Comprehensive Spending Review Is Comprehensive

It's not far from the truth. Avoid.

Clearly Nick Clegg has been doing a little too much 4chan lately, trying to keep up, or down, with the kids. Anyone with a bit of internet nous will have heard the meme: “adjective noun is adjective” – and it seemed like Mr Clegg was enjoying using it this morning.

In two separate interviews on BBC outlets, while doing the rounds celebrating the coalition’s 100th day as if it were an achievement equal to the discovery that the Earth orbits the sun, he described the comprehensive spending review as “comprehensive”. Gee, that’s useful!

But the argument itself was rather specious, for the comprehensive spending review (CSR from now on to save my fingers!) is not exactly comprehensive at all. The mere notion that the government reduces every budget to zero and works upwards is a nonsense. Some programs are never going to be cut. We’re not exactly going to stop funding our wars. Meanwhile, we’ve been told the NHS budget is ringfenced. And yes, that milk in primary school scheme isn’t going anywhere either.

So to dodge questions about whether X programme is in jeopardy, or Y is going to be protected, by replying saying the CSR is “comprehensive”, that no decisions have been taken yet, but everything is up for grabs, is misleading. Everything isn’t up for grabs. Child benefit is going nowhere. Neither is the winter fuel allowance.

But that’s how all this started. All of a sudden, journalists have remembered that politicians are politicians, and unless they’ve given a Sherman pledge on something, there is always wriggle room. For instance (page 26):

We will protect key benefits for older people such as the winter fuel allowance, free TV licences, free bus travel, and free eye tests and prescriptions.

“Protect” is the verb. Protect is meaningless. One could argue that increasing the winter fuel allowance age limit to 66 is indeed “protecting” it, because if the government didn’t take such “bold and decisive action to preserve our economy” then the whole benefit would have to be scrapped. Easy.

Nowhere in that pledge does it say the government will not adjust eligibility requirements, or the value of the benefit-in-kind. And because of that, politicians, even in this “new politics”, are always going to be tempted to run things up the flagpole.

Of course, if the coalition document was full of Sherman pledges – comprehensive, shall we say – then it would run to about 3,000 pages, with a verbose explanation of every policy, covering every possible scenario. It would also be very boring and highly predictable. And, of course, it would only exist in cloud cuckoo land.

Not much of a spectator sport then. And that’s the comprehensive truth.

Is Trident In Trouble?

In Chewing Gum Administration

The fact that George Osborne has placed the cost of Trident within the Defence budget is quite an interesting gamble. It’s bound to enrage MoD types, and it’s made Dr Liam Fox, our esteemed Secretary of State for Defence, even more of a pariah than he already is.

The odds on Liam Fox being the next Cabinet minister to go are already high and will surely rise in the next few weeks if he starts to get a little stroppy over this decision. Surely Cameron is not already looking for yet another fight with his right-flank? One would have thought the whole coalition thing was bad enough for them to deal with, but seeing national security being chopped to help the budget deficit. Unthinkable!

The move will definitely endanger Trident, at least in its current form. There is no way the departmental budget can sustain its present guise and forthcoming renewal. So if they really want to keep it, major sacrifices will have to be made. Which is very unlikely, especially when there is obvious room for manoeuvre in the Trident budget.

It’s made me think, however. Is this actually a sop to the Lib Dems? Has Danny Alexander managed to persuade Osborne that, OK, we can’t cut Trident altogether, but can we at least do something – and give a credible, financial excuse – which forces the whole project to be reassessed? This allows the Tories to keep saying “we’re all in this together” and allows Lib Dems to quietly purr that, maybe, just maybe, we’re taking steps in the right direction, and we can all pretend the reason is “financial” so we don’t have to suffer the inevitable “SOFT ON TERROR!” attacks.

Politics is filled with trade-offs and calculating schemes of the highest order. This may well be one of them.

I hope so, anyway. It’s a damn sight more exciting.

Beware The Cuts Expectation Game

The gruesome twosome...

So which is it?

20% ? (June 8, 2010)

25% ? (June 23, 2010)

or 40% ? (July 3, 2010)

Or maybe none of these are possible.

