Public service cuts do not make sense

Update 21st Sept 2011
Key messages are coming to pass and still the government is not listening

The Branch put up these key messages (see below) in January of this year to show why we were campaigning against this Conservative/Lib Dem Government's ideological cuts to public services.

We warned that the strategy of austerity, imposed by this government to deal with the deficit caused by the bank bail-out would not work; that it did not make economic sense and that it could lead to a double dip recession - that what the country needed to get back on trackwas a strategy to promote growth by investing in jobs and services.

We warned that slashing public service budgets; cutting public sector wages and throwing public service workers out of work would make matters worse. Not only would it cause misery to those who lost their jobs and/or the services they depend on, but it would reduce the amount of tax put into the treasury (after all, with PAYE we are the group of workers who always pay their taxes) and would mean greater benefits pay-outs.

We also warned that the government's austerity measures would affect the private sector just as much, both by reducing spending in local economies (because people have less disposable income and are more careful about spending) and because public services are key contractors of the private sector. We have seen this happen too. The expectation that the private sector would step in and create jobs lost in the public sector has just not materialised.

Now we are seeing that our predictions, that cuts would prevent growth in the economy - predictions which were completely unheeded by this government and by much of the press and media - have come to pass. The IMF warned on 21st Sept 2011 of a 17% chance of a double dip recession in the UK and has revised the UK growth forecast down to 1.1% for 2011. http://news.sky.com/home/business/article/16073633

In giving these warnings we were in good company. They were also made by a number of well respected economists -

Prof David Blanchflower (former member of the Bank of England Monetary Policy Committee) said of the UK Government's June 2010 budget, "This unnecessary and dangerous budget will to push the economy back into recession."

Joseph Stiglitz (who has won a Nobel prize in economics) predicted that,
"cutbacks in Germany, Britain and France will mean all of Europe will suffer. The cuts will all feed back negatively. And if everyone follows this policy, their budget deficits will get worse, so they will have to make more cuts and raise taxes more. It's a vicious downward spiral. We're now looking at a long, hard, slow recovery with the possibility of a double dip if everybody cuts back at the same time."

Paul Krugman (another Nobel prize winning economist) stated,
"governments are obsessing about inflation when the real threat is deflation, preaching the need for belt-tightening when the real problem is inadequate spending."

There is no pleasure in saying "I told you so!" Just a great deal of frustration that the government did not listen to UNISON, our colleagues in the TUC and STUC, and these repected economists at the time. Sadly it seems, the government is still not listening.

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