Death by a thousand cuts

It’s pouring with rain here in Mexico and reminding me of the gloomy homeland, so I thought I would round up some of the latest news on the cuts.

To begin with, the man in charge of ensuring the cuts are administered properly has decided he wants nothing to do with it after all. The Financial Times reports that the coalition government intends to introduce a reverse London weighting for regionally-employed civil servants. There are rather a lot of them, it seems – almost 400,000 in fact – and such a pay differential will peg back the intended boosts to local economies which was part of the point of devolving employment in the first place. This shows that the government is effectively in support of the absurd cost-of-living gap between London & the South-East and the rest of the United Kingdom (where London is one of the most expensive cities in Europe, and Belfast, for example, one of the cheapest); further cuts will considerably set back the economic recovery in the regions. This is in addition to the news that the government hopes to reduce further the cuts to civil service redundancy payments agreed last year; the aim is apparently to reduce them to those ‘enjoyed’ by the least secure private sector workers (unbelievably as little as a week’s salary per year worked). Those civil servants who lose their jobs are not expected to find work easily in the private sector.

The particularly pernicious targeting of incapacity benefit is unpopular among the yellow segment of the coalition, but Lib Dem opposition does not seem to have had any effect. Plans to reduce unemployment benefit payments are moving ahead (pleasing the credit raters who were so beautifully revealed as complete morons by Michael Lewis in The Big Short), despite news that graduate job vacancies have fallen to a one-to-seventy jobs-to-applicant ratio, further swelling the jobless masses. It remains unclear what the coalition policy on university place provision will be, though the Liberal Democrats have so far displayed no ability to rein in the gleeful Tory knife-wielders. Labour has provided little coherent opposition as thoughts turn to its impending ’40-ish inoffensive white male’ popularity contest, though at least Milibland Jr provoked some sort of debate on tuition fees (note the entirely unsurprising dissenter, the Professor of Management). And in a stealing-candy*-from-a-baby** shocker, despite the supposed ring-fencing of the schools budget the scrapping of £1 billion of building schemes was announced today.

(*for ‘candy’, read ‘bricks and mortar’; **for ‘a baby’, read ‘schoolchildren’)

How does this affect the prognosis for economic recovery? The signs are pretty terrible. The pound continues to look toothless, and the service sector recovery seems to have been an illusion. The British Chambers of Commerce report the biggest drop in business confidence ever recorded in one calendar month in response to the ’emergency’ budget. Yes, ever. The compiler of the survey suggested that the “government was almost walking away from supporting the recovery and moving towards settling their political agenda”. Why this should be seen as surprising is beyond me, as it simply confirms the dogmatic neoliberal agenda so fervently espoused by George Osborne – this is ideology, not economics. For the Conservative policy-makers, demand-side economics is a distracting irrelevance and any hope that the British economy will be stimulated into growing its way out of debt is dying rapidly.  Conservative policies will create a vast and desperate rank of unemployed reserve labour; this is, of course, great news for employers, as long as they stick their fingers in their ears and pretend nobody needs to buy their wares. I expect renewed attacks on labour organisation (as seen already in relation to the civil service, and flagged by Robert Peston in regard to the BBC) and perhaps even a call for a reduction in the minimum wage under the banner of ‘getting the economy moving’, but in reality to protect profits in a stagnant period. This may at least have the side-effect of sending a life-giving shock through the moribund corpse of the union movement.

Former Bank of England MPC member David Blanchflower (he of prescient pre-crash interest rate wisdom) has given his damning verdict on the government’s fiscal policy. And when the Financial Times, mouthpiece of the markets, thinks the government is too neoliberal, it truly is time to panic, though perhaps Osborne can take some comfort from the fact that his friends at the ghastly Spectator still love his work.

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Published in: on July 6, 2010 at 5:21 am  Leave a Comment  

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