Osborne's cuts will cost Britain in the long run

Through his narrow focus on making the books add up now, the Chancellor is piling up social costs for the future.

George Osborne today set out the grim departmental spending settlement for 2015-16: the year after the next general election and so, in some ways, no more than a starting point for whoever wins. Yet it is a critical baseline: whatever its political colour, if the government of the day wishes to deviate from these plans they will either need to set out how they will reallocate cuts between departments, or how they will replace these cuts by either increasing taxes or increasing borrowing. It is also likely, then, to mark a turning point in the framing of the political debate about austerity.

Unless there has been no or very little pick up in the economy by 2015, (in which case the economy is in much more serious trouble than many think) it looks increasingly likely that Labour will go into the general election with a 1997-style type pledge to match Conservative spending plans, at least on current spending. Even if that isn’t the position, all of the parties are signed up to medium-term fiscal consolidation. As the debate moves away from the here and now, and towards what happens after the next election, "too far, too fast" will become increasingly irrelevant.

This is why Miliband and Balls have shifted the debate away from the pace of deficit reduction towards starting to set out how Labour might seek to make savings. The debate is not so much about the size of the state but about how fiscal consolidation is to be achieved. There are some major flaws in the way Osborne is cutting and the centre-left should be highlighting these while still emphasising the need for medium-term cuts.

A smart corporate looking to take almost a fifth of its cost base out over an eight-year period would probably start with three principles. First, it would look right across its activities and investments to take a comparative view of what adds most value to its business, and would start by taking out the lowest-value expenditure. Second, it would take a long-term view spanning decades not months: ensuring cuts made today would not create higher costs over a ten or twenty year period. Last, it would have its best and smartest minds focused on the significant task at hand: it certainly wouldn’t be letting its top performers go, or distract its board and mid-level management with big restructures or expansion into new markets.

Osborne’s approach couldn’t be further from this sort of strategy. First, the government is not looking at what it does in the round, taking a comparative view of the value of its activities. Thus it is ring-fencing universal pensioner benefits, such as the Winter Fuel Allowance and free bus passes, some of which are paid to older people with an income far in excess of average earnings in retirement, while cutting working-age benefits and services for young people. Four out of five pounds of every welfare cut are hitting families in work, for example through cuts to childcare tax credits. Despite historically high levels of long-term youth unemployment, the Future Jobs Fund and the Education Maintenance Allowance have also been cut. The cumulative result of Osborne’s decisions, from his first emergency Budget up until today, is a big redistribution from the young to the old, further consolidating the intergenerational transfer that’s happened via the housing price bubble and shifts in pension provision away from defined benefit towards defined contriubution.

Second, Osborne is taking a short-term view, pursuing cuts that may make the books add up that year but which risk creating big long-term costs for the state. The short-sightedness of his decision to cut the Future Jobs Fund, proven to work in reducing youth unemployment, is a perfect example: the long-term costs of youth unemployment through the 'scarring' impact it has on a young person’s lifetime employment opportunities are well-established. But there are many others. Cutbacks to the early years services offered in children’s centres risk manifesting themselves in higher costs later on, for example through poorer school results and employment outcomes for the young children who no longer benefit from them. The government has forecast its increased tuition fees will save money based on some highly optimistic predictions about the rate at which graduates will pay back loans: the Higher Education Policy Institute have said the new system could actually end up costing more than the old system, despite a £9,000 a year price tag on most degrees. Some decisions will end up costing more in the even shorter term. The bedroom tax is forcing local authorities to move those who cannot afford it to more expensive bed and breakfast accommodation when there are no smaller homes available. Social care cuts simply shift the load over to the NHS as hospitals are forced to keep older people on wards longer than necessary because of a lack of community care, an even more expensive solution.

Osborne would claim that in the case of social care and children’s centres, it is local authorities choosing to make these cuts in light of their reduced settlement, not him. But if Whitehall were taking the long view it would be incentivising local government to think longer-term, for example by enacting a settlement that allows councils that do achieve long-term savings to keep a proportion to reinvest.

Last, the government certainly does not seem to be creating space for its brightest and best minds to focus on the challenge in hand without distraction. Cutting headcounts is an inevitable part of any austerity programme. But this has not been used as an opportunity to performance-manage out the poor performers. Instead, in many Whitehall departments, the best staff have taken voluntary redundancy packages and left. And the government’s misguided public service reform programme is absorbing huge amounts of energy at a time when morale is low. The NHS faces its tightest spending settlement since the Second World War: demographic pressures and social care cuts mean the ring-fence will feel very much like a cut. Yet health commissioners are focused not on the challenge at hand but on a massive structural reorganisation with no clear rationale as to why this will improve the quality of healthcare. In education, primary schools in several local authorities are being forced to become academies, getting grants of tens of thousands of pounds from central government to figure out how to recreate back-office and school improvement economies of scale. Ofsted has said this risks distracting school leaders from their core mission of improving standards at a time when cuts to children’s services are loading more onto schools.

The centre-left cannot make these sorts of critiques without saying more about how it would be cutting differently. Yet by setting out what he would do were he still Chancellor in 2015, Osborne is effectively forcing Labour onto this territory. Miliband and Balls made a good start a couple of weeks ago in making it clear universal pensioner benefits are no longer sacrosanct in light of what that means for support for young people and working families, and insetting out how a Labour government would seek to bring down the medium-term cost of social security by investing upfront in house building and encouraging businesses to pay the living wage. Eventually though, and before the next general election, Labour will need to say exactly how their plans would differ from Osborne’s; with the assumption that unless they set out more tax rises or accept higher levels of borrowing to pay for current spending, they will need to accept his cuts unless they are reapportioned elsewhere. This is what Ed Miliband signalled is to come in a recent speech: it will represent a marked shift in the tone of the political debate.

