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The first cut isn’t the deepest

The recent march through London involving people protesting about the savage cuts to the public sector was hijacked by a few hundred thugs with the combined IQ of a fence post who decided to engage in mindless violence and senseless destruction.

That’s a shame because the vast majority of those who took to the streets clearly have a legitimate grievance and were intent on expressing it peacefully. The fact that there were 250,000 peaceful protesters on the Capital’s streets shows that there is widespread and growing anger over how the coalition Government is plugging the gaping hole in its public finances.

This, however, begs a simple, but fundamental question – what are the alternatives to Whitehall’s approach? The answers were not forthcoming from the protesters I heard interviewed during the March 26 march.

So what are they? There are essentially three choices open to the Government – impose swingeing cuts now to reduce the country’s crippling debt burden; make the cuts, but at a slower rate; or impose a childish and ill-thought out policy like ‘tax the rich’, ‘tax the banks’, ‘tax companies’, ‘tax the bosses’... in fact, ‘tax anybody except me’.

The last option is simplistic as well as being just plain dumb. That leaves big cuts fast or smaller cuts over a longer period. The Government has plumped for the former, but is it right?

Of course, we urgently need to make cuts – the country is spending a staggering £128 million a day on debt interest alone... that’s before we even start paying off the debt itself.

However, cutting the public sector too deeply and too quickly impacts on the private sector because the two sectors are interdependent. Indeed, some accuse the Government of a slash and burn policy towards public services and this is clearly unsustainable.

Having said that, is it really fair to saddle the next generation with the consequences of our own profligacy? We should surely take responsibility for clearing up the economic mess that we have created.

The cuts have not yet really started to bite; it will get a whole lot worse before it gets better. Even so, according to a recent poll, 57 per cent of the public think the Government has achieved the right balance or don’t go far enough.

Although we have apparently run out of money, this Government is still willing to spend. It has, for example, shelled out on a fuel duty stabiliser (at a projected cost of £6 billion a year); the free schools initiative (at an average cost per pupil in the first year of £7,000, according to some reports), and firing cruise missiles at Libya (at almost £400,000 a pop).

The real choice is political – the point is not so much how fast the Government implements the cuts as where it spends the money.

However, to solve the problem in the longer term, the country desperately needs growth and the crushing disappointment of the recent Budget is that it did little to promote this in the form of investment in manufacturing and universities as well as in apprenticeships and the construction sector, including building services.
Posted by David Dunn 07 April 2011 12:57:59 Categories: General manager

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