Comprehensive Spending Review

After the weeks and weeks of build up – today was the Comprehensive Spending Review (CSR).

The amount of work and effort that has gone into the thinking behind this CSR is huge – and it showed. Whilst definitely medicine in parts – all that thought and effort had produced something not only economically credible but a radical reforming agenda It wasn’t just cuts – it was about a different way of doing things.

And – outside of George Osborne’s clever rabbit out of a hat finish in which all the coalition cuts (at 19%) still come out at less than the 20% cuts that Labour were proposing (without a single idea on the table as to what they would have been) the key thing was that this CSR addresses the Why of the cuts and the How of the cuts.

In terms of the Why – economically it is about freeing the nation of debt and the waste of interest payments. It is nuts to pay £43 billion in interest a year – you can never get clear and never get on to doing the things that bring real change and real improvements to peoples’ lives. In fact – the pain is longer and worse for everyone – but especially the poor – if the deficit is not dealt with swiftly.

As for the How – this CSR has been done in a way that is fairly spread (a lot of work on equality impacts and effort made to make sure that those who have the most pay the most) – and in a way that promotes future fairness and future prosperity.

As you read about all the measures announced today or watch the reports on the television – you can see that there is clearly a Liberal Democrat approach hard-wired into it – but it is ultimately a coalition process – with full involvement of LibDem Ministers – and the result is most definitely a coalition product. It is a far, far better product for the steel and fire in which it has been forged in the crossfire of two parties with very different approaches but aiming for the same outcome – a fairer (solvent) country.

It is:

pro-fairness– with items like the £7 billion ‘fairness premium’ including £2.5 billion to go into our schools with the funding following underprivileged children; with the NHS being protected; with us being the first country in the world to delivery 0.7% GDP for International Aid

pro-growth– thank goodness carrying on with capital infrastructure investment including Crossrail; investment in science and HE. Next week there will be a whole raft of details on capital projects going ahead right across the land.

pro-green: with £2billion for the Green Investment Bank (for starters), public transport investment, feed-in tariffs, a funded Renewable Health Incentive, a ports competition to encourage offshore wind manufacturing industry

The CSR was only the beginning really – and gave for the most part – the global percentage cuts in each department. How each department now takes the reduction forward will be the further test of our administration’s commitment to fairness during the deficit reduction.

There was one particular issue that I have been worried about – both in terms of national but also local funding – the voluntary sector. I wrote about here a while back.

So for me –  one very important announcement was the £100 million fund being created for a year to support the voluntary sector during the transition phase. I have been stomping around pointing out to everyone the vulnerability of this sector – a sector who we in government are expecting to grow and blossom in the ‘big society’ but which without support might not have survived the transition.

Happily somehow that message seems to have got through.

I have Violence Against Women and Girls in my portfolio, for example, and the voluntary sector is absolutely crucial in supporting victims of Domestic Violence. So this was a very welcome part of the CSR!

0 thoughts on “Comprehensive Spending Review

  1. Pingback: Tweets that mention Comprehensive Spending Review | Lynne Featherstone --

  2. What has impressed me is the sudden Growing Up of the Liberal Democrats. In less than 6 months you have gone from political poseurs playing at ‘niceness’ to a serious political alternative.
    And you are 100% correct in saying that “there is clearly a Liberal Democrat approach hard-wired into it – but it is ultimately a coalition process – with full involvement of LibDem Ministers – and the result is most definitely a coalition product. It is a far, far better product for the steel and fire in which it has been forged in the crossfire of two parties with very different approaches but aiming for the same outcome.”

    I know it matters to those involved but even if the public does not understand or recognize the efforts made by the LibDems, I think that by 2015 the members of the Party will have done something that ,per se , is ‘good’. Hopefully good electoral results will follow for you, but even if not —- it still will be ‘good’. Not many politicians can ever really say that.

  3. Five hundred thousand people to lose their jobs Lynne. 500,000. Half a million. People. Not words on a page. People with families. Hopes. Aspirations.

    Not a clue how the public sector links to the private. Another half million jobs.

    You, a millionaire amongst millionaires telling us what is best for us. Totally unaffected by any of it.

