Thursday, 26 November 2015

New Dawn or another Pig in a Poke: the Spending Review

Dawn on 25 November
Our esteemed leaders

A splendid dawn had me rushing to find a camera, the red sky was indicative of ominous events. I spent the rest of the morning splitting logs for the winter ahead. I finished in time to listen and then watch the Chancellor deliver his Autumn statement and spending review. He has acquired a confident style of delivery and reeled off an apparently impressive list of proposals that would invest in the country's future and eliminate the annual debt by 2020.

At times it was like the Four Yorkshiremen sketch by Monty Python, except that instead of each living condition being worse and less believable. each proposal was better but less believable. Oh yes and the Chancellor also displayed  his newly acquired humility by backing down on his proposal to withdraw tax credits. This all was made possible by an apparent windfall of £27bn accredited to the Office of Budget Responsibility (sic) that had revised its forecasts of tax take and lower interest payments on debt. So not real money but a gold plated excuse to transfer the blame if things go wrong to the OBR.

The response to the speech by John McDonnell, the shadow Chancellor, was pre prepared and failed to challenge the more mendacious proposals. He was increasingly hesitant as the hecklers from the Tory benches followed their script to disrupt him. It mattered not because, as we know from the days of Gordon Brown, it always takes a day or two to decode the budget and discover all the dastardly things that have been studiously excluded from the Chancellor's speech. Increasingly we are more dependent on the think tanks to disassemble the blue book that contains the devil in the detail; the press and media no longer seem to have any more nous than the MPs in performing this role.

So apart from the savings on tax credits being re-captured in future years as universal credit is rolled out with the poorest assigned to suffer the brunt of the savings and at no cost to the wealthiest; the police were rescued from any further cuts, the NHS receives some of the budget growth required and defence, security and prisons did quite well. It is no surprise, governments of all persuasions seem unable to resist the well targeted lobbying by the security and defence establishment. Ministers responsible for these services are directly in the firing line if things go wrong. Not so where there is local control, budgets can be chopped and decisions on cuts are the responsibility of local politicians and organisations.

The issue that has been missed in much of the subsequent analysis is the absolute devastation of public services in our local communities. The Chancellor is halving the local government central grant to Councils over the next four years. At the same time letting them have the business rates so that they can "compete for economic growth". This might work well for the growing areas of the south east but could be devastating for places like Scunthorpe and Middlesborough that have already been scuppered by the lethargy of Business Secretary, Sajid Javid.

The Chancellor's next trick was to allow a 2% increase in Council tax to pay for increased costs of social care. He claims that this will produce £2bn per annum which, as well as being insufficient to meet pent up demand by the increasingly frail and elderly population, is a grossly over optimistic estimate of receipts according Councils. The proposal is very much in line with the tendency of this government to pass the buck on the wicked issues. And, of course, the fact that any council tax increase is dedicated to social care means that there is no headroom to source alternative funding to replace the 56% cut in the central grant.

It is noteworthy that the Conservative chair of the Local Government Association (LGA), Lord Porter, has not exactly endorsed the autumn statement in his response.

"It is wrong that the services our local communities rely on will face deeper cuts than the rest of the public sector yet again and for local taxpayers to be left to pick up the bill for new government policies without any additional funding.
Even if councils stopped filling in potholes, maintaining parks, closed all children's centres, libraries, museums, leisure centres and turned off every street light they will not have saved enough money to plug the financial black hole they face by 2020."

The question is when will the electorate start to believe that the Chancellor's end game of reducing public expenditure from 47% in 2010 to 36% of GDP by 2020 is a momentous blunder. It has reduced local democracy to the role of public liquidator? When communities realise the implications, and complaints about everything from pre school to community care and homelessness, from pot holed roads to closed facilities are already reaching a crescendo, the level of public indignation may even be discernible to the press.  The game will then be up for the Chancellor and the  OBR will no longer have the scope to deliver any more windfalls.

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