Targets to cut government department spending by £35bn by 2011 are “unlikely” to be met, the National Audit Office (NAO) has warned.

Since the election, the rhetoric of cuts seems to have been increasing exponentially. I suppose that’s not much of a surprise. After all, why be honest with the voters when they’ll probably only kick you in the face for doing so?

Remember April? Ah yes, the General Election. It was fought over a miserable £6bn of cuts. Labour saying they couldn’t be made this year. Tories saying they very much could. Lib Dems sometimes said they could, sometimes said they couldn’t. It was all a bit uncertain.

Then once that inconvenience of being faced with the public vote was out the way, everyone started talking about the true task ahead.

Only now it seems to be getting more and more ridiculous.

Is the real reason why departments have been asked to plan for 40% cuts such that when they are only asked for a 20% cut it doesn’t sound so bad?

Expectations are everything in life. Stock market, currency and bond prices swing on a daily basis on the mere assumption of expectations of future growth or retrenchment.

Politics is no different. By making out that the government wants to slash and burn to a degree that would be truly unprecedented in modern democracy, we can pretend we’re all soft and cuddly when the cuts are a mere fraction of such a disaster. After all, if your budget is £100bn, and you’re asked to prepare for a cut to £60bn, and you later get told it will just be to £80bn, that’s a 50% reduction in the cut.

And then we have a “Big Society” mantra, which is to take our attention from the cuts taking place in public services by asking us to step forward and provide that same service ourselves for nothing. Just like that. A distraction trick of the highest calibre.

Cynical? Me? With my reputation?

I’m even beginning to think that the cuts may not actually be as drastic as we expect. There are two reasons to think that. First, if the economy starts to tank once more, cuts will simply not be possible, or a depression will ensue. Alternatively, if the economy actually starts to work, cuts so deep will not be necessary after all, and the government may step back from the brink, especially if public opinion starts to turn.

There is either a very clever game in progress here… or I’m crediting our politicians with too much intelligence and Machiavellian countenance. It’ll be fun to find out.

Protecting The “Frontline”?

This kind of "front line" removes parasitic fleas and ticks from the system. How... ironic.

In recent times we’ve been told that cuts would be “compassionate” – if that even means anything. The idea behind it being that cuts would be very careful, and avoid damaging the front-line.

Then the government unveiled its Spending Challenge, hoping to crowd-source ideas for saving money by asking six million public sector workers who “work on the frontline” (quote from the Spending Challenge website).

Putting that in the context of the Budget, which estimated cuts of 25% will be needed in each unprotected department, there’s something not adding up here.

From what I know, the Spending Challenge has gone out to a large number of people who we very definitely would not consider to be working on “the frontline” of public services. They are administrators, or other back-office support staff. When Joe Public thinks of the term “front line” in the context of the public sector, they probably mean doctors, nurses, teachers, maybe social workers, etc…

With that in mind, the coalition government can’t have it both ways. It is fantasy politics to pretend that these 6m public sector workers being consulted are not going to be affected. Yet that is what’s happening. After all, those compassionate cuts are going to avoid the “front line”. And David Cameron and Nick Clegg have called them all “front line”.

More likely then, they are engaging in a rather amusing exercise of self-destruction. They are asking the public sector workers to think of ways they can make themselves obsolete. Clever.

The real problem, as ever, is politicians not being able to say what they really want to say. Without a doubt they want to tell millions of public sector workers that their jobs no longer exist, but they probably want to win the next election, after all.

So, instead, they’ll craftily redefine what it means by “the frontline” when it suits them. You can be sure when the 25% cuts bite, and redundancies are announced (which they will be), we will be told that our government at least has protected the jobs “on the frontline”, and these are the sacrifices we will have to make if we want to keep teachers and police officers in their jobs.

Yes, people are going to be asked to commit hara-kiri for the sake of our betters. Even though, in June 2010, those people laying down their jobs were very probably being asked by David Cameron and Nick Clegg to share their most radical thoughts. Because they, on the “frontline”, had the best vantage point to see what was going wrong.

Politics, eh.

A Budget With Balls

The battered old Budget box keeps on going...

No, not the Ed kind of Balls – though more on him tomorrow – but the other kind.

