IN LITTLE over an hour yesterday, Chancellor George Osbourne has made the deepest cuts in decades. However, is it a wise move, or George’s great gamble?
Labour have slammed the cuts, with Shadow Chancellor Allan Johnson saying that these ‘aggressive methods could lead to a double-dip recession.’ They think it is a wreckless gamble, but Osbourne claims that it is a ‘tough, but fair’ cut. I would have to agree with Osbourne’s viewpoint, rather than Johnson’s opinion and we have to stick together through this.
As it was leaked in the papers yesterday morning, 490,000 jobs have been axed in the public sector, as the harsh economic realities have set in. One of the surprises was the decision to raise the state pension age upto 66 by 2020. Within four years, 27% will be cut in council budgets, and there is a 7% cut in welfare. The most controversial area was the expected demise of child benefits. As previously announced at the Tory press conference, 2.5billion will be saved in this area, meaning that other affected areas didn’t take as hard a hit as some departments were expecting.
Despite a 3.4% spending cut in education over four years, meaning there will no new schools for a while, the schools budget will go up overall by four billion. For the elderly, it was a positive outlook, as the coalition government announced that all elderly budgets will remain untouched. This means that free eye tests, free bus passes and free TV licenses for the over 75’s will remain untouched, as previously promised by David Cameron during the TV leadership debates. NHS health spending will rise by 1.5% and there will be good news for current university students too. With no announcement on an increase in tuition fees and UCAS applications starting within the next month, the current payment of £3,290 will remain in place for the next academic year.
Other areas that were significantly hit were foreign office spending (cut by 24%), police spending (cut by 14%) and the Home Office (cut by 23%). Rail fares are set to increase by 30%, but Foreign Aid will go up massively, following the staggering donations that the UK gave to the appeals in Haiti and Pakistan earlier this year. The Treasury believe that the private sector will improve, so unemployment won’t be an issue, despite the significant public sector cuts.
The theory behind these cuts is short-term pain, long-term gain. George Osbourne still maintains that there will be a 1.3% economic growth for the remainder of 2010, 2.5% in 2011 and 3% in 2012. The City in London say that is hugely optimistic and Dragons Den entrepreneur Deborah Meaden isn’t convinced by these figures either. However, you must praise the current Chancellor for his ambition. By also confirming that the Tories have come to a final overall cut of 19%, a 1% decrease on what Labour had planned back in March, it was clever politics from Osbourne and it has consequently put the newly reformed opposition in a very tricky position.
Painful measures had to be taken and some groups in our society will claim that it wasn’t fair, but it was a fairly reasonable spending review. It is best to take one big hit, rather than smaller dozes over the course of a year. If the figures are current, 80billion pounds of saving is expected over the next four years. Millions of people in the UK have been affected by the spending cuts, but fundamentally, there was no choice and it wasn’t as bad as several forecasters had earlier predicted.
