Last Thursday George Osborne, the Chancellor of the Exchequer, faced questioning by the Treasury Select Committee of the House of Commons. According to the Guardian's report (5th November) he was accused of "misleading the public" by claiming that at the time of the election Britain was facing "unprecedented levels of debt," in a "financial danger zone" and in danger of losing our AAA status from the credit rating agencies. MPs pointed out that, of six leading industrial countries, including the US, Japan, France and Germany, we have the lowest national debt as a proportion of GDP of all.
Even the Tory chairman of the committee, Andrew Tyrie, said that Osborne's claim that Britain was "on the brink of bankruptcy" was "a bit over the top."
Yet Liberal Democrats in government repeatedly use this distortion of the truth to justify support of the Tory policy of cutting back the state, and, more recently, to justify breaking our promises on tuition fees. In his front page article in Liberal Democrat News this week, Vince Cable blames the U-turn on "these difficult economic circumstances" and Michael Moore used a similar excuse (I can't remember the exact words) on Friday's Radio 4 "Any Questions."
The Labour government lost the confidence of the public and did incredible damage to the political process largely as a result of leading the country into the Iraq war on a false prospectus. The coalition, which promised to try to restore faith in the political process, and create a "new politics," is in danger of going down the same route. To quote the Tory Andrew Tyrie yet again, we should "tell it as it is."
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This seems to be about more than just cutting back the state. The impact on jobs in the private sector of the cuts is likely to be of a similar order to the job losses in the public sector. The agenda seems to be, as it was 30 years ago, to create a large "reserve army" of unemployed people to control wages and therefore inflation. One of the monetarist fallacies is that this creates the conditions needed for the private sector to grow.
ReplyDeleteMore than that, today's announcement that the unemployed will be compelled to "volunteer" for community projects on pain of losing their benefits finally answers the question of where the volunteers for the Big Society will come from. The Government needs high levels of unemployment to make David Cameron's pet project workable.
Agreed. Much of the private sector (especially in the building and construction industries) depends on the public sector for orders. So rather than create space for the private sector to expand, public sector cuts are likely to shrink the private sector even further. The Keynesian multiplier in reverse!
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