Though the Budget has annoyed me in more ways than one, it has been very interesting, and very good, for another reason.

A couple of weeks ago I wrote this post imploring the government to just get on with it as far as cuts are concerned. At the time, I was fed up with the pussy-footing around, the idea that maybe cuts were going to be quick, or slow, and might exclude certain things too politically sensitive.

In the end, I got exactly what I wished for, and for that I am actually quite pleased.

The reason I am happy about this is simple. Politics doesn’t seem to be about anything these days; the three parties are increasingly close to each other. But this Budget really will set the cat amongst the pigeons. Labour, whoever their new leader is, are drawing a very clear line in the sand. They are, naturally, going to stand up for their record in power, and are going to snipe from the sidelines, but will be ready to say, “I told you so” if the worst predictions for this Budget do happen.

That is good. It feels like there is a real division between the coalition government and the Opposition, and that’s because, at last, there actually is. So many times politics is all about an imaginary distance between the two parties. So many times we have to suffer the tedium of centrist politicians fighting between themselves to out manoeuvre each other.

Naturally, I am under no illusion that Labour would also have been making cuts. But there is a stark difference between the parties. One is for cutting all the deficit within the next five years. The other had made half of that ambition. One is taking its ideological belief in a small state right to its logical conclusion. The other would have reluctantly made cuts, but only out of fiscal necessity, on a small and slower time scale in order to protect the state apparatus they genuine believe in.

OK, maybe when it’s put like that I might be exaggerating just how exciting this apparently yawning gap between the parties is. But in today’s catch-all politics, we have to be grateful for small mercies.

The coalition will either live by the cuts, or it’ll die by the cuts. Its whole reputation has been staked on this gamble.

As a person, I am deeply worried that we’re heading down the wrong path.

But as a political observer, the coalition government is the gift that keeps on giving.

We’re All In This Together… Unless You’re A Business

Aren't they a happy lot?

We’ve had many pro-business budgets in the past, but this one truly went out of its way to suck it up to them. After all, when was the last time you heard the CBI gush with such force about a government:

The Chancellor has achieved his twin objectives of setting out a credible plan for the public finances and producing a convincing growth strategy for the longer-term

Oh, yes, George! And all this before anything has actually changed yet.

It’s simple. There isn’t a single thing in the Budget that would have any negative impact on the business community. What’s that about VAT, you say? But most businesses, certainly the ones that employ people, claim back all input VAT anyway. And giving them till next January to plan for it eases the burden even further.

It’s those businesses that are more than one-man bands that are going to revel most in the plan to cut small companies’ corporation tax to 20%. And those medium and bigger businesses will also benefit from the year on year falls in corporation tax.

Then there is the changes to NI, which included a minor change to the thresholds, a reversing of Labour’s planned NI rise on employers, and an incentive scheme to encourage businesses to employ people outside the South East and London by reducing employers’ NI to zero on the first ten employees.

Meanwhile, the Capital Gains Tax rise on those who enjoy these kind of things was much less than it should have been, and George Osborne greatly improved an allowance for “entrepreneurs”, now allowing them to dispose of businesses at a very generous CGT rate of 10% below £5m.

Yes, banks are being hit… but even they didn’t seem too bothered. Very small ones will be exempted, and to them it may be a small price worth paying for the fact that they wouldn’t be in existence today but for the government. Furthermore, many of them are likely to play ball, keeping their powder dry for the bigger battle regarding breaking them up into smaller entities.

In other words, the totality of this package is the coalition saying to the private sector: we’ve done our bit, now get us out of this mess.

The question really is whether private sector growth is going to come roaring back to such an extent that it will make up for the withdrawal of 25% of the budget in all departments bar health and international development. It is also whether those cuts, which will affect public sector jobs, public sector wages and many private sector contracted-out jobs which rely on the public sector, will affect people’s spending and consumption. Coupled with the VAT rise, it simply has to.

George Osborne’s gamble appears to be that the public and private sector are in a zero-sum game. That’s a big enough risk on its own, without even considering the fact that the private sector is really not ready, willing or even able to prop up this stagnant economy.

Hold onto your hats…

It’s The Changes That Worry Me

Don't we look stupid now?

