Cutting the Deficit
No more Iraq-scale operations |
Spending review 2010
defencecutscost Cameron's Risky Shock Therapy |
No more Iraq-scale operations after cuts
In the key decisions facing the three services, the Army will:-
* Cut the number of troops by around 7,000, taking it to 95,000 by 2015;
* Reduce its holdings of Challenger 2 battle tanks by 40% and heavy artillery by 35%;
* Cut the number of deployable brigades by one, as it re-structures to five multi-role brigades.
The Royal Navy will:-
* Get its two planned new aircraft carriers while scrapping the existing HMS Ark Royal with immediate effect;
* Decommission either the helicopter landing ship HMS Ocean or HMS Illustrious while retaining one as a helicopter platform:
* Cut its surface fleet of frigates and destroyers from 23 to 19;
* Reduce the number of naval personnel by 5,000 to 30,000.
The RAF will:-
* Remove the Harrier fast jet fighters from service, while scaling back the number of Tornados;
* Scrap the planned Nimrod MRA4 maritime reconnaissance aircraft, despite spending £3 billion on its development;
* Withdraw the C-130 Hercules transport fleet ten years earlier than planned, as the new A400M enters service.
Independent 19 Oct 2010 Churchill's Client StateAircraft carrier strategy 'incoherent'
Cameron says 42,000 jobs to go
Cameron attacked by Royal Navy Harrier pilot
Cameron defends defence cuts
Spending review: government expects 490,000 public sector job cuts
The coalition expects 490,000 public sector jobs to be shed by 2014-15 directly as a result of the drastic spending cuts, Danny Alexander, the Treasury chief secretary, has accidently disclosed.
He inadvertently allowed two pages of tomorrow's spending review to be photographed as he left the Treasury building ...
The document also proposes that public sector employers should try to strike deals to cut hours to reduce the level of redundancies.
The forecast is based on the estimate of the Office of Budget Responsibility ...
Guardian 19 Oct 2010Social housing budget 'to be cut in half'
Terrorism and cyber attacks among top threats to UK
Intelligence, counter-terrorism and cyber security are all expected to escape major cuts and in some cases may even be given fresh investment, increasing speculation that police forces could face the brunt of any cuts.
While declining to be drawn on the details, Mrs May said she had always made it clear there was scope for the police to make savings without hitting beat operations by cutting bureaucracy and increased collaboration between forces ...
The Conservative MP Bernard Jenkin, who is chairman of the Commons Public Administration Committee, said it was difficult to see how an effective National Security Strategy could be developed against the backdrop of cuts.
"We seem to be operating under the imperative of deficit reduction," he said.
"But, there's very little in what's being done now that reflects deep and sustained analysis about what sort of country we want to be in 10 or 20 years time."
In a new report, the cross-party committee said there was a lack of strategic thinking at the heart of government over security, defence and foreign policy and a tendency to "muddle through" rather than be forward thinking ...
BBC NEWS 18 Oct 2010zavaell 18 October 2010 11:35AMCounter-Terror Foreign Policy_Defence
Don't mock cyber-warfare. It is cheap and easy to do if you know how to attack another country's infrastructure.
Whether is is a geeky singleton chancing his arm or a deliberate state-sponosred attack, it is pretty important to have all sorts of warning and precautionary measures in place.
My recipe for a defence review would be to adopt a much more 'fuzzy' approach (after the term fuzzy logic).
The battle over aircraft-carriers typifies how blinkered civilian arm-chair generals are and thus no better than the individual Chiefs of eache service.
One reason that equipment costs so much is the interference from the civil service.
If the services were given a procurement budget for smaller items it would be much easier, for the Army in particular, to go out and buy kit off the shelf or with a short lead time rather than subject things like boots to years of competition, tendering and then the wrong decision.
Let's face it, nobody knows what is likely to happen in the next ten years: saying that it is all going to be like Afghanistan is as bad as trying to rerun the Cold War.
Will there be conflict involving NATO in the Arctic for instance? Would an aircraft-carrier be useful in those circumanstances? Probably.
Should we guard protectorates thousands of miles away? Probably not.
I see little sign of intelligent discussion along these lines and a lot of heat about expensive equipment.
Well, unless we buy some bows and arrows we have to live with the fact that modern equipment is expensive but a lot of the simpler stuff could be much cheaper.
The bottom line is that Trident is now an expensive dinosaur in defence terms.
Guardian 18 Oct 2010
UK's Nobel economics laureate warns chancellor: don't axe jobless benefits
"I would be very concerned if social benefits are targeted," Pissarides told the Observer.
"The risk is essentially that people will sink into poverty. When people get into poverty, they get disillusioned with their engagement in the labour force, they face longer periods of unemployment, and it becomes much harder to get them back into the workforce." ...
The government has already said it will scrap universal child benefit and has ended the roll-out of the Future Jobs Fund, intended to get young unemployed people back to work.
Pissarides expressed concern that Osborne will be tempted to look at broader social benefits such as jobseeker's allowance and housing benefit ...
Fears over the withdrawal of stimulus from the economy are likely to be aggravated by the Item Club's findings ...
Item is concerned that the scale of the fiscal retrenchment – which is expected to shave 0.6 percentage points off growth in each of the next four years – could be "too much, too soon" ...
Observer 17 Oct 2010 Crackdown on Welfare 'Reserve Army'
Spending cuts: We have to see this through, says Osborne
Osborne is expected to outline £83bn of cuts, the most drastic reductions in state spending since the second world war ...
"We have to see this through," the chancellor said, signalling that he would not shy away from the cuts despite warnings about their impact.
"Our plan is the plan that will restore credibility to the public finances," said Osborne.