    A wicked ruse created by right wing idealogues. Bought into by collaborators like you.

    Not for you scrapping Trident to pay for it. Not for you phasing in any needed cuts over a longer period.

    Brutal. Uncaring. The lady is not for turning.

  4. Pro-fairness? The IFS have already torn that claim apart. Like the Budget in June, today’s announcements were deeply regressive. Once again, the Libservative government is making the poor pay for the excesses of the rich.

  5. Extraordinary. Where to start?

    1. You give yourself a pat on the back for getting a great deal for the voluntary sector, yet the Chief Exec of Scope says:

    “Despite the continuing rhetoric that spending cuts will be fair the Chancellor’s announcements today are anything but. Local government will lose 28% of its funding over the next four years, compared to just 14% reductions to the royal household, and this will hit disabled people and their families particularly hard.”

    2. The so-called ‘increase’ in schools budgets via the pupil premium is misleading, as there isn’t – despite the claims – extra money for this. A 0.1% increase in the budget includes the £2.5 billion you refer to – so this is not extra cash (0.1% does not equal £2.5 billion). Most schools will face cuts.

    3. You say the country will be solvent. At what point did the UK become insolvent? You don’t seem to know what the word means.

    4. ‘Investment in science’ – what!?

    That’s about all I can manage, there is so much in your post that is nonsensical or misleading. Many people who voted for you, or for Lib Dems in other areas, will be mightily confused. Your cheery approach – to what is a desperate day for thousands of people – who will lose their jobs really sticks in the throat.

  6. Sometimes you read what these Lib/Dem MP`S say and you think that your reading George Orwells 1984. Yes is No, Black is White!
    The Disabled are going to lose benefits. the disabled i n care homes are even going to lose there DLA which helps them get about.Housing Benefit means many will be forced to move and council tenants who may get a home why unemployed will lose it as soon as they get a job.
    If those measures are progressive and Liberal god help us.Its beyond me how any Liberal can support this vicious and callous statement by George Osborne that we have heard today.

  7. Lynne – your fellow-collaborator Danny Alexander on Channel 4 News tonight was presented with the fact that some seriously disabled people will inevitably be deprived of benefits as a result of this package. His response? The usual “we have to make difficult decisions” guff.
    So the reality is Alexander – and presumably you – are content to see people in wheelchairs being turned out into the street to “pay for the deficit”.
    You really should check your conscience. Now your government is talking about introducing new laws to make trade union action against the cuts more difficult.
    It’s a pretty nasty direction to take, don’t you think?
    Maybe you think it’s all fine and dandy. Either you’re collaborating in a massive attack on the most vulnerable and pretending to agree with it, or you really do agree with it.
    Shame on you either way.

  8. As a Lib Dem member for the last 16 years I can quite easily support
    the Chancellor’s statement. While the last Labour govenment may not be entirely responsible for our record national debt they are certainly guilty of significantly contributing to it by not reigning back the PSBR during the artificial boom years.

    I do not agree with every coalition decision (for example I would have scrapped the Trident replacement) but as you say Lynne “it is nuts to pay £43 billion in interest a year – you can never get clear and never get on to doing the things that bring real change and real improvements to peoples’ lives. In fact – the pain is longer and worse for everyone – but especially the poor – if the deficit is not dealt with swiftly”. That is the crux and I am hugely proud of my party that we have displayed the courage to stand up and be counted.

  9. I’m not going to try to comment on the substance of the Chancellor’s statement, or on your post, Lynne, but just wish to make one comment. As a public servant who has worked in higher education for 34 years I get rather miffed when I hear politicians talking about public servants and taxpayers as if they are two separate groups. If I’m not a taxpayer can I just ask where all the money I have been paying each month out of my salary has gone? Are our taxes filtered away and spent on something else so that only people in the private sector contribute to the NHS, universities, police, etc. No, I thought not – please can you have a word with your ministerial colleagues, of both parties, and stop this nonsensical division of public and private. Thank you.

  10. Tim

    Lynne and co have their own special way of stopping the division between the public and private sector. Her mate George set it all out for us today.