Sonia Sodha is a former policy adviser to Ed Miliband and writes in a personal capacity

George Osborne and Danny Alexander leave the Treasury for the House of Commons before the Spending Review. Photograph: Getty Images.

Sonia Sodha is head of policy and strategy at the Social Research Unit and a former senior policy adviser to Ed Miliband. She tweets @soniasodha.

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Why I'll miss Sean Spicer, the tragic hero who couldn't cope with Trump

He was all of us when we have a sociopath for a boss.

From the first day he walked up to the White House press podium, in his ill fitting suit like an intern on his first day in the office, my heart went out to Sean Spicer. He did that classic thing you do when you have a very strong brief from your new boss and no idea what you're doing. He went completely overboard. Donald Trump’s inauguration crowd wasn't only huge, contrary to actual photo, video and eye witness reports, it was exceptionally huge. In fact, it was the biggest in history. Period!

We all had the same thought. This guy? This is who you pick to be White House press secretary? He crashed on to the scene all stutters and swivel eyes and redundant suit material. It was a fitting debut for the Trump’s administration.  

It was the start of a show that would give us Sean Spicer’s ABCs, a montage that poked fun at his tendency to mispronounce words and foreign leaders’ names. His greatest hits include saying "sometimes we can disagree with the facts". He brought on to the stage two piles of paper, one large and one small, pointing to the larger one as evidence of what "big government does", like he was on Sesame Street showing the kids the difference between BIG and SMALL. He said even "someone as despicable as Hitler didn’t sink to using chemical weapons". Just face palm, head-desk stuff everyday. His press briefings descended into laughter from the press and cries "oh come on Sean. Sean??" as he stormed off in the middle of a briefing.

But somehow, you couldn’t get mad at him. Or mad enough. Sean Spicer is that man who collapses late into the meeting he is supposed to be leading, sweating, nervous, spilt coffee down his tie and a distinct air of having stress-induced heartburn, before overcompensating for it by talking over everyone and throwing his weight around. More than anything, Spicer just seemed scared. His bursts of irritation and anger masking a deep seated sense of inadequacy probably much exacerbated by Trump reportedly chewing him out everytime he didn't come across as slick enough.  

Despite working for a dishonest and dissembling White House, Spicer never felt like the actual bully. He was the bullied. The kid who wanted in with the big boys and did their bidding but actually wasn't that bad inside so never did it with much effect. Indeed, he was all of us when we have a sociopath for a boss, a recent promotion, and a mortgage. All of us when just trying to get through the day when we don’t believe what we’re selling and are crippled by impostor syndrome. He was a tragic hero. Someone who just wanted to be taken seriously but somehow had missed out on all the genes that would enable that. The man who shoveled elephant excrement at the Big Top but stuck with it because he wanted to work in show business. A modern day clown who hated people laughing at him and cried after the show. And then there was Melissa McCarthy’s Saturday Night Live rendition which drove the final nail in the coffin of his hope to ever develop any gravitas. But it was as affectionate as it was brutal.

None of this excuses any of his complicity of course. I over embellish for effect. He went out there and lied day in and day out, but as his tenure went on, his suits got better, but one felt that he wasn’t coping. People who could work for Donald Trump and not have a nervous breakdown probably fall into two camps; those who agree with him and all his tactics, and those who don’t but are careerists. To be in the latter and be able to sleep at night requires a pretty high functioning ability to compartmentalise and, let’s be honest - kill your soul.

In a recent interview, Tom Ricks, the veteran journalist said:

"It's a crushing burden to be in political power in Washington these days, and you see people almost lose their souls. I think Sean Spicer, the president's spokesman in recent weeks has been pushed almost to the edge of a nervous breakdown from his public appearance. And he's kind of lost a big part of his soul, and I think that's true of some other people. And watching H.R. McMaster, an officer I do admire, over the last few weeks, I feel like I've seen him come out and give up a slice of his soul a few times. And I wonder how many more times he can do that before he just says I am becoming part of the problem, not part of the solution here."

That’s what it felt Spicer was doing everytime he came on. Giving up a slice of his soul. This might be a charitable explanation and he’s just really bad at his job. But when Sarah Huckabee Sanders began job sharing with him, it looked like her relative competence was less attributable to the fact that she was a better press secretary, and more that she was a soulless stone cold liar who felt no dissonance.

As Anthony Scaramucci came onto the podium to accept his position as White House Communications Director, the appointment that Spicer allegedly resigned over, it was clear that it could get a lot worse than Spicer. Scaramucci put on a sickening display where he said he "loved" and was "loyal" to the president about ten times, as Huckabee, now fully wearing the late Sean Spicer’s shoes as White House Press Secretary, looked on dead-eyed from the sidelines.

Sean Spicer still has a chance to completely blacken his name and lose any fondness he may have fostered by leaving the White House, joining the cable TV circuit  and continuing to shill for the Trump administration. This is a highly probably scenario. But until then, here’s to Sean Spicer. You were the best White House press secretary ever. Period!