"It is what the IMF, the OECD, international observers say is necessary. It is what British business says is necessary.
"People in this country know we were on the brink of bankruptcy, and if we are going to have growth and jobs in the future we have got to move this country into a place where people can invest with confidence." ...
He added: "We have got to make some tough decisions, but the priority is healthcare, children's education, early years provision - particularly for some of our poorest - and the big infrastructure developments like Crossrail, Mersey Gateway, the synchrotron [UK-funded science facility], broadband." ...
Osborne revealed that those caught making repeated bogus benefit claims would have their welfare payments halted for up to three years ...
Guardian 17 Oct 2010 Crackdown on WelfareCuts come to a green and pleasant land
George Osborne takes spending axe to prisons and legal aid
Leaked documents show Ministry of Justice will lose 30% of budget in comprehensive spending review
Massive cuts of around 30% to the justice system, which will dramatically reduce the number of people in prison, slash legal aid in divorce and family law cases, and see the closure of more than 150 courts across England, will be unveiled this week ...
One source with experience of the Ministry of Justice said it was impossible to see how that amount could be raised without selling off large parts of the prison estate ...
Observer 17 Oct 2010 Prison and ProbationPrisons and probation
David Cameron orders defence to be spared from deepest cuts
The main points of the deal, which Cameron will outline to MPs on Tuesday in a statement launching the strategic defence and security review, are:
• The MoD's annual £37bn budget will be cut by 8% between 2011-2015. It will face an effective cut of a further 9.5% as it deals with a £38bn "overspend" over the next 10 years in its procurement budget inherited from Labour.
• A saving of £750m will be made in the budget of the Trident nuclear deterrent.
• The army, which at one point was to be cut from 105,000 personnel to 80,000, will not face substantial cuts.
Cameron intervened 24 hours after the service chiefs marched into Downing Street in their uniforms to warn that the 10% cuts were unacceptable ...
The battle continued into today when air force chiefs mounted a dramatic fight to save the RAF's fleet of ageing Tornado fighter-bombers.
The move would see the RAF axing the Harrier squadrons now shared with the navy.
This would leave a huge question over the future of the first of the two aircraft carriers which ministers this week finally agreed should be built.
Some officials said tonight that a decision to dump the Harriers had already been taken in principle.
"It is a ridiculous situation," said a defence source. "The navy will have a carrier with no aircraft." ...
Guardian 15 Oct 2010Foreign Policy_Client StateAnalysis
Caroline Wyatt Defence correspondent, BBC News
It has been a gruelling five months for those involved in the strategic defence and security review but, in many senses, it is far from over.
Given that one of the original options requested by the Treasury from MoD civil servants and the armed forces was the details of what 20% cuts would mean for defence, with another option for 10% cuts, this will be seen by many - especially within the MoD - as a victory for Defence Secretary Liam Fox and the defence chiefs.
However, the MoD has inherited one of the worst legacies of any department from the previous Labour government in terms of budget - an unfunded liability or 'black hole' of £38bn over the next decade of equipment which has been ordered but for which there is no cash.
That means that the pain for the MoD will be greater than the headline figure suggests, and so many people in defence are likely to face continuing uncertainty - even after the SDSR is published - as to what the future holds for their job, their base, their project or their unit.
BBC NEWS 16 Oct 2010David Cameron steps in to quell military revolt
Cameron forced to ease US fears over UK’s war budget
Carriers could deploy without British jets
Universities 'to face £4.2bn cut'
Universities in England face funding cuts of £4.2bn in the coming Spending Review, an e-mail leaked to the BBC News website suggests ...
Professor Smith says ...
"The biggest worry is simple to state: if Browne fails to get through the Commons, or gets unpicked, or gets accepted but only after major changes are made, we will simply not be able to replace the unprecedented reductions in state funding that are coming in the Spending Review."
Responding to the claim, the general secretary of the UCU, Sally Hunt, said:
"It is hard to believe that any government could contemplate making £4.2bn cuts to higher education given that it generates massive economic growth.
"Cuts of this magnitude will leave many cities and towns without a local university and our students paying the highest public fees in the world." ...
President of the NUS Aaron Porter said: "The devastating scale of the cuts to publicly funded degrees planned for next week is laid bare by this admission.
"The true agenda of the coalition government this week is to strip away all public support for arts, humanities and social science provision in universities and to pass on the costs directly to students' bank accounts."
He accused vice-chancellors of standing by plans that would lead to many universities closing down ...
BBC NEWS 15 Oct 2010 Education for the Good Society
Hillary Clinton has admitted Washington is "worried" over the scale of the UK coalition government's planned spending cuts on defence.Hillary Clinton says US worried over UK defence budget
NATO is past its sell-by-date, Mrs C: Stalin died in 1953!
BTW, how long are the Chinese going to fund your deficit?
The US secretary of state told the BBC that Nato must be "maintained", as it was the "most successful" defensive alliance "in the history of the world".
Mrs Clinton's comments precede next week's defence spending review, when the scale of cuts will be revealed.
Downing Street said an agreement had been "very nearly" finalised.
The Treasury has been pushing for a reduction of up to 10% on the £37bn Ministry of Defence budget between 2011 and 2015 ...
BBC NEWS 14 Oct 2010Clinton warns UK defence cuts may undermine Nato
According to senior defence sources the number of RAF fast jets is expected to be drastically cut.
The Navy will get its two aircraft carriers, though one will either be mothballed or used as more of an amphibious vessel; the surface fleet is due to be cut by about four ships.
The Army will lose some armour, including tanks, but its manpower will not be reduced significantly until 2015, when the Afghan mission is due to end.