  11. So you have cooked the books to make it look like you have acheived 19% cuts. Big deal. I thought GO had told a very funny joke judging by the juvenile stage managed mock laughter from the coalition today. You need to grow up, it’s not a game. The consequences for us non-millionaires in the real world are serious.

  12. Jill said: “Women will be the main losers from this catastrophically unfair program.”

    Well that depends how you define losers. Yes they’ll be special privileges such as a ridiculously early retirement bankrolled by men who have to work longer and they’re losing bodies that exclusively represent them instead of everyone. It’s called equality.

    In relation to job loses the real question is why does the public sector show such an incredible bias towards females in the first place? If we had gender equality in this sector then there would be more men losing jobs. Unfortunately they’ve never been given the jobs in the public sector and the quite brilliant pensions that come with it and you cannot “lose” what you haven’t got.

    The only issue I’d take with Lynne’s post is the final paragraph – please do you not use discredited and outdated Harman type language when discussing domestic violence. You should be concerned about all victims especially given the increasing numbers of men reporting abuse (40% of vicitms at the last count)

  13. And – outside of George Osborne’s clever rabbit out of a hat finish in which all the coalition cuts (at 19%) still come out at less than the 20% cuts that Labour were proposing (without a single idea on the table as to what they would have been) the key thing was that this CSR addresses the Why of the cuts and the How of the cuts.

    Only if you ignore the extra £11 billion you are robbing from the poor. Moronic and immoral – that’s you.

  14. Yes, Danny A is somewhat embarrassing at times. As for insolvency, that was looming (but not yet here) when there was that prediction that our country’s credit rating was about to crash.
    Over at Burning Our Money is a July report about predictions for jobs growth: 2m, and Wat Tyler is sticking to that by a reference in yesterday’s posting. Maybe not the type of jobs that £50K plus ex public sector want or can handle…
    So, for me, yesterday was a lot better than expected.

  15. With all the talk of “fairness” and “broad shoulders”, I would like to know how the statement yesterday affected the top 2% of the country, ie those earning over about £120,000. Setting aside measures introduced by the Labour Government (50% tax rate etc), I wonder how the very rich such as the Prime Minister, The Chancellor and – yes – you yourself Lynne have fared?

    It’s easy for multi-millionaires such as Cameron, Osborne and Featherstone to tell the “wealthy” on earnings of around £40,000 that we “all” have to suffer. How will this round of cost cutting affect you Lynne? How will the cuts in child benefit and student support affect Cameron and Osborne with their trust funds?

  16. Lynne, in your previous post you pointed out that by 2015 Government debt will be £1 Trillion and the Government isn’t planning on doing anything about that. So all these cuts – mostly aimed at the poor and vulnerable – won’t achieve debt reduction. This might come as a surprise to some people, but not to you and your party which has joined with the Tories in a disgraceful, divisive idealogy.

    I would like you to say how the cuts will affect you personally. Danny Alexander was asked this question last night and stuttered his way through the answer which turned out to be ‘not at all.’ Is it the same for you?

  17. I find your comments unbelievable. For a start: removing disability mobilty allowance from older people in care homes – thus taking away the last vestigages of their independence.
    Second: Such a squeeze on non-statutory council services that libraries and leisure centres could close – ripping the heart and soul out of a local community. Most people rely on these services for knowledge and exercise and health.
    Third: No more social housing for life. People in the position of Osbourne, Cameron, Clegg and possibly yourself would never know the awful insecurity of not being able to call a home ‘your home’, to put down roots, to integrate into society.

    And so on and so on….

    Do you really accept these changes. And also, the greatest burden of the spending cuts will fall on the poorest in society. You know this, so please do not deny it.

    I have no idea who you represent anymore. But I am filled with shame for having voted for you.

  18. Lynne, your blog has become pure spin!

    If you believe anything that you’ve written then I’m afraid minorities and woman are in for a hard time this parliament.

    Your press/media team gave this to you whole and you swallowed it…. stop being so dim!

  19. Pennies from the banks which got us into this mess. Pennies from the super-rich who can afford to contribute the most. But everyone else suffers.

