It was in the 2012 Autumn Statement that George Osborne announced plans to extend austerity measures until 2018. More recently, the chancellor has talked of a ‘10-year project’ to get the country’s finances under control
So it is with some trepidation that the public sector awaits the outcome of the 2013 Autumn Statement, due on December 5.
As Tony Travers points out in this month’s cover feature, the chancellor’s vice-like grip on the finances looks set to stay in place until the early 2020s. This is despite the generally more positive economic news.
According to the Bank of England’s Monetary Policy Committee, the UK is experiencing a ‘sustained recovery’. Growth is up, while unemployment and inflation are down.
The Office for Budget Responsibility will reflect the better mood when it publishes its latest forecasts at the same time as the statement. But this won’t divert Osborne from his stated course.
He has promised to move into surplus by the end of the next parliament, and declared there will be no ‘quick fixes’. Meanwhile, the prime minister talks of doing more with less ‘not just now, but permanently’.
David Cameron’s intervention, in his Lord Mayor’s Banquet speech, suggested a marked change in philosophy. The man who once said he ‘didn’t come into politics to make cuts’ is now advocating a permanent revolution in public spending.
As Travers notes, the consequences could be an extension of real-terms cuts to currently protected areas, an expansion of pooled budgets, more charging, reduced subsidies for the arts and railways, and further increases in the retirement age.
It’s not a hugely appealing prospect. The alternative, of course, is an increase in taxes, but that would be a huge risk for any politician to take in the run-up to the next general election.
The grim truth is that, post-2015, the current deep cuts to public spending are likely to look like a mere dress rehearsal, with inevitable consequences for the country’s social fabric.
But before we endure 10 more years of pain, shouldn’t there be an open discussion with the electorate about appropriate levels of taxation and public services?
Perhaps it’s too much to ask our politicians to add this to their list of New Year resolutions.
The next issue of Public Finance will be published at the end of January 2014. We wish all our readers a Happy Christmas and a peaceful New Year.
This opinion piece was first published in the December edition of Public Finance magazine