More unmanned "drone" aircraft will be used, possibly under an integrated tri-service command. Cyber defences and other forms of "electronic" warfare will also be boosted.
The RAF will have fewer US F-35 Joint Strike Fighters, and the Tornado GR4 will be withdrawn earlier than the planned date of 2018.
The numbers of Nimrod MRA4 will also be cut and RAF bases may be closed.
Independent 15 Oct 2010MoD pays extra £2.7bn for unwanted Typhoons
The RAF will get 16 more Eurofighter/Typhoon jets than it asked for because the Ministry of Defence would have had to pay for them because of contractual obligations with the manufacturers.
The MoD decided that buying the planes – at a cost of £2.7bn – was the "best value for money in the circumstances", says the National Audit Office ...
Delays in building new aircraft carriers for the navy has meant their combined cost has risen by £650m to more than £5bn, the report says.
The cash-strapped MoD delayed the programme to save money in the short term.
The report comes a day after Hillary Clinton, the US secretary of state, and Robert Gates, the defence secretary, both voiced concerns about planned cuts that are expected to see Britain's defence budget reduced by 10% ...
Guardian 15 Oct 2010Fox assures US of Britain's commitment to Nato
Hillary Clinton 'worried' by UK defence cuts
RAF cuts 'could make Britain's air space vulnerable to attack'
Government scraps 192 quangos
Overall, 901 bodies will be reduced to 648.
However, 40 are still under review. Among the most prominent organisations affected are:
• British Nuclear Fuels Limited will be abolished.
• The Competition Commission will merge with the competition functions of the Office of Fair Trading.
• Consumer Focus, the consumer rights group, will transfer to the Citizens Advice Bureau.
• Design Council and the National Endowment for Science, Technology and the Arts (Nesta), will become charities.
• British Waterways will be abolished as a public corporation in England and Wales and a new waterways charitable trust will be created – similar to a National Trust.
• The Environment Agency will be substantially reformed with further announcements in the spending review.
• The Student Loans Company, responsible for delayed loan payments to thousands of students last year, is still under review and could be axed.
• The Youth Justice Board, set up by Jack Straw to oversee crime prevention and custody of under 18s, is to be abolished. The National Women's Commission is to be abolished and its functions transferred to the Government Equalities Office. The Security Industry
Authority, which regulates the private security industry, will be abolished ...
Guardian 14 Oct 2010 QuangosQuango cuts may well cost more than they save
Bonfire of quangos 'is a smokescreen that will cost money'
OFT faces merger in ‘quangos bonfire’
So far the chief constables of West Midlands, Lancashire, Hampshire, Kent and North Wales have indicated to their authorities that they plan to cut a total of 6,467 police jobs over the next four years.Police forces facing 'deep cuts' to number of frontline officers
Cuts 'could imperil national security' - John Yates
The decision to protect counter-terrorism funding follows reports in July that Scotland Yard's counter-terrorism chief, John Yates, had told a private gathering of chief constables that "eyewatering" cuts of £150m to the budget to fight terrorism could imperil national security.
It is expected that the decision to exempt counter-terrorism from the cuts of up to 25% demanded by the Treasury will mean deeper cuts in other parts of the £10.2bn Home Office annual budget ...
Thousands of jobs to go as government puts Home Office's counter-terrorism budget first ...
Graham Maxwell of Acpo said it was a fallacy to claim that the required savings could be realised without any impact on frontline services.
"The sums simply do not add up," he said.
Acpo has warned that there is a doubt over the future of specialist units such as those covering domestic violence, rape, hate crime and child protection ...
Guardian 13 Oct 2010 Counter_Terrorism
Spending cuts 'risk 1m UK jobs'
The PwC report put the total number of job losses arising form the public sector spending cuts - including knock-on effects in the private sector - at about 943,000.
And it said the output of private firms may fall by £46bn per year by 2014-15.
PwC chief economist John Hawksworth said the predicted levels of job losses would be a drag on the pace of the economic recovery "but should not derail it altogether".
He added that increased labour market flexibility - including people working fewer hours or for lower wages - may lead to fewer job losses ...
BBC NEWS 13 Oct 2010 'We're all in it together'
Disabled people 'to lose £9bn from cuts'
The Government's proposed benefit reforms will see 3.5 million disabled people lose about £9.2bn of critical support by 2015, a report from Demos claims ...
Demos warns that by 2015, families with disabled children could lose more than £3,000 each, and disabled adults whose partner is a full-time carer could lose about £3,000.
Kitty Ussher, director of Demos, said: "The emerging evidence from recent years is that the only way to get those furthest from the labour market back into work is through individual client-led support.
"Cutting the welfare bill is attractive to government in the current climate, but without better support for individuals it threatens to just exclude people further."
The Independent 09 Oct 2010 Crackdown on Welfare 'Wasted Lives'Destination Unknown
Benefit cuts will squeeze vulnerable out of London
The federation calculates that, if enacted, the changes would see the rent charged on 114,000 homes occupied by benefit claimants in London become unaffordable – leaving more than 250,000 people "at risk of losing their residences".
Osborne's move would not just affect wealthy areas such as Westminster but also poorer parts of the capital such as Lambeth and Southwark.
The research, which is based on official government figures, backs the claim that poor and vulnerable people will no longer be able to live in the capital – forced instead to go to London's fringes or pushed into "overcrowded conditions" ...
David Orr, the federation's chief executive, said:
"London is one of the most vibrant and socially mixed cities in the world – and yet the diversity, for which it is so famous, is under threat from the government's proposal to bring all housing benefit allowances into line with the bottom third of rents.
