Coalition drives Britain into reverse

The Chancellor talks about growth, but his cuts are hardwired into every department, argues Fiona Mactaggart

by Fiona Mactaggart
Friday, April 8th, 2011

Chancellor George Osborne claimed his recent Budget was a plan for growth “to drive our nation forward – a Britain carried aloft by the march of the makers”.

What a cheek. A genuine plan for growth would involve policies in every government department that contributes to economic growth. But we have the opposite: a school curriculum narrowed by the “English baccalaureate” which includes nothing creative or practical; work visas for graduating overseas students halted, driving research-based companies overseas; and a localism agenda wholly at odds with plans to sell planning permissions.

Over the past year, the policies of the Conservative-led Government have increased inequality, while ministers continue to claim the opposite.

Plans to shift burdens from business onto hard-pressed families will squeeze even more mothers out of the labour market.

This creates a context in which the Labour Party’s message – that the coalition’s cuts go too far and too fast – should win support. But attempts to explain Labour’s alternative have not gone well. Conceding that there have to be some cuts without saying specifically what they should be creates suspicion.

Further, although Ed Balls is good at taking the fight to the Tories, his past denial of the need to make cuts undermines his message now.

But Labour can use the evidence of what is actually happening under the Tories to show that their painful cuts are not working.

According to the Retail Price Index, inflation is at 5.5 per cent – the highest for 20 years.

While devaluation and increases in commodity prices have contributed to this, Osborne’s VAT increase is the key driver. In the last quarter of 2010, the British economy contracted.

Unemployment is currently higher than it has been for 17 years and house prices are falling. Borrowing, which the policies of David Cameron, George Osborne and their Liberal Democrat allies was supposed to cut, has also increased.

Britain’s exposure to the financial sector meant this country was hit hard very  by the global banking crisis, but there is no equivalent reason why we should now be doing so much worse than countries such as the United States, Germany and France.

It’s not just interest on debt that is an unproductive drag on the economy, so is paying the costs of unemployment.

Small businesses are not creating the new jobs that the Chancellor predicted. In the last quarter of 2010, bank lending to the small and medium enterprises sector dropped by 38 per cent from the last quarter of 2008.

Osborne’s late conversion to a strategy for growth is little more than spin. The reality is that the coalition’s cuts policy is hardwired into everything every government department does.

A growth plan can only work if it is as comprehensive. Labour should offer a detailed alternative: a plan for growth that could really work in order to regain the economic credibility we need.

Fiona Mactaggart is Shadow Minister for Women and Equalities and Labour MP for Slough

The only place you can read all of Tribune's articles as soon as they are published is in the magazine. To find out more about subscribing from as little as £19, click here.

About The Author

  • Anonymous

    “there is no equivalent reason why we should now be doing so much worse than countries such as the United States, Germany and France.”

    Not true. Germany and France have social democracy, solid public investment and a more varied economy. Germany has a strong export-orientated economy and a respectable manufacturing sector. The U.S. has the built-in advantages of being a large country — economies of scale — and much a more vibrant economy and society.

    Britain has none of the above. It is a country depressingly in decline. Completely dependent on one sector — financial services — and has little hope of generating wealth in the future. Worst of all, there is no left-wing alternative that is willing to address these problems and invest in areas where growth is realistic.

    We need fewer ‘Third Way’ boot lickers like Fiona Mactaggart and more people willing to aggressively argue for a left-wing alternative; particularly in new technolgy which would spurn growth.

  • http://www.facebook.com/people/Will-Podmore/780339646 Will Podmore

    Quite – we really need a plan for growth.

    All the evidence shows that cutting public spending increases the public debt.

    Private borrowing now stands at a vast £1.56 trillion. According to the independent Office of Budget Responsibility, it is expected to reach £2.13 trillion in 2015. That is half as much again as the total national income and nearly twice the total household income.
    Under our current dysfunctional banking system, the only way in which the money supply can be expanded is by individuals and businesses borrowing further from banks and thus increasing private debt. Effectively, the money supply has long been in the hands of the banks, which generate domestic credit apparently out of thin air simply by creating ‘bank deposits’ (the numbers in bank accounts), subject only to minimalist capital ratios.
    We need investment in people – in industry, health, education, childcare and affordable housing. But instead the government is slashing wages, welfare spending and investment, worsening the crisis. And (like the Irish government) it is blaming public sector workers ‘to distract attention from the main source of our economic woes’, as the Irrish government’s chief economic adviser Alan Ahearne admitted.

blog comments powered by Disqus