The cuts: another straw in the wind?

The Guardian’s most centrist commentator Martin Kettle argues that  the First Minsters’ case  for leniency is one of the signs that the cuts mightn’t  live up to their fierce billing. Or is  being panglossian, as he himself wonders?

Extracts

 Might it not instead be time for the long expected political hurricane to be cautiously downgraded to a tropical storm?

Here are three very current reasons for thinking the answer is yes. The first is this week’s report in the Financial Times that Treasury officials are working to “reprofile” the planned cuts more evenly over coming years

Now here’s the second reason. It comes in the form of yesterday’s joint declaration by the UK’s three devolved first ministers that the cuts are too fast and too deep. Given that Scotland, Wales and Northern Ireland are all disproportionately threatened by the cuts, the joint declaration is hardly unexpected. Nevertheless anything that gets the SNP’s Alex Salmond, Labour’s Carwyn Jones and the DUP’s Peter Robinson on the same side cannot be dismissed as the usual suspects.

As recently as Monday, in his speech to the Tories in Birmingham, George Osborne claimed that only Ed Miliband and the union bosses that made him Labour leader were opposed to the government’s plans. Everyone else from the IMF and the OECD to David Miliband, Tony Blair and the British people were on the coalition’s side in the argument, said Osborne. Yesterday’s joint declaration makes that claim look silly.

The third piece of evidence is in some ways the most suggestive of all. John Hutton’s interim report on public sector pensions is as intelligent a piece of political and policy work as one would expect from this most underrated of former Labour ministers. At its heart is Hutton’s belief that denial about the affordability of the problem is simply not a long-term option. But central too is his rejection of many of the lazy cliches about public sector pensions into which both the Conservatives and the Lib Dems have recently fallen.

 

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  • Two quickies here (I’m off base, in haste):

    1. Having marched his men to the top of the hill, can Osborne now march them down again? My impression is that the Tory Right are looking for raw red meat; and are not going to be satisfied with canapes. Around the same moment, the narrative about the Labour legacy starts to unravel. If what we get is the diet previously prescribed by Chancellor Darling, cui bono?

    2. Hutton, according to one interpretation (the FT?) bottled it on one important element. He keeps the “dscount rate” (or whatever the technical term is) in the control of the Treasury. This is the notional amount of “interest” that the Treasury use to calculate the unfunded amounts paid in by contributors. Repeatedly this has been the big point of dispute. The State has been deducting significant amounts from public sector salaries for many decades, and trousering that into the general fund. What should be the proper “rate of interest”? Were that fairly included, to match how funded pensions accumulated, the public-sector unions argue the funds would remain in massive surplus.

    Public sector pensions have already been devalued by a quarter (that is in Hutton, but the piranas in the IEA chose to ignore it). the switch in indexation to CPI will be a further 10%. At some point, public sector employees (who accepted lower-than-private sector pay in return for such benefits) are entitled to ask why they are being sold a pup.

  • dodrade

    I suspect Kettle is whistling past the graveyard on this one.

  • Alias

    John Hume said that unionists are loyal to the half-crown not the crown, but the reality is that catholics are just as loyal to the half-crown as the protestants are, and probably even more so since the catholics are fixated on a rights-based legislature and the welfare systems that is spawned by it. British state subvention is therefore a central dynamic of their politics and they’d have no politics at all without the crown and the half-crown.

    Crown spending in NI as percentage of GDP is over 70%, so the citizens of NI would be utterly destitute if the crown wavered in its support for them. It won’t waver in that support, however, since its policy is to make them state-dependent and it has duly and successfully implemented that policy. They will never vote to dismantle the state that they depend on.

    That reality, if Peter Robinson is aware of it, must present him with an awful conflict of interest between his desire for a smaller public sector and his desire to maintain the union since if he cuts the half-crown then he also cuts loyalty to the crown.

    The catholic parties would support a cut in British state subvention if they wanted to undermine support for the union but that is not their actual agenda, being mere puppet parties of the British state.

  • DC

    True.

  • Archie Noble

    Kettle… Yes, well he has form for being wrong.

    I’m interested to note that the role of ‘pensions holiday’ in this story is being studiously avoided by journalists. Do they even know what it is I wonder?

  • Alex Gray

    Successive DUP Finance Ministers denied there was a blck hole in the public finances for a year and a half despite weekly warnings from David McNarry of the UUP. The suddently there was a £400 million black hole. Now they are taking a departmental approach to cuts – but as one MLA said recently this could see a hospital ward closing on the same day a football pitch was opened. Both the DUP and Sinn Fein indulge in populist politics – Sinn Fein say they will fight the cuts and teh DUP say they will cut MLA’s – both of these are tokenism. What is needed is a joined up Executive approach based on proper priorities.

  • Comrade Stalin

    Successive DUP Finance Ministers denied there was a blck hole in the public finances for a year and a half despite weekly warnings from David McNarry of the UUP.

    I got a brief anxiety attack there when I contemplated the possibility of David McNarry being taken seriously as a commentator on economics and finance.

  • Similarly one should automatically discount as a serious contribution to economic discussion any comment which includes the tired cliché bl*ck h*le.

  • Alex Gray

    Don’t be too sniffy about what McNarry says. Its a cop out to ignore a fact because of who says it. Black Hole is just shorthand for a failure to reach over optimistic income targets factored into the PfG because of the collapse of the commercial and domestic property markets. I know journalists use it all the time but the idea behind it is sound enough. The issue about the black hole is that Sammy Wilson and before him Nigel Dodds ignored it for so long until it became a big problem and went on spending money they really hadn’t got and took on staff they couldn’t afford such as in the Planning departments. Then Poots the Environment Minsier had to redeploy these surplus staff. Bad planning.

  • barnshee

    Er the original insult was addressed to the catholic community who were loyal to the half crown (dole family allowances etc) while rejecting loyalty to the “crown”

    The propensity for catholic family numbers to run into double figures with subsequent demands on housing and AFM “benefits”helped fuel the prejudice