He said: "The changes push 160,000 vulnerable households into competing for just 46,000 homes [which] is extremely worrying and morally wrong."
While some landlords could reduce rents in line with the new upper limit, the federation says that the housing market in London is so strong that most would simply decide to keep their charges at the same level and let properties out to private tenants ...
Guardian 08 Oct 2010 Crackdown on Welfare
Public pensions review recommends higher contributions
Many public sector workers argue that they have accepted lower pay than they could get in the private sector in order to benefit from better pension provision.
But, in his report, Lord Hutton rejected this: "There is no evidence that pay is lower for public sector workers to reflect higher levels of pension provision," he said.
Among the longer-term changes being considered by Lord Hutton's independent public service pensions commission are:
changing the public service schemes from a final-salary to a career-average structure
copying the Swedish and Dutch examples of defined-contribution schemes
raising normal pension ages beyond their current levels - typically 65 - as longevity increases.
The interim report points out that the long-term cost of funding public service schemes has already been drastically reduced.
The recent decision to uprate pensions in line with the consumer prices index (CPI) rather than the retail prices index (RPI) has shaved 15% from the cost of the schemes ...
BBC NEWS 07 Oct 2010'Celebrate huge salaries'
Gordon Brown warning over aircraft carrier contracts
Former prime minister Gordon Brown has warned the UK government against cancelling orders for two Royal Navy aircraft carriers.
He said the costs of not going ahead with the ships "are probably greater" than the costs of completing HMS Queen Elizabeth and HMS Prince of Wales.
Cancelling the carrier contracts could cost £3bn, the SNP government has said ...
Mr Brown's comments came as Defence Secretary Liam Fox warned there would be some, "uncomfortable reductions in defence spending", because of budget pressure.
Speaking to a fringe meeting at the Conservative party conference in Birmingham, he said his department was entering a "very difficult period", but said the "ghastly truth" was that Labour had left a legacy of £38bn of unfunded liabilities at the Ministry of Defence ...
BBC NEWS 05 Oct 2010 Client State Contesting Austerity
Cameron faces Tory criticism over child benefit cuts
The Conservative children's minister, Tim Loughton, said the chancellor's move to axe the payments to 1.2 million families might need revising ...
His comments came after criticism from unions and poverty campaigners and a warning from a respected economic thinktank that the cut could "seriously distort" work incentives ...
Officials said the cut-off point had to be aligned with the higher-rate income tax threshold to ensure simplicity and avoid complex means-testing.
But Loughton indicated that it could be revised:
"If there are ways we can look at compensating measures for those genuinely in need that will be looked at in future budgets," he told Channel 4 News.
"If the thresholds need to be adjusted there's plenty of time to look at that."
Seizing on his comments, the shadow work and pensions secretary, Yvette Cooper, said last night:
"The government's unfair attack on child benefit is now unravelling. The chancellor only announced means testing this morning, and already the children's minister has admitted that the thresholds need to be looked at again. They have clearly been taken aback by the reaction of parents across the country.
"George Osborne and David Cameron obviously don't understand what it means for families on middle incomes to lose thousands of pounds a year."
Osborne made the policy, which ends the universal payment of child benefit to all parents, the centrepiece of his own conference speech.
But within hours, an analysis by the Institute for Fiscal Studies (IFS) said some may regard the measure as "unfair" because it favours two-income families over those where one parent stays at home to look after children ...
Guardian 05 Oct 2010 Contesting Austerity More Haste, Less Speed WelfareWhy the Tories failed
Child benefit withdrawal will mean some worse off after a pay rise
Ending middle-class child benefit is just a start
The next step for Mr Osborne will be to move on to other areas of the welfare system. He should begin by aiming to save more elsewhere within child benefit.
The reforms announced this morning will save £1bn.
But the think-tank the Institute for Fiscal Studies has suggested aligning the withdrawal of child benefit with child tax credits, which would save £5.5bn and might also be simpler from an administrative point of view.
Second, this should be part of a wider assault on mis-directed benefits to the middle class.
Some 32 per cent of all benefits paid out last year went to people who are wealthier than average, costing £53bn.
Excluding the state pension, 28 per cent of all benefits go to the better-off half of the population, costing £30bn.
Finally, bigger cuts in middle-class welfare should be used as the political counterweight to placing much tougher expectations on claimants of out of work benefits. Such spending ... now costs £80bn-£90bn a year.
Instead of sucking more and more people into the welfare net, the message should be that people who do not need to rely on the state, should not.
So far, the government has been shy about making these arguments. Mr Osborne has shown his political steel in beginning to do so. He should keep pushing.
FT 04 Oct 2010 Contesting Austerity WelfareOsborne under fire over child benefit cuts for higher earners
Capping benefits (and families?)
Child benefit withdrawal will mean some worse off after a pay rise
Child benefit withdrawal will mean some worse off after a pay rise
Cap brought in on benefit claims
When simplicity trumps fairness
Minister backs high-speed rail to Manchester and Leeds
George Osborne to cap welfare payments
Coalition's infrastructure cuts 'inconsistent' with UK recovery
Child benefit to be scrapped for high earners
End for middle class benefits
Top earners to lose child tax credit benefits
Osborne: cuts must be fast and deep
David Cameron's welfare reform to target middle class
George Osborne's key arguments
1. It's not the government's fault: Mr Osborne was at pains to blame Labour for the deficit. He is cutting spending to rescue the economy from Labour's legacy. He makes but the barest mention of the 2008 financial crisis, referring to it obliquely as "when the storms came".
2. Labour would make it worse: Any delay in cutting the deficit would put the recovery at risk. Delay would mean paying more later. He does not address his critics' argument that cutting spending too fast could risk a double dip recession.
