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Morning Line: don't soften us up for cuts we don't need

The coalition government has thrilled many right wingers with its plans to scale back the state, but in being so aggressive on spending cuts it is taking a big risk on consumer confidence.

The coalition government has thrilled many right wingers with its plans to scale back the state, but in being so aggressive on spending cuts it is taking a big risk on consumer confidence.

Consumer confidence inevitably took a hit from the emergency Budget last month as people began to see what the VAT increase and big reductions in benefits and government spending might really mean to their lives.

Yesterday transport secretary Philip Hammond all but conceded that frightening talk of 40% cuts in unprotected departmental spending over the weekend was a ploy to soften up the public ahead of a tough spending review in October.

He said ministers wanted to avoid a ‘salami slicing’ approach with each department taking an equal hit. Some departments would have to cut more than 25% – the figure announced by chancellor George Osborne in the Budget – and some by less, he said.

However, the risk is that in upping the ante with its austerity package with each daily announcement the Con-Lib administration slices at consumer confidence in exactly the same way.

Confirmation from the Institute of Fiscal Studies and the Joseph Rowntree Fooundation that the budget measures hit the poor the hardest may inspire some Conservatives, but many others will find it depressing.

Already the public has had to digest the fact that 600,000 public sector jobs could go in the next five years, with more to come from the private sector. Inevitably there is scepticism that economic growth can compensate for these losses and create many more jobs. Consumer confidence is the essential ingredient if this miracle growth is to occur. However, this fragile resource will evaporate completely if the government continues to go about its business this way.

I'm not saying cuts to the capital spending on schools and roads aren't necessary. But we need some good news to lighten the gloom. The government still hasn't explained why it needed to save £40 billion more than the £73 billion of cuts the last government intended to make.

9 comments so far. Why not have your say?

Jeremy Bosk

Jul 06, 2010 at 12:35

Remember that for the Tories the 1930s were a golden age. All their grandparents could afford at least a housemaid and a cook. Many had butlers, chauffeurs and the complete servant set. The deliberate creation of a new Great Depression is the only way to bring down the cost of domestic help to affordable levels.

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Peter J

Jul 06, 2010 at 12:40

There is a danger that if we don't make significant cuts then interest rates will rise earlier which would be so not very good.

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Anonymous 1 needed this 'off the record'

Jul 06, 2010 at 12:46

The government has an excellent opportunity to fundamentally review the role of the estate and to make substantial and permanent cuts. The state in the UK is grossly inefficient and a very poor provider of services and many of the functions it has assumed since 1945 should be returned to the private sector.

The gloom will be lightened when the taxpayers who bear the cost of this waste learn that for many civil servants the gravy train has finally hit the bumpers. When the burden of excessive taxation, regulation and waste has been lifted the economy will be able to grow again leading to a better life for all other than the idle bums who currently do nothing.

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Anonymous 2 needed this 'off the record'

Jul 06, 2010 at 13:08

yet again the new Government is losing the PR war to Labour who are still trying to pretend the country isn't in a mess caused by them.

Lets be clear the economy is currently only being supported by low interest rates. The average £150k mortgage payer is at least £6k better off with interest rates where they are (not to mention corporate/business debt). If rates return to normal historic levels of around 5% the economy will implode.

The Con-Lib's need to be making this point clear to everyone. That keeping rates low is the only thing that will save us.

Labours proposals are consistent with their short term economic outlook, ie don't save when the economy is booming and Borrow like crazy when rates are low.

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Anonymous 3 needed this 'off the record'

Jul 06, 2010 at 14:30

I agree with Anonymous 2.

Also the size of the State is too large. It has its fingers in all manner of things where it really shouldnt and industry is hamstrung by red tape and bureaucrats. Get rid of them and it soonest and let entrepreneurs get on and do what they do. Also lets have a welcome return of caveat emptor as the nanny state regulates everything in order to protect idiots from buying rubbish. Just do a little homework before buying and let the best service thrive while the rubbish withers.

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indigo

Jul 06, 2010 at 15:34

State is too big, my friends who work in beaucratic roles say that inefficiency and incompetence is accepted. Government are doing well if they can cut non-essential paper-pushers and encourage businesses to start up. Presumably though this is easier said than done.

I think in the years down the line, cutting down on the state will be citied as a major reason for future growth

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derek farman

Jul 06, 2010 at 15:36

Why should everybody get so nervous about the cuts . They don't necessarily mean cuts of people . But they do mean cuts of scandalous waste . And that doesn't mean people have to be made redundant . It does mean , however , that spending needs auditing before the money actually gets wasted .

Unfortunately we haven't been allowed to see how our money vanished into a black hole with the previous government . But week after week it was possible to read articles about insane spending across all departments . Lets hope the coalition have ALL this information to hand so that they can effectively prune it out .

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Tony Edge

Jul 06, 2010 at 17:36

WHY are posters to this thread so afraid to use their names??

Tony

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michael coxson

Jul 06, 2010 at 20:10

Tony they are close to the core ????

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