeze public sector pay rises at 1 per cent for four years. The move has infuriated unions, which have threatened industrial action.