3. We are cutting in the national interest: The government is tackling the deficit in the same spirit that it formed the coalition in May. We are, as Mr Osborne never ceases to remind us, all in this together.
4. Cuts will help the poor in the long run: This sounds counter-intuitive but Mr Osborne's argument goes like this: the government currently spends £120m a day in interest payments to service the deficit. If you get rid of the deficit, you can start spending that money on schools and hospitals and the least well off in society. Nota bene Ed Miliband.
5. We are not cutting everything: The NHS will remain - partially - protected. The Tories promised not to touch it four years ago and they do not want to be accused of breaking promises. There will be enough of that over his child benefit cut.
6. We are cutting for a better tomorrow: Mr Osborne is casting himself as the Judy Garland of British politics, promising that somewhere over the rainbow (he does, I admit, use the word horizon but the point stands) there's a Britain where skies are blue. Just over the horizon, he promises, lies the Britain we are trying to build, a hopeful, united, prosperous country, governed with imagination, fairness and courage, a Britain that pays its way. Luckily he restrains himself and does not promise a Britain where troubles melt like lemon drops, away above the chimney tops...
7. Few will escape the axe (we are all in this together): This is why Mr Osborne announced a child benefit cut for the better off on the same day as a maximum cap on household benefits claims. Middle class higher rate taxpayers will take a hit, as will jobless households claiming a huge whack of housing benefit. Key Osborne fact: the government spends more on housing benefit than it does on the police.
8. We don't just cut, we do growth too: What little cash we have got left we will spend on transport schemes, medical research and communications' networks. There'll be a green investment bank and stuff like that.
9. Vince Cable and I get on better than the Milibands: This might be a gag but I am not sure this is not saying much in current circumstances.
BBC NEWS 04 Oct 2010 Contesting Austerity Welfare
Oliver Letwin offers hope for government's green agenda
Conservative party conference speech by former shadow chancellor welcomed as a sign that key government figures are still pushing the low-carbon agenda ...
Letwin ... listed many of the government's policies and promises, including the Green New Deal for a big increase in energy efficiency, building a smart grid, electric vehicles, generating energy from waste, feed in tariffs, carbon price support, and carbon capture and storage for fossil fuels.
The country needed to do "the lot" to cut carbon, improve energy security and protect homes and businesses from volatile fossil fuel prices, he said ...
Letwin will, however, have offered some hope to experts who believe key decisions about supporting nascent renewable technologies and investing more in energy efficiency have been held back by strict Treasury cost-benefit rules.
Criticising the reliance on net present value (NPV) as a way of making decisions, Letwin said that ...
"NPV is an extremely valuable tool for taking short-term investment decisions which are single generational decisions ...
"But the most important decisions society has to make are intergenerational decisions, and those economic and accounting tools we have break down at that point and you're forced back on much deeper considerations."
In particular many current cost-benefit analyses do not take into account the damage done by volatile fossil fuel prices or uncertainty about which would be the best future alternative energy sources, said Letwin ...
Guardian 04 Oct 2010 Is the coalition eco-friendly?Minister backs high-speed rail to Manchester and Leeds
Defence cuts are draconian, Fox tells Cameron
In a private letter to Cameron, the defence secretary makes clear his feeling on cuts to the defence budget and goes on to say that the Tories risk "destroying much of the reputation and capital" they have built up with the military.
The letter, leaked to the Daily Telegraph, was written on Monday night, before a National Security Council meeting to discuss the strategic defence and security review. In it Fox says the proposed review was "looking less and less defensible" and was likely to have "grave political consequences for us, destroying much of the reputation and capital you, and we, have built up in recent years".
He warns that the "party, media, military and the international reaction will be brutal if we do not recognise the dangers and continue to push for such draconian cuts at a time when we are at war".
He goes on: "Our decisions today will limit severely the options available to this and all future governments."
Fox says that if cuts go ahead the "range of operations that we can do today we will simply not be able to do in the future" ...
Guardian 29 Sept 2010 Churchill's Client State
UK public finances post record August deficit
• Public sector net borrowing comes in at £15.3bn
• Tax on bankers' bonuses raises £3.5bn
• Government still on track to meet forecast
• UK net debt is 56.3% of GDP ...
Guardian 21 Sept 2010Moody's AAA rating may not stand the test of time
Britain keeps AAA credit rating
The influence of the credit rating agencies
Doctors and nurses among 1,700 staff sacked at DoH
Markets eagerly await Irish bond results
The CBI agrees that spending must be limited to "avoid major tax rises that would damage our economy and undermine competitiveness".Treasury must protect growth, says CBI study
A very corporate-state agenda
But it says investments in areas that facilitate growth must be protected if the economy is not to be tipped into another tailspin.
These include continuing investment in Britain's creaking infrastructure, research and development, and human capital through education and skills training.
"The Government must protect investment in areas that do most to foster economic growth while making savings by re-engineering public-service delivery, reforming public-sector pensions and reducing spending in other areas," the CBI will say.
John Cridland, its deputy director-general, said yesterday:
"The Government rightly decided to limit public spending. The alternative would have been tax rises and other consequences that would have damaged the economy for years to come. Cutting spending means tough choices.
"We think the need for economic growth, not the noise of the loudest voice, should determine where cuts are made. The Government must improve the efficiency of public services and focus the limited public money available on areas that do most to galvanise growth."
The CBI will place particular emphasis on what it sees as the importance of investing in transport infrastructure, because "this offers high returns and will play a crucial role in boosting domestic and international trade".
It will call on ministers to breakdown what it says are barriers to private-sector investment in energy and communications infrastructure ...
