So Mr 25% has become Mr 19%. Chancellor George Osborne announced some serious cuts in this week’s Comprehensive Spending Review, but not quite on the scale previously forecast.
Having apparently found an extra £7bn in welfare savings, the chancellor was able to offer a few surprises. The schools budget will rise in cash terms, science will be protected, an extra £2bn has been provided for social care and a number of large capital projects have been given the go-ahead.
We’re stepping ‘back from the brink’, he suggested, but the reality is that public servants still face the biggest cuts in their budgets since the dark days of the 1970s.
Local government, in particular, can expect a reduction in central funding of 26% over four years, with the Foreign Office (–24%), Home Office (–23%) and Ministry of Justice (–23%) not far behind.
Councils do have some positive news in that ring-fencing of most revenue grants will end, while there will be extra cash to allow authorities to freeze council tax.
But, even so, it will be a terrible time for town halls and for public services more generally. Nearly half a million public sector jobs will be lost, inevitably resulting in cuts to frontline services.
The chancellor hopes that private sector growth will boost overall employment levels, but with the ever-present threat of a double-dip recession this seems optimistic at best.
So far, the public seems to have accepted Osborne’s ‘we’re all in this together’ line. However, as jobs and incomes get squeezed this will become a much harder sell.
Given this situation, it’s surprising that the coalition has not done more to rein in universal benefits. Such an approach could offer some quick wins and yet, beyond the previous Child Benefit announcement, ministers have left well alone.
In part, this is because of Prime Minister David Cameron’s somewhat rash promise in the pre-election television debates to protect all pensioners’ entitlement to the winter fuel allowance and free eye tests, bus passes and TV licences.
Means-testing is also complicated and costly, and it would be a tricky political manoeuvre. But if the principle works for middle-class mothers, surely it should also apply to prosperous pensioners.
Politicians sometimes have to make U-turns – most recently the Liberal Democrats volte-face on tuition fees – so perhaps the PM could take a leaf out of his deputy’s book
Mike Thatcher is Editor of Public Finance
