Politics is dictating 40% cuts, critics warn

5 Jul 10
Warnings of 40% reductions in departmental expenditure are a precursor to a radical restructuring of the state's role, public commentators have said

By Jaimie Kaffash

5 July 2010

Warnings of 40% reductions in departmental expenditure are a precursor to a radical restructuring of the state’s role, public commentators have said.

In a letter leaked over the weekend, Chancellor George Osborne instructed ministers to draw up plans on how they would make 40% spending cuts.

Cuts of this magnitude would be the highest ever achieved in a democratic nation and would exceed even the most pessimistic of forecasts, including the Institute for Fiscal Studies’ post-Budget analysis warning that there could be 33% cuts to some departments.

Whitehall departments have indicated how frontline services will be affected. Estimates by the Home Office said that 25% reductions in spending equate to 20,000 fewer police officers. The Association of Chief Police Officers has suggested that new recruits could work for free.

Chief Secretary to the Treasury Danny Alexander is today expected to announce £1.5bn cuts to the education budget – which is protected in comparison to other departments. These will include scrapping plans to rebuild 700 schools under the Building Schools for the Future programme.

Transport Secretary Philip Hammond, who drew up the Conservatives’ spending plans while in opposition, played down the 40% figure, but warned that some departments would have to make cuts ‘a bit higher’ than 25%.

Ed Balls, who is running for the Labour leadership, said: ‘The Tories are trying to whip up a sense of crisis… to soften the ground and provide cover to what they always wanted to do.’

However, John Tizard, director of the Centre for Public Service Partnerships at the Local Government Information Unit, wrote on his Public Finance blog: ‘The logical implication is that the government’s position is increasingly driven by a political agenda that goes beyond economic considerations. It would appear to be about changing and dramatically reducing the role of the state.’

Labour peer Toby Harris agreed in his blog: ‘What is driving the coalition government’s stance on public spending is ideology not economics – a desire to finish the Thatcherite evisceration of the public sector.  It is rather as though Thatcher’s children – aka Cameron, Osborne and Clegg – have a psychological drive not only to obtain parental approval, but a desire to achieve more than that parent.’

This comes as a survey by the accountancy firm Deloitte showed that chief financial officers increasingly fear a double-dip recession. They believe that the probability of the UK plunging back into recession is now 38% – up from 33% in the first quarter of the year.

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