Independent 20 Sept 2010 Corporate StateAusterity will harm UK's economic prospects, says CBI
CBI
Alexander launches 'ruthless' tax evasion clampdown
Unveiling plans agreed with the Chancellor George Osborne, Mr Alexander said the authorities would get £900m extra in financial support for the "ruthless" pursuit of tax evaders and those who use legal loopholes to minimise their tax bills.Alexander launches 'ruthless' tax evasion clampdown
Ministers want to see a fivefold increase in prosecution for tax evasion and Revenue & Customs will be given in extra resources to create a dedicated team of investigators to bare down on offshore tax havens and online tax evasion.
"There are some people who seem to believe that not paying their fair share of tax is a lifestyle choice that is socially acceptable," he said.
"Just like the benefit cheat, they take resources from those who need them most. Tax avoidance and evasion are unacceptable in the best of times but in today's circumstances it is morally indefensible.
"We will be ruthless with those often wealthy people and businesses who think they can treat paying tax as an optional extra."
Tax evasion and avoidance cost the Treasury an estimated £14bn a year and successive governments have vowed to take action against it ...
BBC NEWS 19 Sept 2010 Tax Dodgers
Mr King said he believed it was vital the Government set out a clear plan for reducing the deficit and warned the UK could otherwise have suffered the kind of woes seen in Greece.UK risked Greek-style crisis, Mervyn King tells TUC
King obviously didn't read the Indie last month when David Prosser
comprehensively dismissed the comparison between Britain and Greece.
"As a result of a failure to put such a plan in place sooner, some euro-area countries have found - to their cost - a much more rapid adjustment being forced upon them," he said.
But he told delegates they were "entitled to be angry" as he admitted the financial sector and policymakers were to blame for the financial crisis that has landed the UK with the largest peacetime budget deficit in its history.
Independent 15 Sept 2010 Boris fears double dip recession'Deficit deniers' are not the problem
The coalition government has said the strategic defence and security review ... is designed to look at the UK's role in the world, evolving threats to the country's interests, the nature of the UK's response to such threats and whether the armed forces are equipped to deal with future challenges.Speed of defence review 'could put operations at risk'
Annual defence spending in the UK currently stands at about £37bn, which is around 2.5% of GDP. Cuts of 10-20% are expected ...Analysis
The Defence Select Committee's report echoes concerns inside the military and the Ministry of Defence that the strategic defence and security review is being driven as much by the Treasury as by national security.
The MoD is being asked to make savings of up to 20%, but the real figure will be higher because the ministry already has a black hole in its budget of £37bn.
Defence Secretary Liam Fox insists that by the end of the process the UK will still be able to deal with current and future threats. But the scale of the cuts certainly raises doubts.
The UK currently has about 10,000 troops in Afghanistan, but it needs another 50,000 to sustain the operation, bearing in mind that soldiers are replaced every six months and need time for rest and training.
If the Army were to lose as many as 20,000 troops, as has been suggested, then that would leave it severely stretched.BBC NEWS 15 Sept 2010 Foreign PolicyTop 10 military spenders 2009
Source: Sipri
- USA $661bn
- China $100bn (Sipri estimate)
- France $64bn
- UK $58bn (£37bn)
- Russia $53bn
- Japan $52bn
- Germany $46bn
- Saudi Arabia $41bn
- India $36bn
- Italy $36bn
Ministers may delay key decisions on Trident renewal
On the shape of things to come
"We are all in it together, only some are more 'in it' that others"
Birmingham City Council is looking to cut the pay - and worsen the conditions - of 25,837 staff in order to save £330m by 2014.
It would be interesting to know, btw, how many of B'ham City Council's 'top brass' are on the list.
At the same time Ofsted have found a novel way of cutting education costs: claiming that half of all SEN children are misdiagnosed, and therefore their specialist provision can be cut.
Included in Ofsted's sights are the children of service personel serving in Afghanistan, who probably have nightmares about Mum/Dad's face appearing on prime-time TV, and being driven through Wootten Bassett in a hearse.
As a three year old - circa 1939/40 - I recall similar nightmares which only made sense when I was old enough to understand what had been going on, and how frightened the adults were around me. (My father, I discoveed later, had been wondering which part of Canada I would go to.)
I write this to point out the failure of imagination on the part of Ofsted's inspectors.
Finally, we have the ugly spectacle of the police threatening the coalition not to cut their numbers, as they are needed to control all the rioters who could plead not such excuse when they were faced with the chop.
Recall Maggie's cockney police waving wads of cash, and their overtime slips, at striking miners.
Boris fears double dip recessionIMF warns of the 'human cost' of public spending cuts
Birmingham city council puts 26,000 staff on notice
Half of special needs children misdiagnosed
Police: we can't take care of cuts protests if you cut us
Public sector cuts
Spending Cuts: IMF warns of the 'human cost'
Someone at the IMF has had a brain transplant
Strauss-Kahn said:
"The labour market is in dire straits. The Great Recession has left behind a wasteland of unemployment, and this devastation threatens the livelihood, security and dignity of millions of people across the world."
He said the severity of the recession was in part to blame, but also how the fallout from the recession affected particular sectors.
In a reference to the UK, Ireland, Spain and the US, which suffered a banking crisis made worse by the after-effects of a housing bubble, he said:
"Job loss was greatest in countries where housing and financial markets collapsed. Most of this came from manufacturing and construction, showing that ordinary workers have paid the price for mistakes made elsewhere." ...
Guardian 13 Sept 2010BoE 'warns on sovereign debt'
Contesting Austerity
Double-dip recession: bulls and bears
Doing more for less with Vince Cable ...