Today’s Budget has… irritated me. Just a little.

I don’t buy any of this rubbish that the Coalition are spinning: “it’s worse than we thought”.

Frankly, it can’t possibly be worse than they thought, considering the budget deficit is smaller than Labour had predicted, by almost £20bn compared to Labour’s first estimate.

Meanwhile, inflation is stubbornly high. Inflation, disastrous in large quantities, but very helpful in the short term it stays above target. And hiking up VAT is only going to add more to inflation. A crafty way to inflate away the debt, perhaps? All on the Q. T. – you understand.

No. “Worse than we thought” is spin, pure and simple. It’s a way to say “Not me guv!” all the while delivering the ideological love for cuts that is becoming apparent.

So if we ignore this spin, what other explanations could stand up?

The current Lib Dem line, which is being used as an excuse to tear up the manifesto, and make us a total laughing stock considering we stuck it to the Tories thusly, is that the “crisis” in Europe has made us reverse our whole economic doctrine. Yes, Vince Cable really has gone from centre-left neo-Keynesian to Thatcherite neo-liberalism. Or maybe it was just the Bank of England that persuaded him.

Never mind the voters. Never mind everything you told them, promised them and went all round the country trying to convince them of. Never mind your own principles either. There are others, after all.

It just doesn’t stack up to me. Look at the kind of thing Vince Cable was writing last year. And yes, events have changed. But after going through the most turbulent period in our economy’s history since the 1920s and 30s, can anyone claim with a straight face, like Danny Alexander and Nick Clegg do, that the last month in Europe has been even more dramatic that we’ve had to change almost everything we stood for?

It is an insult to people’s intelligence to pretend otherwise. Government has meant we’ve had to close down major chunks of our manifesto, which have been sold out to ensure the coalition’s agenda.

It’s grist to the mill of the opposition, naturally. After all, haven’t they been crowing since the dawn of time that you “cannot trust the Liberals/Lib Dems”? Say one thing in opposition, do another in power. We’ve only gone and proved it.

There was no mandate for a VAT rise. Everyone said they weren’t planning one. The Lib Dems even tried to make political capital out of it. Now, tainted by this decision, we will never hear the end of it.

More Budgety fun tomorrow, perhaps…

The Strains Of Coalition

Stolen from ConservativeHome.com, but drawn in 2007! Prophetic...

In recent days I’ve been troubled by the cover the Lib Dems are being forced to give to the Tories for the “cuts now” agenda. In truth, I’m probably deeply unsure myself, having argued in the past that we do need to make mega cuts in budgets all over the place, before then saying that those very cuts would do serious damage.

But now I feel quite certain. The economy is still in the tank. Cuts now are definitely going to create the W shaped recession we were all afraid of. The private sector is not sitting on its hands, waiting for the moment 20% is cut off all government department budgets to spring into action. The concept is laughable.

The consequence is that inbetween the cutting and the beginnings of genuine recovery in the private sector, there simply is going to be more of an economic decline.

The seriously worrying part of this, as a Liberal Democrat, is that the party is backing it 100%, and is completely tied into it with its Man in the Treasury, and coalition agreement pledging to be pretty radical with the scissors.

Last night, a Liberal Democrat MP, never mind a Cabinet minister, wouldn’t even appear on Newsnight to defend the agenda. Instead, it was left to former MP Susan Kramer, who was tied up in knots by Gavin Esler and even Ed Miliband over the pre-election opposition to “cuts now” compared with our new position of “why haven’t we started cutting yet?”.

There are some mutterings of discontent on the Lib Dem backbenches, but that’s no surprise. And though there’s still five years till the next election (apparently) early Lib Dem poll ratings are very poor indeed relative to our election performance, and considering all the pollsters massively overstated us in the run up to May 6.

If I’m wrong, and the government is right, and it manages to cut carefully without stoking another recession, and without punishing the poorest in society, then I’ll hold my hands up and admit it.

But right now, with the ideological love of a smaller state on the Tory benches, combining with the libertarian economist streak that is emerging from the Orange Bookers in the Lib Dems, it seems to be creating the perfect storm for a groupthink mentality, coalescing around a slash-and-burn programme.

