Monday, 30 November 2015

More on the Spending Review

My article in this week’s Cornish Guardian somewhat predictably covers the recent Spending Review. Though I have already covered this on my blog – for completeness – here is the article.

The responses to the Government’s Spending Review have predictably been mixed.

One Conservative-leaning newspaper, for example, declared that the Chancellor’s long-term economic plan equated to an “end to austerity,” which is simply not true.

I prefer to stand with those commentators who have complained about George Osborne’s “smoke and mirrors,” that conceal devastating cuts – many hidden in the small print – which will do great harm to communities across Cornwall.

The extent of cuts were deemed not as severe as feared, because the Office for Budget Responsibility had projected that the public finances would be £27 billion better off by the end of the parliament. 

One dissenting voice noted that the OBR expected “more money to flow into government coffers from income taxes, corporation tax and VAT than it did at the time of its last forecasts,” but countered that this was only four months ago and the new forecasts must therefore be questionable.

There was some good news with George Osborne announcing a u-turn on his plan to reduce funding for policing and also reversing tax credit cuts for the working poor.

It shows that strong political campaigns can succeed and I would like to congratulate everyone who played their part in putting pressure on the Chancellor to perform these much needed changes in policy.

But the victory on tax credits is likely to be short-lived. The Government is still committed to £12 billion in welfare cuts and the less-well-off will lose out when the new universal credit system is rolled out. The Institute for Fiscal Studies has estimated that, by 2020, 2.6 million families will be worse off by £1,600 a year.

The cuts are continuing with business, culture, environment, justice and transport among those government departments which had their funding slashed last week, while councils across the UK are right to be fearful.

In terms of local government, George Osborne’s statement was full of talk of “efficiency savings,” “the sale of assets” and a growth in “self-financed expenditure” – that is council tax increases to you and me. But his key announcement was his plan to entirely phase out main grants to local councils by 2020.

Even the Government’s own councillors are saying is truly unsustainable. Lord Porter, Chairman of the Local Government Association, said: “Even if councils stopped filling in potholes, maintaining parks, closed all children’s centres, libraries, museums, leisure centres and turned off every street light they will not have saved enough money to plug the financial black hole they face by 2020.”

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