Defending the British budget cuts

Prime Minister David Cameron and his deputy Nick Clegg have rejected claims the Spending Review cuts were "unfair".

The respected IFS think-tank says poorer families with children would be the "biggest losers".

But Mr Cameron said higher earners would pay more, while Mr Clegg said those who said the measures were unfair "were not being straight with people".

"Frankly they are frightening people and that is not right," said Mr Clegg during a joint visit to Nottingham.

And Chancellor George Osborne said that, including June's Budget's measures, the top 10% of earners would be hit hardest, although everyone would have to make a contribution to cutting the deficit.

Labour called the £81bn cuts - the biggest since the 1970s - a "reckless gamble" with the economy.

It has been estimated that the measures will lead to the loss of 490,000 public sector jobs - with the Local Government Association saying 100,000 of them will be at local authorities, which are facing a budget squeeze.

Mr Osborne told MPs on Wednesday that he had acted to restore "sanity to our public finances" and deal "decisively" with Britain's record peacetime deficit.

He told the BBC he expected many more private sector jobs to be created over the four year cuts programme - but shadow chancellor Alan Johnson says the redundancy bill alone for the lost public sector jobs will be £8bn.

'Fair choices'
Mr Osborne told BBC Radio 4's Today Programme he had made a conscious decision to "curb the rise on the benefits bill" to pay for continued investment in the NHS and schools.

"That has involved some hard choices, but I think they are fair choices," he said.

"We have got to put the welfare state on a sustainable footing and we have got to reform it so that it always pays to work."

Mr Johnson, for Labour, challenged the chancellor's claim that the cuts were a necessary response to Britain's financial situation, saying: "It is not unavoidable and it is certainly not fair."

Labour says the Treasury's own figures show that the poorest 10% of people would pay more to reduce the deficit than everyone other than the richest 10%.

There was a way to cut the deficit "without diminishing our society and our communities", the shadow chancellor said, adding: "There is great cruelty in this and great unfairness being introduced into our society."

Welfare changes
In his statement, Mr Osborne unveiled plans to cut a further £7bn from the welfare budget - on top of £11bn cuts already announced - which include putting a time limit on some incapacity benefits and changes to tax credits and housing benefit.

This had enabled him to restrict departmental spending cuts to an average of 19% over four years - not the 20% he said Labour had planned, he told MPs.

Government sources say they expect up to 200,000 people to lose their Employment Support Allowance, the replacement for incapacity benefit, as a result of the decision to time limit the benefit to 12 months.

This is the number of claimants who are expected to fail the new means test which would be enforced after a year.

Under the changes, people with assets of more than £16,000, or a weekly household income of more than £90 will no longer be eligible to receive it.

Welfare groups have warned that the income of partners will also be taken into account when calculating weekly household income and they say this will particularly disadvantage low income couples.

Government sources say that although such claimants will lose their right to the benefit, they may still be able to receive other payments such as council tax benefit, housing benefit and disability living allowance.

Protecting the vulnerable
DWP sources have said those affected will not include the seriously disabled and ill. They say the measure is designed to deter those who have minor ailments from seeking to remain on the benefit long term.

Prime Minister David Cameron defended the welfare changes during the visit to a school in Nottinghamshire, saying the system needed to be simplified, but the most vulnerable in society would still be protected.

"We are changing some of the benefits but in terms of the key benefit for the disabled, disability living allowance, that stays and it is not means-tested. It goes to people according to their disability, not their ability to pay," he said.

"This is a coalition government which will help those who can't help themselves."

At the same event, deputy prime minister Nick Clegg said suggestions the Spending Review was a "full frontal assault" on the public sector were completely wrong.

While he understood people's anxieties about their jobs, he said the programme was the "fairest way" of addressing the crisis in the public finances and emphasised the billions in additional resources being allocated to social care and schooling for the poorest children.

'Plan A'
But the IFS think tank cast doubt on the chancellor's analysis of who would feel most of the pain from the cuts.

Excluding the wealthiest 2% of the population, who it assesses will be the hardest hit, it said the plans would be regressive in their impact since those in the bottom half of the income scale would be affected more than those in the top half as a result of cuts to benefits and public services.

The BBC's Economics Editor Stephanie Flanders said the bottom 10% will, on average, lose about 5.5% of their net income compared to roughly 4.5% for the top 10%.

It is also being argued that Mr Osborne may need to revisit his plans given their likely unpredictable effect on the economy and future growth.

"There is a 40% chance that he will have to come back for bigger tax rises or deeper cuts to public spending," Carl Emmerson, IFS acting director, said.

"Plan A, if it works, will get the deficit down... but I think he has to remain flexible.

"What happens if these deep cuts to public services lead to worse public services than he is prepared to tolerate then clearly he will want to top those plans up. A review of these spending plans, possibly in two years time, will be a sensible way to proceed."

Ministers also gave more details on Thursday of the permanent bank levy announced by Mr Osborne, saying it will coming into force in January and they expect it to raise £2.5bn a year.

It has been estimated that the measures will lead to the loss of 490,000 public sector jobs - with the Local Government Association saying 100,000 of them will be at local authorities, which are facing a budget squeeze.

The_Amber_Spyglass wrote:

It has been estimated that the measures will lead to the loss of 490,000 public sector jobs - with the Local Government Association saying 100,000 of them will be at local authorities, which are facing a budget squeeze.

We can start with all the "Muslim Liaison Officers", "Awareness Campaign Executives", "Street Football Co-ordinators", "Toothbrush Assistants", "Walking Development Managers", "Diversity Officers". That ought to count for about 480,000.

http://www.timesonline.co.uk/tol/news/uk/scotland/article5950574.ece

The_Amber_Spyglass wrote:I don't know what they are, but they are certainly a waste of money.

The Street Football Liaison Officers was apparently a council employee whose job it was to show children how to play football in an alleyway or on the street. When I was a kid we could manage that ourselves with jumpers for goalposts and chalk to mark the centre and penalty spots. Why it requires a 25,000 a year Council employee to organise that is anybody's guess.

The_Amber_Spyglass wrote:

It has been estimated that the measures will lead to the loss of 490,000 public sector jobs - with the Local Government Association saying 100,000 of them will be at local authorities, which are facing a budget squeeze.

We can start with all the "Muslim Liaison Officers", "Awareness Campaign Executives", "Street Football Co-ordinators", "Toothbrush Assistants", "Walking Development Managers", "Diversity Officers". That ought to count for about 480,000.

http://www.timesonline.co.uk/tol/news/uk/scotland/article5950574.ece