"The Nineteenth century saw a great Springtime of Nations as the revolutions of 1848 saw new countries created the length and breadth of Europe. In our world today we are now seeing our own Spring Awakening with people and cultures that have long been dormant and subdued asserting their right to exist, their right to dream." Adam Price MP
Thursday, 3 June 2010
Labour's Legacy for Scotland and the UK
From the SNP
“The NHS will pay more to banks in repayments over the next five years for three hospitals than those hospitals are actually worth. That is an example of the profligacy and incompetence that characterised Labour’s financial management and that Scotland’s public services are now paying for.
“After taking out repayment policies like this Labour has no credibility left on public spending and must answer to NHS staff and patients who are left facing up to Labour’s outrageous debts."
'Wretched': Former Chief Secretary to the Treasury Liam Byrne left a cynical note for his successor noting 'there's no money left'
The response to yesterday’s announcement from Treasury chief secretary David Laws that he planned some £6billion in spending cuts couldn’t have been more predictable – or more pathetic.
Liam Byrne, Labour’s discredited Treasury spokesman, claimed that the cuts package would plunge Britain back into what he called a ‘double dip’ recession.
Meanwhile, a phalanx of trade unionists came forward to warn of economic devastation and a massive loss of public sector jobs.
But it is obvious that Mr Byrne does not know what he is talking about.
Britain’s total economic product adds up to well over £1trillion.
The idea that the loss of £6billion (scarcely 0.5 per cent of the whole economy) could make the slightest difference is economic illiteracy of a very high order.
The horrific truth is that unless this country starts to make cuts now, international markets will lose confidence in our economy and plunge us into the same kind of financial crisis that Greece is enduring.
Moreover, the main problem with the economic package from George Osborne and David Laws is not – as the Labour Party claims – that their cuts have come too soon. It is that – as a result of Labour’s delay and defeat – they have come much too late.
The facts are simply terrifying.
This year the Government is set to spend approximately £170billion more than it will generate from taxation – that’s a phenomenal £500million a day.
Our indebtedness is far, far higher than it has ever been before in peacetime – the direct result of Gordon Brown’s crass management of the economy.
Indeed, the wretched Mr Byrne admitted as much when he left a cynical note behind to his successor after the election noting that ‘there’s no money left’.
However, that infamous letter actually understates the scale of the problem.
We actually ran out of our own money, thanks to Labour’s profligacy several years ago. Now we have run out of other people’s money as well.
Thirteen years ago, when Labour took over from the Tories, the national debt stood at a comparatively modest £350billion.
Over the past decade that has doubled to just over £700billion.
Tragically, under Treasury projections, that sum is set to double again over the next five years to around £1.4trillion.
Even these unimaginable sums of money hugely underestimate the scale of the problem.
It is now dawning on financial experts that Mr Brown hid much of our public debt (such as the giant liabilities incurred by our public sector pension funds) off the national balance sheet. Only urgent, hideous and painful surgery can tackle a problem like this.
The £6billion which Mr Laws and Mr Osborne are planning to wipe from the national spending ledger this year represents only a fraction of the work that needs to be done.
Indeed, the scale of what lies ahead can hardly be exaggerated.
The cuts that await us over the next few years are far greater than the so-called ‘savage’ cuts imposed by Margaret Thatcher and her Chancellor Geoffrey Howe in the 1980s.
In all, at least £80billion – and very likely far more, depending on economic circumstances in the years ahead – need to be slashed from annual national expenditure. Therefore, there is huge pain in the pipeline.
Yesterday’s axe was merely for starters. The true scale of cuts will only partly be apparent by the time of Mr Osborne’s emergency budget on June 22.
And the complete picture will be clear only much later in the year, when he announces the results of his comprehensive spending review of all future departmental expenditure.
Bear in mind that, thanks to the prolifically prudent but cowardly decision to protect spending on the NHS, some departments face cuts on a scale that calls their very existence into question.
Let’s take the Ministry of Defence.
Currently, Britain is fighting a bloody and terrible war in Afghanistan and has military commitments all over the globe. Yet no less than £7billion – roughly one quarter of all defence expenditure – looks set for the chop.
Major programmes, such as the Eurofighter, may have to go. So will plans to build new aircraft carriers. The idea of Britain as a nation with a defence capacity to police the globe will vanish.
In order to understand the monstrous amounts involved in this whole process, it is helpful to contemplate the measures already taken by near bankrupt European countries such as Spain, Greece and Ireland.
Most public programmes have been stopped. Civil service pay has been cut by as much as 20 per cent while the age at which state workers can receive pensions has risen sharply. Unemployment benefits have been slashed, while taxation has risen sharply.
Here, it can now be taken for granted that VAT will rise from the present 17.5 per cent to 20 per cent and quite possibly more.
Punitively, the budget changes that are now inevitable over the next five years will change us forever as a nation.
The truth is that Britain resembles a profligate and irresponsible family which has long been living way beyond its means.
We have enjoyed an exaggerated idea of our international standing, and a standard of living to which we are not entitled. Finally, the bank manager is now calling in his loans – and giving us the unpleasant choice between bankruptcy or a very painful drop in living standards.
By the luxurious standards of the New Labour years, yesterday’s cuts – the slashing of several quangos, the loss of tens of thousands of student places and the ending of certain civil service perks – may have sounded very severe.
But in comparison to what is to come, they were nothing.
Sailors sometimes talk of seeing a ‘cloud no bigger than a man’s hands’ on the distant horizon. Now we lie in wait for the hurricane.