Wednesday, October 20 2010
Business is not normally supportive of a Chancellor’s statement. Especially when Gordon Brown or Alistair Darling were doing the job.
But now George Osborne is in the hot seat, they have changed their tune.
While much of the public will worry about benefit cuts, while public sector workers will fear that their job will be among the 500,000 on death row for the next four years, business was pretty upbeat.
All the usual suspects like the CBI, FSB and EEF were surprisingly supportive of the overall spending cuts strategy.
I guess that in their own business, they know how important it is to be prudent. In the early years of Gordon Brown‘s tenure as Chancellor in 11 Downing Street, there was a lot of talk of prudence. He seemed to speak the language of business.
But a boom seemed to give him licence to spend, and prudence was left abandoned at the church door as the global financial crisis coincided with a spending binge.
That combination of events, however you explain them, led to the present £109bn deficit, the largest, so the present Chancellor says, in Europe. The UK was on the brink of bankruptcy, he claimed.
But the £80-plus billion pound cuts will not make a lot of difference to the overall level of spending which continues to rise over the next few years to around £700bn.
As Mr Osborne said, the debt “supertanker” takes a long while to turn around. And interest payments, currently running at a staggering £120m a day, will continue to be onerous.
But at least with the CSR, the UK has signalled it is doing something about a problem that every household faces from time to time. As Mr Micawber said to David Copperfield: “Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds and sixpence, result misery.”
And we have had plenty of misery. There is lots more to come. But at least George Osborne leavened bad news with good, although the nasties could still be in the small print.
He pleased business, protected key infrastructure projects like Crossrail, bashed the banks a little, boosted apprenticeships, protected education and health, and not been too hard on the elderly.
That he has robbed middle England to bear much of the pain will be hard to take. Whether they sympathise with Mr Micawber’s dictum will determine whether Mr Osborne remains in Number 11 after the next general election.
Wednesday, October 20 2010
The devil, as they say, is in the detail.
So, it's hard in one sense to make a snap judgment on the long-awaited spending review announced today as most central government departments will be spelling out specific plans over the coming weeks. George Osborne got plenty of cheers from his own benches after an hour-long speech whose tone was clearly supposed to be sober but veered at times to being rather too euphoric.
Perhaps it was the testosterone flying around the Commons, where the baying across the green benches seemed unusually loud.
From Kent's perspective, there were a few unexpected announcements - or announcements slipped out without much fanfare - notably the proposed increase in the Dartford Crossing tolls which will rise to £2.50 by 2012 - a clear U-turn and one guaranteed to anger a lot of people who may feel the government has backtracked over commitments made before they came to power.
It certainly came as a surprise to KCC leader Paul Carter when I spoke with him earlier - I dare say he won't be happy not to have been briefed.
And for all the talk of fairness, I suspect hard-pressed rail commuters will find it hard to stomach the prospect of higher fares come 2012.
Meanwhile, the message from County Hall is that it was about as bad as expected but no worse. In total, councils are facing about a 30 per cent cut in their budgets. The government has tried to sugar the pill by giving councils more say over how they spend their money but it might turn out to be simply more freedom to make cuts.