    Cameron, Osborne – the super-rich – won’t even notice the difference. Easy for them to tell us to have broad shoulders – it’s only their staff who will be shouldering any of the pain.

    Where are the cuts going to hurt for you Lynne?

    Why should the rest of us pay taxes so that Cameron, Osborne and Clegg – both in the top 1% of earners – can educate their kids for free? Why should we contribute to their state pensions when they will retire on their inherited millions?

    If those questions are asked about people on £40k receiving child benefit, why aren’t they asked about people with multi-million pound inheritances receiving free education? Or free health?

    When is it the turn for the super-rich to suffer?

  20. While I agree regarding removing the Disability Mobility Allowance (and hopefully this proposal will be strongly opposed in the parliamentary scrutiny to follow) going on and on about the rich misses the point. Yes some of the rich should pay much more for example Sir Philip Green who disgracefully pays virtually no personal tax to the UK Exchequer yet purports to be a government adviser. However we cannot make a meaningful dent in the deficit without most of the rest of us contributing.

  21. Lynne, following the IFS analysis, I now believe that your blog was a bunch of poorly constructed lies.



    Why are you lying?

    What is the plan for growth other than to keep your fingers crossed?

  22. Yes, RobC, everyone needs to contribute. Let’s just nail this lie that the “wealthy” are contributing the most.

  23. Actually Rob, if the super rich institutions- the banks- that caused this were made to pay properly for what they have done the need for the pain being inflicted would be massively diminished.

    What is being done is not the only route despite what the Mail, Express and Mr Murdoch would have everyone think. It is ideology from the tories and simply power lust at any cost from Lynne’s bunch.

    The “fairness” argument is so preposterous. The only people who purport to believe it are ministers (see paragraph above) who came third in the general election and a few fellow travellers.

    Wood Green and Hornsey didn’t vote for this. Lynne if you think that what you are doing has the support of voters in your constituency, put it to the test. Resign and stand again. See what happens.

  24. I have just seen that Nadine Dorries says her blog is 70% fiction 30% fact.

    That seems pretty good.

  25. @Adam

    It’s better than Lynne’s – I think Lynne’s must be 90% fiction/10% fact.

    She is making a fool of herself.

  26. “…one of the richest corporations in Britain, Vodafone, had an outstanding tax bill of £6bn – but Osborne simply cancelled it this year.”


    So much for fairness – when will the government stop being threatened with job cuts by multinationals so they can avoid paying taxes? It’s not just Vodafone but many many other companies avoiding TENS OF BILLIONS of tax money they owe. These companies NEED to be in the UK and EU to sell, or pay massive import levies. Stand up to them and demand their tax money!

  27. @RobC – I admire your defence of the coalition; that said, it’s beyond my comprehension how you can look at what is happening and feel ‘proud’ of your party. Proud that the poorest are paying more than anyone but the top 2%? Proud that women are bearing the brunt of these cuts? Proud that the two totems of Lib Dem policy – PR and ending tuition fees – are nowhere to be seen? Pride is a very, very strange word to describe what this Govt is doing.

    The extent to which dearly held values have been bartered for political power is remarkable – your party has been hijacked by the Orange Book brigade and is aligning itself with as Tory party who are finally finishing the job Thatcher started. You should be ashamed, not proud.

    Oh, you are scornful about Philip Green not paying tax and also being a government adviser – shocking, but he doesn’t ‘purport’ to be an adviser. He is. And he was appointed by Danny Alexander who, last time I checked, was a Liberal Democrat.

  28. If these Coalition cuts are not ideological driven ?? and not unfair on the poorest

    Why wont the Coalition agree to put the money cut back into public services once the economy improves (as agreed in Ireland)


  29. At last an answer to all the whingers posting on Lynne’s blog.

    How dare you say the Coalition CSR lacks support?

    Only this evening Rupert Murdoch – giving the inaugural Margaret Thatcher lecture – has praised the Coalition’s budget. Lynne you should feel proud.

  30. Yes Lynne – Rupert Murdoch on behalf of Margaret Thatcher, two icons of Liberalism. You should feel very, very proud.

