“Our plan B”, so some Treasury official was recently quoted, “is to do plan A, but for longer”.
And maybe with even more destructive cuts.
The international economic organisation OECD reckons that the UK is already into a double-dip recession, at least for the end of 2011 and the start of 2012. The government’s claims that its cuts would close the budget deficit are way off the mark.
In his autumn statement on 29 November, chancellor George Osborne responded with some feeble “growth” stunts, and renewed cuts;
• Public sector pay rises will be frozen at one per cent, amidst 5% inflation.
• The state pension age will be raised quicker.
• Tax credits will be cut in real terms.
Back in 2010, Ed Balls was saying that “cutting billions of pounds from public services and taking billions of pounds out of family budgets” would kill jobs and growth, and that Labour should consider cuts “only once growth is fully secured”. It was an argument within orthodox capitalist economics, from the Keynesian rather than monetarist side, but it’s turned out completely right as far as it went.
Labour and the unions should now be pressing the case for expanded public services, against cuts.
Instead, Balls limits himself to a piffling “five point growth plan”, not much stronger than Osborne’s “growth” stunts.