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Home » Economy, Policy

“We’ve never had it so good”: tell that to Britain’s poorest

Submitted by on 15 Feb 2011 – 10:33

The Coalition are gambling with the UK’s economic growth, argues Angela Eagle MP, Shadow Chief Secretary to the Treasury

October’s Comprehensive Spending Review saw the Conservative-led Government reject Labour’s sensible and balanced approach to reducing the deficit. Instead the government choose to take a risky gamble with growth and jobs by dogmatic pursuit of their economics of austerity.

The plans set out by the Chancellor in the CSR are not only dangerous they are more about politics than economics. He is gambling that deep and fast cuts will give him scope for tax giveaways in time for the next election. He is putting the fragile recovery at risk in uncertain and volatile times.

Yes, the deficit must come down and Labour had realistic plans to achieve that which were in line with actions being taken by the other G7 countries. The Government myth that the UK was at risk of a Greek style sovereign debt crisis is the excuse now cited by the Liberal Democrats for abandoning their pre- election economic pledges which agreed with Labour’s approach. The truth is that this Government does not have an electoral mandate for the Irish-style economic shock treatment it is pursuing.

In government, we spent and invested money to keep people in work because we believe that ordinary people and families should not be forced to pay the price of a crisis that was made in the banks. This Conservative-led Government has chosen to make ordinary people shoulder the largest burden of deficit reduction. According to estimates, between 830, 000 and 1.6 million jobs could be lost as a direct result of the cuts. The VAT increase in January will cut GDP growth by 0.3% meaning further damage to job prospects.

Just endlessly asserting that “we’re all in this together” doesn’t make it true. The VAT increase is regressive and the Institute for Fiscal Studies’ findings demonstrate that the poorest will bear the brunt of the cuts. It is women and children who will pay the most. The IFS points out that the tax and benefit changes as a result of the spending review are “regressive rather than progressive across most of the income distribution” It appears that this is now the definition of ‘fair’ in Government doublespeak.

In softening up the country for this age of austerity, Ministers have been anxious to establish a series of myths. They pretend they have no choices in order to try and evade responsibility for those they have quite deliberately made. They seek to blame ‘Labour’s wasteful public spending’ for the deficit and the economic storm we must still navigate. The plain fact is that this was a private sector crisis in the global money markets which started in America. The fact is that the Tories and the Liberal Democrats both called for more public spending rather than less right up to the collapse of Lehman Brothers in 2008. The fact is the Tories wanted more deregulation of the banks not less. Incredibly, they seek to deny there was ever a global financial crisis and give no credit for the robust and crucial actions of the Labour Government at a time when we really did stand on the brink of global financial meltdown.

The truth is that the Conservatives, with the Liberal Democrats, do not have a credible analysis of what caused the global credit crunch because they deny that there was one. Their laissez faire economic ideology means they are incapable of developing a coherent growth strategy to help rebalance our economy and reduce the deficit. Instead, we have their economic shock therapy inflicting needless pain and threatening social cohesion whilst they soft pedal on bank remuneration and Lord Young believes that we’ve never had it so good.