  31. For a Liberal MP to be so subserviently supporting a right wing agenda would normally cause absolute outrage, were you not viewed upon as the Sarah Palin of UK politics.
    Instead of attacking women, the poor, the sick and the elderly- why doesn’t your party take a stand and go after the £121billion in tax avoidance? or would this be too harsh on Dave, George and their chums?
    What about the bank levey? 0.04% rising to a mighty 0.07%? not even a drop in the ocean- as according to the FT, the bankers are now literally laughing all the way to the proverbial bank.
    I see one LibDem Peer states that the LIbDems don’t institute enough publicity around the measures they’ve influenced. That’s because they haven’t got any backbone to influence a thing.
    If you think you’re doing the right thing by this constituency, resign and stand again-put your considerable money where your mouth is.

  32. I have not commented on your blog for some time, mainly because I am working hard to keep my business which has taken a hit due to the public sector proposed cuts, but felt i had to because I am so angry at the spending review outcome.

    Firstly I would like to say that everyone I have talked to agree that something had to be done about the debt etc the country is in, so I am by no means disagreeing with that, however I do feel that the behaviour of the MP’s when George Osborne was delivering his review (and I say his review) was disgusting. Led by both David Cameron and Nick Clegg. Both of these men and the other MP’s behind them had a smile on their faces and during the delivery were passing notes around. PLEASE even if they feel it is the right thing to do could they not have had a little understanding or empathy to understand what us mere mortals are feeling. Most of us are going to have to really cut back on our everyday living let alone have any luxury in life and this is for the next 4 years, most people I know do not have millions in the bank to fall back on at times like this so we can’t smile about anything at the moment most of them are just worried and fearful of the future.

    Secondly PLEASE do not commend yourselves on doing a good job or working hard because no one will care anymore. You have as a lib dem sold out to the conservatives.

    Thirdly I stand for equality Lynne and have put my money where my mouth is, I have been running a business and giving the message about equality to people changing mind sets WORKING HARD to show people that equality does work and it does make a better society for us all to live in.

    Now the cuts are in place it would seem that no one is worried or cares about equality. I have been in sessions in the past where I have trained disabled people who are hard to place into work and given them the confidence to think about a life other than living on benefits, I have given them the mindset to apply for jobs and work hard to get a better life. I have paid for their training out of my own pocket because I felt they had a chance to see a better future. I have done this quietly and asking for no rewards or recognition I was just happy to see others achieve.

    What is happening now is shameful at a time like this equality should be high on all agendas. The public sector duty for socio economic status should not be delayed as this government have done but of course it does not fit in with the conservative agenda and let us make no mistake this is a conservative agenda.
    I am so angry really angry there has to be a better way of doing this without the pain but I know the government want quick successes. The people of this country will only take so much though and what we all must remember is that the government as it stands now was not what was voted for. Enjoy every day you are in office Lynne remember the feeling you had when you got the phone call inviting you to office and how you enjoyed your bubble bath thinking of the future, in the words of a past MP politics always starts on a positive but it never ends that way.

  33. What is the Equalities Minister, Lynne Featherstone, going to do about the families who will be kicked out of their homes locally because of the cuts in housing benefit, the poorest children who will lose out on Education Maintenance Allowance, the sick and disabled who will have their benefit removed if they have more than £16,000 in savings (do the maths – how long can you live for on that bearing in mind it costs more if you are disabled?) or the poor pensioners who lose the supplement to the fuel allowance?

  34. Just needed you to know I have added your site to my Google bookmarks nfl jerseys because of your extraordinary blog layout. But seriously, I think your site has one of the freshest theme I’ve came across.

  35. Most of the time I do not post on blogs, but I have to say that this post really forced me to do so. Really nice post!

  36. Why is this all so obviously unfair? Take someone who has around £100,000 and someone else with £10,000. If both see a 10% cut, the first person ends up with £90,000 and the second person with £9,000. Things costs the same for everyone and so it’s easier for the first person to cope with a cut in income because they still have £90,000 to play with – almost four times the median national income. A loss of £1,000 on an already low income – £200 a week down to £180 a week – is harsh.
    Wouldn’t you agree Lynne?