Doing 'more for less'
Vince Cable's lecture to 'academics' at London University could well be emblematic of the coalition's approach to cuts this autumn.
Many taxpayers are due to find out this week that 'doing more for less' at the HMRC has turned out to be both costly and - for thousands of our fellow citizens - destabilizing.
The impact of staff cuts - and targets - on the HMRC is a likely portent of what is to come.
Worse, Cable continues the tripartisan notion - a legacy of Thatcher's myopic approach to research - that if it's not relevant to business, it's not worth funding.
This is wholely typical of neoliberalism's short-termism: "if shareholders don't see a profit this year, we don't go there".
The problem is that the sort of decisions governments are tasked with confronting involve the one thing 'here today and gone tomorrow politicians' do not want to confront: uncertainty of outcomes.
One of the key reasons for adopting the scientific method is precisely because today's received wisdom is subject to the next piece of research which calls it into question.
While it's true that politicians cannot adopt the scientific method when drafting a budget or spending review, they could subject their certainties to the uncertainty principle: the range of unintended consequences which any policy is likely to provoke.
This is the irony undermining Cable's attack on the purposes of scientific research.
George Osborne's secret plan to slash sickness benefits
Chancellor plans to slash welfare bill by £2.5bn for people who are disabled or too ill to work ...
Details of the plan, spelled out in a confidential letter from Osborne to Iain Duncan Smith ... will fuel mounting concerns that the government's assault on spending ... will hit those on the lowest incomes the hardest.
Osborne told Duncan Smith:
"Given the pressure on overall public spending in the coming period, we will need to continue developing further options to reform the benefits as part of the spending review process in order to deliver further savings, greater simplicity and stronger work incentives.
"Reform to the employment support allowance is a particular priority and I am pleased that you, the prime minister and I have agreed to press ahead with reforms to the ESA as part of the spending review that will deliver net savings of at least £2.5bn by 2014-15."
In a further extraordinary development, sources within Duncan Smith's department turned their fire on the Treasury, insisting nothing had been decided and suggesting Osborne's department may have leaked the letter to bounce them into accepting the plan ...
Guardian 11 Sept 2010George Osborne's axe falls early
Police cuts will leave public less safe, federation warns
Chairman of police federation warns cuts could leave up to 40,000 officers out of a job and result in rising crime figures ...
Guardian 10 Sept 2010Up to 40,000 police jobs face axe, federation warns
'Christmas for criminals'
Jobs recovery 'will take 14 years'
More than 1.3 million private sector jobs have been lost since official figures for workplace jobs peaked at 31 million in 2008, the study found.
Around 2.2 million jobs will have to be created to get the labour market back to pre-recession levels, which could take up to 14 years, but much longer in areas such as Yorkshire and the Humber and the North West, said the TUC.
Mining and quarrying have lost the most jobs since 2008, losing 15% of its workforce, followed by manufacturing (down 12%), construction (11%) and retail (7%), the analysis showed.
The loss of jobs would have been even greater but for increases in staff in the NHS, social care and education, although the TUC warned that public spending cuts due to be announced by the Government next month will lead to "heavy" job losses ...
uk.news.yahoo 10 Sept 2010 Boris warns bankers 'Reserve Army'Cuts mean unemployment is here to stay
This is George Osborne's chance to back away from austerity
The OECD's volte-face over the dangers of spending cuts gives the chancellor plenty of cover to rethink his approach ...
Osborne's belief is that hacking away at public spending will create space for the private sector to flourish.
Britain will cease to be so dependent on consumer spending and the state for its growth; instead, resources will shift to manufacturing and exports, thus reducing both household debt and the size of the UK's current account deficit.
Such an outcome is much to be desired but, as today's trade figures show, it remains a long way off.
Far from benefiting from the 20% drop in sterling over the past three years, the trade gap in the three months to July was the worst on record.
Only the efforts of the City, which boosted the UK's surplus in service sector trade, prevented an even worse outcome.
Not much sign of rebalancing there ...
To sum up, then: the world economy is clearly slowing; both the OECD and the International Monetary Fund are now warning against over-aggressive tightening of policy; Britain's economy is both unbalanced and weakening; and in less than six weeks' time the government is planning to announce the biggest programme of spending cuts since the 1930s.
Osborne has now been given a perfect excuse for moderating his plans. If he carries on regardless, he risks making the biggest economic blunder since John Major took Britain into the Exchange Rate Mechanism.
Guardian 09 Sept 2010 Boris warns bankers ONS Growth State
Weaning places off the state
Middlesborough's problem with the shrinking of the state
Today's Experian data finds that 42% of workers are employed in the public sector.
In the decade to 2008, it's estimated that while private sector employment created only 168 jobs, 13,000 public sector jobs were created in Middlesbrough, Redcar and nearby Stockton.
No wonder today's survey finds this area so vulnerable to a shrinking state ...
The town's elected mayor, Ray Mallon, is very bullish about Middlesbrough's prospects but he does accept that there are challenging times ahead.
"We will lose something like £6m this year from the budgets and something like £12-18m next year and over the next three years it will be over £30m" he told me.
"Clearly we will get job cuts (but) we will survive this because we have the get up and go and the will to deal with what we have got."
It is estimated that 11,000 public sector jobs could be lost following the cuts in the Tees Valley and the big question is whether the private sector can replace those workers as fast or faster than they disappear ...
Mark Easton's UK 09 Sept 2010
Is Capitalism the only game in town? 'Pawns or Players?'North East and Midlands 'least resilient' areas
'There is an alternative'
UK trade deficit hits new record
Cable reveals a strategy to cut science funding
Business Secretary Vince Cable has ... urged universities to do "more for less" and said taxpayers should only back research that has a commercial use or was academically outstanding.
