Latest post on Left Futures

Why does Labour stick to Tory austerity plans the stats show can’t be achieved?

socialism and austerity signs, original pic by 123rf.comOsborne’s boast that he would shrink the welfare state to its small scale in 1948 has been definitively scuppered by a report from the Office of National Statistics (ONS). These official figures reveal that there are at least 6 major areas of public expenditure which are currently escalating rapidly and make it impossible to reconcile with his proposed 35% cuts in all non-protected departments and a further £25bn cuts in benefits in the next parliament.

This is reinforced by the latest news that the deficit (public sector net borrowing), the reduction of which is the ostensibly central objective of Osborne’s economic strategic, actually increased last year by £13bn despite a year of economic growth, whilst in the first quarter alone of the new fiscal year ONS figures now reveal a big increase in Tory government borrowing to £36bn, a worrying 7.3% increase over the same quarter in 2013. This major reversal, if it continues as it shows every sign of doing so, leaves Osborne’s counter-productive deficit-reduction plan in tatters.

The message that the ONS is now sending is that Osborne’s deficit-cutting programme, already in deep trouble, will be completely derailed by a whole range of inescapable commitments stacking up on a very large cumulative scale. Thus ONS calculates that coping with an ageing society will cost £79bn a year at today’s costs over the next 45 years, a big chunk of spending at some 4.8% of GDP.

Second, the private finance initiative (PFI) is now coming home to roost, having created £239bn of liabilities for the taxpayer which will have to be repaid from the near future to the next 20-30 years.

Third, the cancellation of the privatisation of student loans (anyway who would ever buy them?) leaves student debt outstanding on the government’s books of £46bn, a figure now expected to rise to £200bn by 2042, including some £70bn which will probably never be repaid.

Fourth, the Tory cuts in the NHS of £20bn in the current Parliament are not only worsening healthcare standards but is also predicted to generate a shortfall in current spending of £30bn by 2020 which the government will have no alternative to fill.

Fifth, the Pension Protection Fund (PPF), which deals with the pension schemes of bankrupted companies forced out of business, has shortfall of £110bn which will have to be met by government/taxpayers.

Then sixth there is also the deficit in the solvent UK private sector pension schemes which now stands at £177bn.

And seventh (this is not a complete list) the liabilities on the UK’s public sector pensions are officially estimated at a minimum £600bn over the next 60-80 years.

So how can all this be done?

It can’t except by either a persistent period of high sustainable economic growth (at present we have faltering growth which is not sustainable), or by dramatic cuts in other areas (which on the scale required would be politically inconceivable), or by a highly progressive levy on the ultra-rich (which is the one thing Osborne will never do).

So why stick with a doomed enterprise?

3 Comments

  1. David Pavett says:

    The question posed has an even sharper political form: why did the overwhelming majority of Labour’s National Policy Forum back austerity? And why did the unions blow their anti-austerity campaign out of the water too by joining the majority? That problem pretty much sums of where the Labour Party is. It is not just a question of lack of understanding at the Shadow Cabinet level (painfully obvious though that is), and lack of political will (obvious too), but much more importantly why do the critics cave in as soon as they are invited to do so in the name of unity?

    I was surprised by the ludicrous extent of this cave in on railways, schools, 11+, trident among other issues. Perhaps we need a debate on Left Futures about the future of the left. As far as Labour goes (not very) that future is looking particularly bleak. Politics without principle has won hands down and its exponents are ecstatic: they didn’t even have to fight their corner (read the accounts of the NPF meeting by Luke Akehurst and Emma Burnell).

  2. PoundInYourPocket says:

    Labour say they will bring the economy into surplus by 2020, but is that via the Tory austerity route or by investment and increased growth ?
    Either way I think the commitment was unnecessary and unachievable. Labour may gain election victory via such a pledge but it’s a basic error to promise what clearly can’t be delivered. And if the plan is to continue with Tory austerity, that’s sheer madness that would lead to Labour being deeply unpopular and back out on the street after one stormy term.

  3. Robert says:

    Why would you vote labour when the Tories are doing it, this seems like the old labour days of labour promising so much but actually the voters deciding the Tories are doing it already.

    Growth is now back to the period of pre banking crises why risk this voting for a labour party which is basically promising you the same.

    This is Thatcher all over again.

    We all know why labour are doing it because if they said we will spend the Tories will scream the same old labour and Miliband and Ball’s are not good enough to argue the case.

© 2021 Left Futures | Powered by WordPress | theme originated from PrimePress by Ravi Varma