The Tories should listen to their own economic adviser

Senior Tory pundit warns that early spending cuts would plunge UK economy back into recession.

Conflicting advice for the Tories on spending cuts this morning.

Here's the Institute of Directors:

We are convinced that we need swift action to tackle the Budget deficit. This means making significant spending cuts in 2010. We believe that lower spending is likely to trigger a whole series of positive developments that will assist growth.

And here is Sir Alan Budd, one of the party's senior economic advisers:

If you go too quickly, then there is a risk that the recovery will be snuffed out and we will go back into a recession -- I mean what the Americans say: "Remember 1937."

Budd, who is expected to run the Tories' new Office of Budget Responsibility, is of course right. As our own David Blanchflower has consistently warned, the immediate spending cuts promised by George "Slasher" Osborne would likely trigger a double-dip recession. So long as the level of lending to businesses remains low, the state must step in to boost demand.

Osborne has hailed the IoD's Budget submission (and a similar report from the CBI) as evidence that the economic consensus is moving in the Tories' favour.

But he should be wary of courting such right-wing company. The IoD has called for public spending to be slashed from 48 per cent of GDP to 35 per cent, in part so that corporation tax can be reduced from 28 per cent to 15 per cent.

Osborne has already promised early action to cut the headline rate of corporation tax to 25 per cent and the Tory treasurer, Michael Spencer, has spoken of a rate of 20 per cent by the end of a first parliament.

In a previous report, co-authored with the TaxPayers' Alliance, the IoD suggested, among other things, a two-year public-sector pay freeze, abolishing Sure Start and scrapping the Education Maintenance Allowance.

Osborne may yet need to turn to the IoD for advice on cuts. The Institute for Fiscal Studies has estimated that the Tories' promise to ring-fence spending on health and overseas aid, combined with their pledge to reduce the deficit faster than Labour, means that all other departments face cuts of 22.8 per cent by 2014-2015.

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George Eaton is political editor of the New Statesman.

Felipe Araujo
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Hull revisited: What happens when a Brexit stronghold becomes City of Culture?

We report from Hull, to find out if you can replace the kind of nostalgia that led to a Leave vote with cultural investment.

At 75 metres long, the offshore wind turbine blade erected across Queen Victoria Square, in the heart of Hull, is a sculpture intended to mark a new chapter in the city’s history. For the next 12 months, Hull, a city of more than a quarter of a million people in the northeast of England, will be the UK’s City of Culture.

The 28-tonne blade hails from the local Siemens plant. The German technology company employs around 1,000 people in the area, making it Hull’s biggest single employer.

Seen up close in this context – laid dormant in the middle of a town square instead of spinning up in the air generating energy – the structure is meant to remind passersby of a giant sea creature. It is also, I’m told, an allusion to Hull’s rich maritime history.


All photos: Felipe Araujo

Nostalgia is a big thing in this part of the country. At one point, Hull was the UK’s third largest port but technology and privatisation drastically changed that. The battle over cod fishing with Iceland in the waters of the North Sea 40 years ago has also dealt a major blow to a region with a long and proud trawling tradition.

People here still talk about a bygone era when the fishing industry provided jobs for everyone and there was enough money to go around.

Fast forward to 2017, and the country’s new capital of culture is the same city that voted 67 per cent in favour of leaving the EU last June. Its new-found prestige, it seems, is not enough to erase years of neglect by a political class “too busy for commoners like us”, as one resident puts it.

“More than a message to Brussels, it [the Brexit vote] was a message to Westminster,” Paul Leeson-Taylor, a filmmaker born and bred in Hull, tells me. “For the first time in a long time people in Hull felt like they had the chance to change something, and they took it.”

But while speaking to people on the high street and hanging out with locals at the Community Boxing Club in Orchard Park, one of the city’s most deprived areas, there is one word that consistently popped up in conversation – more than any specific policy from Westminster or the much-hated rules “dictated” by Brussels. Foreigners.

According to official figures, Hull’s population is 89.1 per cent white British. Still, immigration is big on people’s minds here.

During my two-day stay in the city, I find myself being the only black person in most places I visit – I’m certainly the only black guy at the boxing club. So when someone begins a sentence with “I’m not racist but…”, I know a tirade on immigrants is about to ensue.

“There are just too many of them,” Nick Beach, an estate agent whose Polish clientele is a big part of his business, tells me as he is about to teach a boxing class to local children. Beach was born in Shepherd’s Bush, in West London, but has been living in Hull for the last 20 years.

“When I go down there these days and go into Westfield shopping centre, it is very rare you get an English person serving you now,” he says. “I just find it disappointing that you go into your capital city and you are a minority there.”

These are the much-discussed “left behind”, a white working-class community that has gained particular prominence in a time of Brexit and Donald Trump. Under economic pressure and facing social change, they want to have their say in running a country they claim to no longer recognise.

For Professor Simon Lee, a senior politics lecturer at the University of Hull, immigration is only a superficial layer when it comes to explaining the resentment I witness here. For him, the loss of the empire 70 years ago is still something that as a country Britain hasn’t come to terms with.

“The reason for us to be together as a United Kingdom has gone, so what is the project?”

As destiny would have it, a foreign company will now play a major role on Hull’s economic future, at least in the short term. In the wake of the Brexit vote, there were widespread fears Siemens would pull out of the region and take its factory elsewhere. With the massive blade looming large in the background, Jason Speedy, director of the blade factory in Hull, assures me that isn’t the case.

“The Brexit decision has made no difference. We have made our investment decision, so Siemens, together with the Association of British Ports, has put in £310m. It’s all full steam ahead.”

As Hull becomes the country’s cultural hub for the next few months, the hope is that its residents stop looking back and start looking forward.

For Professor Lee, though, until there is a complete change in the power structures that run the country, the north-south divide will remain – with or without the EU. “The way you kill nostalgia is to have something new,” he said. “The reason why people here are nostalgic is because there is nothing to replace it with.”

Felipe Araujo is a freelance journalist based in London. He writes about race, culture and sports. He covered the Rio Olympics and Paralympics on the ground for the New Statesman. He tweets @felipethejourno.