Mr Cable said in a speech in London that the government "values" UK science and research and spends £4.3bn a year ...
The business secretary ... told an audience of academics at the University of London:
"There is a school of thought which says that government commitment to science and technology is measured by how much money it spends.
"Money is important both for the quantity and quality. But it is an input - not an output - measure. We could do more for less." ...
Royal Society president Lord Rees told the Financial Times: "It is crucial that short-term austerity should not undermine our science and innovation capacity.
"Global competition for the most talented individuals, the most innovative companies and leadership in high-tech sectors is intensifying.
"Cuts would create the impression that UK science is in relative decline and make the UK a less attractive location for mobile talent and investment." ...
BBC NEWS 08 Sept 2010Scientists hold protest over budget cuts
Osborne's 'Star Chamber'
George Osborne's new system for deciding the outcomes of the spending review, the "Star Chamber" has its roots in the 15th Century.
And what the secretive cabinet committee decides in the coming weeks will affect every family in Britain ...
BBC NEWS 04 Sept 2010
'There is an alternative' – Ed Balls’
... after seeing first hand the worried and increasingly pessimistic mood in the US – in the media and in conversation with friends – it jarred to read the British Chancellor saying he was “cautiously optimistic about the economic situation”.
The prevailing attitude I saw in America was not optimism but fear.
Every newspaper I read highlighted people’s worries about their business, their jobs or their home and the growing concerns of US policymakers and business leaders and financial analysts at the emerging signs of a double-dip recession – and not just any recession.
They fear what Americans – especially on the Eastern seaboard – like to call a ‘Perfect Storm’.
A perfect storm where continued de-leveraging by banks and the private sector meets premature fiscal retrenchment from governments and a drastic tightening of consumer spending… as tax rises, benefit cuts and rising unemployment hit home.
And it is these fears – not just in the US but round the world – which in recent days have caused equity markets to fall sharply, bond markets to surge, well summed up by Wednesday’s Financial Times front page headline ‘Market jitters over growth’.
This is a risky and dangerous time for the world economy.
History teaches us that economic recovery following a large-scale financial crisis can be slow and stuttering.
In the US, the debate is not about fiscal tightening but whether further stimulus is needed to prevent a double-dip ...
edballs4labour.org 27 Aug 2010Ed Balls has the power to make or break Labour
Ed Balls: a new slump looms
'Deficit deniers' are not the problem: it's the debt extremists we should fear
Mr Darling's pre-election proposals for substantial cuts also represented a gamble that the economy would be able to cope with an unprecedented withdrawal of public spending.
But he was not planning a wager on the scale Mr Osborne is making.
The Chancellor's now familiar argument is that not to do so would be an even bigger gamble, because it would risk the bond markets withdrawing their support for British government debt ...
The second flaw in Mr Osborne's argument is that Britain is nowhere near as dependent on the bond market as our collective terror of the credit ratings agencies would seem to suggest.
Even leaving aside the fact that our total indebtedness is well below many of our rivals, for now at least, the money we owe is not repayable for an extended period.
Our gilts must be rolled over, on average, 14 years from today.
The comparable figure for the US, for example, is around nine years.
Moreover, while more than two-thirds of Greek debt is held by international investors, the comparable figure for Britain is less than one-third.
In other words, Britain has plenty of time to put its finances in order and more forgiving lenders with which to negotiate ...
Independent 18 Aug 2010Inflation threatens the recovery, too
Ministers consider cuts to winter fuel allowance
A truly Keynesian response to public debt?
The issue of debt has risen to the top of the political agenda.
Domestically, all parties are agreed that the level of public and private debt in the UK has risen too far.
Internationally, nations like Greece and Ireland are being forced to carry out drastic cuts in wages and public expenditure in order to satisfy their creditors.
But to listen to the debate one feels that John Maynard Keynes lived and wrote in vain. None of the political participants seem to have any real understanding about what the most original economist of the last century wrote ...
Neither side seems to have Keynes’ feeling for the interdependence of thrift and debt ...
Cutting public sector wages and can temporarily shift borrowing away from the state. Its first effect is to force public sector employees either into debt, or force them to run down their relatively small savings.
But employees are much less credit worthy than the state, and quickly cut their consumption, throwing the deficit in turn onto the company sector and the import sector.
Firms are more creditworthy than private individuals, but still less creditworthy than the state. Firms will respond with futher layoffs and wage cuts.
Falling tax revenues, increased unemployment benefits, throw the deficit back to the borrower of last resort: the government.
In the meantime the productive economy has gone down the tube.
It was against this insane commonsense response to public debt that Kenyes polemicised in the 1930s.
The only sectors onto whom the deficit can be sucessfully shifted are the rentiers and the overseas sector.
The rentiers could be taxed at sufficiently punitive rates to run down their financial assets.
In compensation the public debt would fall, since the public debt is nothing more than a liability to this class, and within a given national economy, the public debt can only be run down by diminishing the assets of the rentier class.
The only way the assets of the overseas sector can be run down is by eliminating the trade deficit and running a trade surplus.
This would imply a much more stringent devaluation of sterling than has so far occurred, which would be no bad thing from the long term working class interest here since it would slow the outward migration of manufacturing jobs ...
... all this evades the real cause of public deficit: the growing financial assets of the international rentier class.
This can ultimately be dealt with only by one of 3 expropriation processes
1)The Denis Healy solution : tax them till the pips squeak.
2)The Weimar solution : pay them off with newly created state currency to inflate away the debt.
3)The Biblical solution : anounce a jubilee and cancel all debts.
Though Cowards Flinch 02 March 2010