Cameron is wrong: the spending cuts are ideological

The Prime Minister says the cuts are not due to his “ideological zeal”. Here’s why he’s wrong.

In his New Year message, David Cameron attempts to rebut the charge that the government's spending cuts are ideologically driven.

He writes:

I didn't come into politics to make cuts. Neither did Nick Clegg. But in the end politics is about national interest, not personal political agendas. We're tackling the deficit because we have to – not out of some ideological zeal. This is a government led by people with a practical desire to sort out this country's problems, not by ideology.

Here are three reasons why he's wrong.

The coalition could have taxed more and cut less

There was an alternative to George Osborne's £81bn spending cuts: higher taxes on the richest in our society. The Chancellor has chosen to reduce the deficit through a 59:41 ratio of spending cuts to tax rises in 2010/2011, rising to 77:23 by 2015/2016 (see Table 1.1 in the Budget).

But as the graphic below from the Economist shows, most deficit reductions have involved a far more even split between tax rises and spending cuts.

Deficit-reduction

The coalition's deficit reduction programme relies more heavily on spending cuts than all but two of the largest OECD fiscal consolidations.

A higher level of tax rises on top earners would have enabled a more progressive programme of fiscal consolidation (the cuts are, by any measure, regressive) and, as I explain below, a less economically reckless approach.

The coalition could have raised more revenue through a tax on land value (69 per cent of which is owned by just 0.6 per cent of the population); a genuine crackdown on the £25bn lost each year through tax avoidance; a tougher, not a weaker, bank levy; and higher, not lower, corporation tax.

The decision to rely on punitive spending cuts to reduce the deficit was a political choice, not an economic necessity.

Spending cuts harm the economy more than tax rises

Economists are agreed that the government's spending cuts will hit growth harder than tax rises would. As Duncan Weldon explains at the excellent False Economy, the fiscal multiplier (the effect on GDP of a tax rise or a spending cut) proves as much. The Office for Budget Responsibility's own multipliers (see Table C8 in the Budget) show that the cuts will reduce growth by significantly more than the coalition's tax rises.

As the shadow chancellor, Alan Johnson, noted in his pre-Spending Review speech: "We know from the Office for Budget Responsibility's own figures that a spending cut hits growth twice as hard as a tax change – three times as hard when it's capital spending."

The government's decision to ignore such economic evidence is the result of an ideological preference for spending cuts.

The cuts are permanent, not temporary

When asked by a Fire Brigade worker last summer if funding would be restored once the deficit has been addressed, Cameron replied:

The direct answer to your question, should we cut things now and go back later and try and restore them later, [is] I think we should be trying to avoid that approach.

The Prime Minister's insistence that we should try to "avoid that approach" reveals an ideological attachment to the small state and to low levels of public spending. The result will be permanently shrunken public services.

The cuts will reduce public spending from 47.3 per cent of GDP in 2010/2011 to 39.8 per cent in 2015/2016 – equivalent to reductions made by Margaret Thatcher between 1979 and 1990. But for many on the right, this is just the beginning of their long war against the active state.

George Eaton is political editor of the New Statesman.

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Our union backed Brexit, but that doesn't mean scrapping freedom of movement

We can only improve the lives of our members, like those planning stike action at McDonalds, through solidarity.

The campaign to defend and extend free movement – highlighted by the launch of the Labour Campaign for Free Movement this month – is being seen in some circles as a back door strategy to re-run the EU referendum. If that was truly the case, then I don't think Unions like mine (the BFAWU) would be involved, especially as we campaigned to leave the EU ourselves.

In stark contrast to the rhetoric used by many sections of the Leave campaign, our argument wasn’t driven by fear and paranoia about migrant workers. A good number of the BFAWU’s membership is made up of workers not just from the EU, but from all corners of the world. They make a positive contribution to the industry that we represent. These people make a far larger and important contribution to our society and our communities than the wealthy Brexiteers, who sought to do nothing other than de-humanise them, cheered along by a rabid, right-wing press. 

Those who are calling for end to freedom of movement fail to realise that it’s people, rather than land and borders that makes the world we live in. Division works only in the interest of those that want to hold power, control, influence and wealth. Unfortunately, despite a rich history in terms of where division leads us, a good chunk of the UK population still falls for it. We believe that those who live and work here or in other countries should have their skills recognised and enjoy the same rights as those born in that country, including the democratic right to vote. 

Workers born outside of the UK contribute more than £328 million to the UK economy every day. Our NHS depends on their labour in order to keep it running; the leisure and hospitality industries depend on them in order to function; the food industry (including farming to a degree) is often propped up by their work.

The real architects of our misery and hardship reside in Westminster. It is they who introduced legislation designed to allow bosses to act with impunity and pay poverty wages. The only way we can really improve our lives is not as some would have you believe, by blaming other poor workers from other countries, it is through standing together in solidarity. By organising and combining that we become stronger as our fabulous members are showing through their decision to ballot for strike action in McDonalds.

Our members in McDonalds are both born in the UK and outside the UK, and where the bosses have separated groups of workers by pitting certain nationalities against each other, the workers organised have stood together and fought to win change for all, even organising themed social events to welcome each other in the face of the bosses ‘attempts to create divisions in the workplace.

Our union has held the long term view that we should have a planned economy with an ability to own and control the means of production. Our members saw the EU as a gravy train, working in the interests of wealthy elites and industrial scale tax avoidance. They felt that leaving the EU would give the UK the best opportunity to renationalise our key industries and begin a programme of manufacturing on a scale that would allow us to be self-sufficient and independent while enjoying solid trading relationships with other countries. Obviously, a key component in terms of facilitating this is continued freedom of movement.

Many of our members come from communities that voted to leave the EU. They are a reflection of real life that the movers and shakers in both the Leave and Remain campaigns took for granted. We weren’t surprised by the outcome of the EU referendum; after decades of politicians heaping blame on the EU for everything from the shape of fruit to personal hardship, what else could we possibly expect? However, we cannot allow migrant labour to remain as a political football to give succour to the prejudices of the uninformed. Given the same rights and freedoms as UK citizens, foreign workers have the ability to ensure that the UK actually makes a success of Brexit, one that benefits the many, rather than the few.

Ian Hodon is President of the Bakers and Allied Food Workers Union and founding signatory of the Labour Campaign for Free Movement.