  37. There is an alternative: The case against cuts in public spending

    The government’s cuts strategy – and why it’s wrong
    Economic growth and public investment
    The case against privatisation
    Tax justice
    Cut the real waste
    The PCS alternative
    What you can do
    We are told there is a deficit crisis in the UK. We are told that we are spending beyond our means. We are told that the solution to this deficit crisis is to cut public spending.
    Public spending is an investment, not a debt. Public servants – the vast majority of whom are low paid – deliver vital services to our communities. The campaign of vilification against public services is motivated by a desire to cut and privatise these vital services. The reality is that there does not need to be a single penny taken away from any public service, or a single job lost.
    The deficit is due to the recession, which has reduced revenues as less people are in work and are therefore spending less. At the same time, government expenditure has increased as more people are without work and are entitled to benefits.
    If the government cuts more jobs this will only exacerbate the deficit crisis – more people will be unemployed and there will be less revenue.
    The answer to the crisis is therefore to create jobs not cut them. Currently there are less than 500,000 vacancies, while 2.5 million people are unemployed. ‘Getting tough’ on welfare will not work since there are not the jobs available. It will simply cause more misery – which is the only possible outcome of the coalition government’s policies.
    This is why we must resist this government’s policy of savage cuts, and reject their flawed arguments. We need a new economic strategy based on public investment, job creation, and tax justice.
    Over the coming months we need to win the arguments for this alternative and then force government to implement it. Otherwise our members and our communities could face years of misery. This page spells out the compelling case against cuts, and for a new vision.
    Mark Serwotka Janice Godrich
    General Secretary President
    The government’s cuts strategy – and why it’s wrong
    Firstly, we need to get the ‘debt crisis’ in perspective. The table opposite shows UK debt relative to other major economies.
    From 1918 to 1961 the UK national debt was over 100% of GDP. During that period the government introduced the welfare state, the NHS, state pensions, comprehensive education, built millions of council houses, and nationalised a range of industries. The public sector grew and there was economic growth.
    Today, the coalition government wants to turn back the clock. It is set on dismantling the NHS and comprehensive education, and it is attacking the welfare state. It is not doing this because the country is on the verge of economic collapse, it is doing it because it is ideologically opposed to public services and the welfare state, and committed to handing over more of our public assets to big business.
    Cutting public sector jobs will increase unemployment. This would mean increased costs for government in benefit payments and lost tax revenue. If people’s incomes are taken away or cut through pay freezes they will spend less. Less consumer spending means cuts in the private sector, and lower VAT revenues.
    Internal analysis by HM Treasury proves this to be the case. Leaked documents estimated that over the next six years 600,000 public sector jobs would be cut, and 700,000 private sector jobs would also be lost – based on the current government’s policies.
    Job cuts are therefore counterproductive. Mass job cuts would worsen the economic situation by reducing demand in the economy, and providing less tax revenue.
    The government claims it can make cuts of between 25% and 40%, and still “protect frontline public services”. This is impossible – not just because ‘frontline services’ are being cut, but because services rely on ‘back office’ support staff. For example, cutting support staff like NHS cleaners has meant an increase in healthcare acquired infections, costing the NHS £1 billion. All public services require tax revenues to fund them, yet HM Revenue & Customs has cut 25,000 staff in recent years, which has led to uncollected tax at record levels and a growing tax gap.
    The impact is likely to be highly divisive too. There is evidence of this already in the UK. In areas where public sector workers have already been laid off, retail sales have fallen faster than the UK average. In nations and regions where public sector workers make up a high proportion of the workforce, major public sector cuts could destroy local economies. Any attack on the public sector will also disproportionately affect women, as 68% of the public sector workforce is female. The public sector also has a much better record of employing disabled workers too.
    The global race to cut labour costs is central to the economic collapse we have seen around the world. Squeezed consumers are defaulting on mortgages and personal debts, and are less able to spend in the economy. In the UK, the value of wages has declined from nearly 65% of GDP in the mid-1970s to 55% today. Over the same period, the rate of corporate profit has increased from 13% to 21%. It is no coincidence that in this period trade union rights were severely restricted, large swathes of the economy privatised, markets deregulated and corporation tax slashed.
