Thursday News Review

The Spending Review

Margaret Thatcher is lying sick in a private hospital bed in Belgravia but her political children have just pushed her agenda further and harder and deeper than she ever dreamed of. When was the last time Britain’s public spending was slashed by more than 20 per cent? Not in my mother’s lifetime. Not even in my grandmother’s lifetime. No, it was in 1918, when a Conservative-Liberal coalition said the best response to a global economic crisis was to rapidly pay off this country’s debts. The result? Unemployment soared from 6 per cent to 19 per cent, and the country’s economy collapsed so severely that they lost all ability to pay their bills and the debt actually rose from 114 per cent to 180 per cent. “History doesn’t repeat itself,” Mark Twain said, “but it does rhyme.” George Osborne has just gambled your future on an extreme economic theory that has failed whenever and wherever it has been tried. – The Independent

Butcher George Osborne’s brutal £81billion attack is unfair and avoidable. Yet Conservative MPs celebrated the job losses, cheered the austerity. This is, as Labour’s Alan Johnson neatly put it, an ideological moment. David Cameron’s deficit deceivers are using debt as cover to slash and burn their way across Britain.Cut-crazy Ireland’s reeling from a double-dip recession, France is going up in flames. The backlash here will not be pretty when people feel Osborne’s crude blade. On a national level unemployment will soar, half a million sacked in public services with accountants warning as many again could go in private firms. Economic growth will be choked and could go into reverse. And on a personal level we will all suffer with the most vulnerable paying the highest price. – The Mirror

The Commons was raucous, and Johnson made much of the sight of Tory MPs waving their order papers – apparently with excitement – during Osborne’s announcement. He said: “Members opposite are cheering the deepest cuts in public expenditure that have taken place in living memory. For many of them, this is what they came into politics for.” Johnson made light of the fact that, during the last comprehensive spending review in 2007, Osborne had supported Labour’s spending plans until after the scale of the credit crunch became apparent “well after the collapse of Lehman Brothers in America set off a disastrous chain reaction around the world”. The Liberal Democrats, he said, had changed position on whether cuts would be justified this year between the ballot box closing and the door of the ministerial car opening. – The Guardian

The government’s great triumph so far has been to portray anyone who opposes their plans as moronic. True, there are a few winners of the Nobel Prize for economics and other lowlifes against them, but they’re just foreigners. The British seem to have bought into the whole thing. Hit us. We deserve it. Just as long as you hit our enemies harder: the banks, the bureaucrats, the quangos, the MPs, the workshy. They were all duly sandbagged. We seem to be in one of those brief periods when the sceptical British have suspended disbelief, as they did before the Iraq war and every time England ever play in an international football tournament. The government’s grip on the politics tightened on Wednesday. In contrast to last week, Mr Cameron was in fine, patronising form and wiped the floor with a verbose and hesitant Ed Miliband at the question time session before the cuts statement. – The FT

“The deficit made us do it,” squeal members of the Con-Dem coalition, from Prime Minister David Cameron downwards. Ministers have long pretended that these cuts are for the common good. And in his speech to his party’s conference, Osborne claimed to be a One Nation Conservative while dismissing his opponents as self-serving: “On the other side is Ed Miliband and the trade union leaders who put him where he is. The national interest or the vested interests.” Put to one side for a moment the long list of notable figures who have spoken out against Osborne-style austerity measures, from Barack Obama to a string of Nobel-Prize-winning economists (including the latest laureate, Christopher Pissarides of the LSE) and focus instead on the curious phrase, “the national interest”. The idea that ministers are guided by the interests of the public at large, rather than those of the insular and privileged elite from which they are drawn, is laughable. Coalition ministers – Tories and Liberal Democrats alike – have little experience of unemployment or life on benefits; in fact, of any economic hardship whatsoever. Twenty-two out of 29 cabinet ministers (76 per cent) are millionaires, 19 out of 29 (66 per cent) were educated at private, fee-paying schools and 19 out of 29 (66 per cent) are Oxbridge graduates. –New Statesman

Britain’s biggest fiscal squeeze since the second world war was greeted with cries of “more” from ecstatic government MPs as George Osborne, chancellor, set out plans for £81bn of spending cuts. This was a very British occasion. Mr Osborne’s plan will lead to 500,000 public sector job losses, higher pension contributions, a higher retirement age and pain across society, but it was not met with any sense of national crisis. While Conservative MPs cheered Mr Osborne, only a few protesters bothered to demonstrate outside parliament. For now, the chancellor seems to have convinced the country that the cuts are “unavoidable”. But these are early days and the pain of what Mr Osborne announced will be spread over four years, marking the start of what Mervyn King, the Bank of England governor, has dubbed “the sober decade”. – FT

For a statement that was billed as doom and gloom, austerity and savage cuts, George Osborne’s Spending Review was delivered with aplomb, style and even some humour. Tory MPs certainly loved it. When he sat down at the end of more than an hour on his feet, they cheered and waved their order papers. Some of them were even on their feet. That prompted Labour’s Alan Johnson to rise and begin his response with a rather charmless, class war rant. “We have seen people cheering the deepest cuts to public spending in living memory,” the normally affable ex-postie sneered, jabbing his finger at Tory MPs. Except that the Chancellor’s cuts weren’t the deepest in living memory, he claimed. The rabbit he pulled out of the hat at the end of his long statement was a claim that he was only cutting Whitehall budgets by 19%, whereas Labour vowed before the election to cut by 20%. – Sky

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