And that may be exactly like standing on the grasping fingers of a man clinging for dear life on the cliff precipice.

Oh, the next 12 months will be worth watching…

The Cut Conflab

It's fortunate for me that there is almost one of these motivational style posters for every subject...

It sounds like it should be the name of a hairdressing consultant, but, apparently it’s what we’re all going to be subject to in the coming months.

I’m on the fence about this for two reasons.

One, this a new government, with a good mandate from coalition. It has political capital to spend, and if it wants to prove itself, prove that all those years in opposition were spent thinking and planning what to do with power, then it should have the courage of its convictions to get to work. After all, the public have only just been consulted a little over one month ago…

On the other hand, I have some sympathy with the argument. The problem is that throughout the campaign, no one was prepared to say what they were prepared to cut. There was nothing in the manifesto on specifics. The £6.2bn that’s already been cut had no detail pre-election either. It was just a figure the Tories wanted. And they got it. They at least had a mandate for that target, but there is no mandate for, say, big cuts in the welfare budget, as David Cameron seemed to suggest yesterday.

But does that mean they will suddenly get a mandate if they launch a consultation exercise and suddenly find that the public backs cuts here there and everywhere? Probably not. After all, there is no danger the consultation is going to come back and say people like their current level of public service spending, thank you very much. Cameron and Co would never risk such embarrassment.

That means the consultation will have its terms of reference severely limited to outlining where the axe should fall. Perhaps George Osborne will say the target is 20%, and the mandarins and other bureaucrats (who, by the way, we hate for their wasteful spending!) will make some appropriate suggestions. Then the public will be invited to ask if they agree, and by jingo, I bet you they will.

After all, who responds to consultations? They’re hardly likely to be representative of the public at large.

Politics is all about judgement. This new government has some serious decisions to take in the months ahead, but is already seeming to want to shrink back from them for the time being, at a time when their mandate is highest, and the honeymoon is still in progress, Laws or no Laws.

Farming these decisions out to “independent”, “non-partisan” people just makes a mockery of the political process. If we want a government of technocrats, governed by some theoretical concepts of utilitarianism, we might as well just abolish democracy now.

That’s why they really should just get on with it.

Budget Cuts: Get On With It

This is what LabourList secretly hopes will be in the Emergency Budget so they can say "I told you so"

The tedium of politics in the last year or more has been the fact that everyone has been going round saying cuts are inevitable and yet nothing has actually happened.

Well, it sort of has with the £6.2bn cuts this year that the Coalition outlined, though we won’t know till afterwards if the targets for the efficiency savings will be met. In any event, they are a drop in the ocean for what’s required.

So seeing today that David Cameron is once again going to tell us that “painful” cuts are necessary, I had reason to have a little yawn.

Clearly the pols think the softening up process needs to continue in advance of this autumn’s Comprehensive Spending Review. That is going to be when the huge cuts will be unveiled, probably around 15-20% across the board, because of the protection to the NHS budget.

Before then though, there is this small matter of an “emergency” Budget.

The bizarre thing is that the Budget will probably not reveal anything more than we already know. It will be another step in the gradual narrative leading up to this autumn. It will be a one hour lecture from George Osborne detailing Labour’s profligacy, and taking some joy in reversing some of their recent decisions.

But we all know this by now. We all know what’s round the corner. We all know the Coalition is hell bent on cuts the likes of which the country hasn’t seen for decades. We expect that from Tories. It is their ideological dream, and to have the cover of a stonking great deficit for it is of supreme excitement to them.

We shall see what effect they have. There will be services curtailed and dropped altogether. Many of them will be used by only a minority of the population. The major things will survive and be reformed, making a lot of middle England wonder what all the fuss was about.

But if a double dip recession really is just peeping over the horizon, the Coalition better choose its medicine appropriately. Wouldn’t want to get lumbered with the epitaph of killing off the British economy, would they? That would look pretty damn stupid after the stick they gave the last lot…

Seems to me, then, that we’re stuck in a holding pattern, waiting to see how the Tories are going to spend their election/coalition mandate.

I just wish they’d get on with it. After all, if it really is an “emergency”…