    There is an urgent need to rebalance the economy in the interests of people over big business.
    The experience of Ireland
    Ireland shows how cutting public spending can damage the economy. The crisis in Ireland was caused by the collapse of its banking sector. The massive cuts in spending and public sector pay that followed have
    increased unemployment and sapped demand, causing the economy to shrink further. Because of this, Ireland is now considered more at risk of sovereign default than before it started making cuts. Historical research clearly demonstrates that budget cuts actually provoke increases in the national debt by damaging the economy.
    Economic growth and public investment
    Investing in public services is the solution to the deficit crisis. Instead of cutting jobs, we should be creating them. Jobs are not created by bullying people on benefits into jobs that don’t exist. Instead there are several areas where public sector jobs urgently need to be created.
    It has been estimated that over a million ‘climate jobs’ could be created if the government was serious about tackling both climate change and unemployment – these would include areas like housing, renewable energy and public transport investment including high speed rail, bus networks and electric car manufacture.
    Today there are 1.8 million families (representing over 5 million people) on council house waiting lists. There is an urgent need to build affordable housing for these people, which would also help reduce housing benefit payments.
    The UK lags behind much of the rest of Europe in the development of a high-speed rail network, which would have the potential to create thousands of jobs and reduce carbon emissions by shifting passengers and freight away from road and air travel. Much of the country outside of London also needs huge investment in bus services – and, just as we should invest in electric car technology, we should also invest in electric buses and tram networks.
    Only 2.2% of UK energy comes from renewable sources compared with 8.9% in Germany, 11% in France, and an impressive 44.4% in Sweden. If we are committed to tackling climate change and ensuring domestic energy security there needs to be investment in renewable energy technology.
    All of these industries would generate revenue – people are billed for electricity, buy tickets to travel on public transport, and pay rent for council housing.
    Research by Richard Murphy (of Tax Research) has shown that the state recoups 92% of the cost of creating new public sector jobs – through lower benefit payments and increased tax revenues.
    The banks
    We should never forget that it was the banking sector that caused the recession, and is ultimately responsible for the huge debts that the UK has amassed. Despite causing the crisis, the banking sector has escaped any significant regulation, and bankers are again awarding themselves huge bonuses.
    The table opposite clearly shows how UK debt accelerated after the banking crisis in 2008. As a result of the UK government’s £1.3 trillion bailout to the financial sector, the government still owns over £850 billion in bank assets. This figure is roughly equal to the total UK debt.
    The UK has an 84% stake in RBS and a 41% stake in Lloyds TSB. In addition, the state also owns Northern Rock and Bradford & Bingley. Under public ownership and control these assets could yield significant annual income to the Government, and could be used to meet social needs and tackle financial exclusion.
    The case against privatisation
    As a result of the government’s agenda to slash the public sector, privatisation, outsourcing and the Private Finance Initiative (PFI) are a fast growing threat to civil and public services despite the many performance failures of past privatisations.
    Privatisation is no solution to the national debt. Evidence confirms that after transfer to the private sector the terms and conditions of workers are worse than before, the public sector loses any revenue stream while ultimately keeping the risk, and services to the public decline or cost more:
    In the DWP, welfare is now described as “an annual multi-billion pound market”, and despite the department’s own research showing that Jobcentre staff outperform the private sector in helping people back to work, all contracts for welfare programmes are now outsourced.
    Qinetiq was a company formed from the privatisation of the Defence Evaluation and Research Agency (DERA). In 2007, the 10 most senior managers gained £107.5m on a total investment of £540,000 in the company’s shares. The return of 19,990% on their investment was described as “excessive” by the National Audit Office. In 2009, Qinetiq offered its staff a pay freeze.
    Although the economic downturn has led to a drying up of bank finance for PFI projects, the government has got round this by funnelling public funds – through the Treasury’s Infrastructure Finance Unit – to state owned banks who then loan finance to PFI consortia (which then claim inflated returns to government for the next thirty years, greatly exceeding the money given to them). The journalist and antiprivatisation activist George Monbiot observed, “the Private Finance Initiative no longer requires much private finance or initiative”.
    Public services were won by trade union struggles in an effort to establish the basis of a civilised society. Driven by the desire for maximum profits, the private sector fails to provide effective and efficient public services.
    Tax justice
    Addressing the ‘tax gap’ is a vital part of tackling the deficit. Figures produced for PCS by the Tax Justice Network show that £25 billion is lost annually in tax avoidance and a further £70 billion in tax evasion by large companies and wealthy individuals.
    An additional £26 billion is going uncollected. Therefore PCS estimates the total annual tax gap at over £120 billion (more than three-quarters of the annual deficit!). It is not just PCS calculating this; leaked Treasury documents in 2006 estimated the tax gap at between £97 and £150 billion.
    If we compare the PCS estimate of the tax gap with the DWP estimate of benefit fraud, we can see that benefit fraud is less than 1% of the total lost in the tax gap (see diagram opposite).
    Employing more staff at HM Revenue & Customs would enable more tax to be collected, more investigations to take place and evasion reduced. Compliance officers in HMRC bring in over £658,000 in revenue per employee.
    If the modest Robin Hood tax – a 0.05% tax on global financial transactions – was applied to UK financial institutions it would raise an estimated £20–30bn per year. This alone would reduce the annual deficit by between 12.5% and 20%.
    Closing the tax gap, as part of overall economic strategy, would negate the need for devastating cuts – before even considering tax rises.
    Our personal tax system is currently highly regressive. The poorest fifth of the population pay 39.9% of their income in tax, while the wealthiest fifth pays only 35.1%. We need tax justice in personal taxation – which would mean higher income tax rates for the richest and cutting regressive taxes like VAT and council tax.
    Cut the real waste
    While it is not necessary to cut a penny in public expenditure due to the ‘deficit crisis’, there are of course areas of public spending which could be redirected to meet social needs.
    In the civil and public services, we know there are massive areas of waste – like the £1.8 billion the government spent on private sector consultants last year. The government could get better advice and ideas by engaging with its own staff and their trade unions.
    There is also the waste of the government having 230 separate pay bargaining units, when we could have just one national pay bargaining structure.
    There are also two other large areas where government costs could be cut.
    The current Trident system costs the UK around £1.5 billion every year.
    A private paper prepared for Nick Clegg (in 2009, when in opposition) estimated the total costs of Trident renewal amounting to between £94.7bn and £104.2bn over the lifetime of the system, estimated at 30 years. This equates to £3.3bn per year.
    At the time Nick Clegg (now Deputy Prime Minister) said: “Given that we need to ask ourselves big questions about what our priorities are, we have arrived at the view that a like-forlike Trident replacement is not the right thing to do.”
    The 2010 Liberal Democrat manifesto committed the Party to: “Saying no to the like-for-like replacement of the Trident nuclear weapons system, which could cost £100 billion.”
    PCS policy is to oppose the renewal of Trident and invest the money saved in public services, whilst safeguarding Ministry of Defence staff jobs.
    War in Afghanistan
    The war in Afghanistan is currently costing £2.6 billion per year. The war is both unwinnable and is making the world less safe. More important than the financial cost are the countless Afghan and British lives that are being lost in this conflict.
    The PCS alternative…
    There is no need for cuts to public services or further privatisations
    Creating jobs will boost the economy and cut the deficit. Cutting jobs will damage the economy and increase the deficit
    We should invest in areas such as housing, renewable energy and public transport
    The UK debt is lower than other major economies
    There is a £120 billion tax gap of evaded, avoided and uncollected tax
    The UK holds £850 billion in banking assets from the bailout – this is more than the national debt
    We could free up billions by not renewing Trident
    End the use of consultants
    What you can do
    Spread the word! Share this page with friends on social networking sites using the buttons below
    Get involved in campaigns and events, and keep informed at our campaigns pages
    Unite with other local trade unions and community groups
    Recruit your colleagues to the union – there’s never been a more important time to join PCS
    Lobby your local politicians against public service cuts and against the attack on our jobs and conditions

  38. Thanks for posting this informative article This is a really good read for me. Hey this is a great post. I amm going to email this to my buddies. Thanks for posting this informative article I was searching some information.