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Comprehensive Spending Review is painful but necessary
20/10/2010 23:04:00

 
 

Today we got to hear the results of the Comprehensive Spending Review.

It contained some good news (see below), but overall there's no denying that it will mean reductions in a number of public services and it will cost some people their jobs (although hopefully most of the reductions can be achieved by not replacing people when they move to another job or retire).

A number of constituents have contacted me to question whether what the Chancellor is doing is necessary. I believe it is. More importantly, so do the International Monetary Fund and the Governor of the Bank of England. This year, the Government is borrowing £1 in every £4 it spends. We can't go on like that - sooner or later, the markets are going to lose confidence in our ability to pay all this debt back. And the cuts they would then require would be much more painful than those the Chancellor announced today - anyone who has ever got into debt will tell you that the longer you leave it before doing something about it the more painful it is.

But there's also a moral case for taking action. At the moment, the Government is wasting £120 million of our taxes every day paying interest on its debt. That's money that could be spent on police officers, teachers, doctors or nurses. And, if we don't do something, that figure is going to keep increasing. We have no right to burden our children in this way.

Finally, the evidence from abroad is that when a country needs to balance its budget, spending cuts are a much more effective way of doing so than tax rises (see here for example, although it's rather technical).

So I think the Chancellor's overall strategy is right. But has he got his priorities right?

Broadly, yes. The NHS and schools - the two public services that people tell me are their top priorities - aren't being cut at all. And, despite the tough times we are going through, the Government is going to honour its commitment to provide more help to the poorest people around the world. We should be proud of that.

He also prioritised those areas of spending that will help get our economy growing again - transport infrastructure (Boris did a great job lobbying for Crossrail, the Tube upgrades and the protection of the bus network in outer London), investment in science, extra apprenticeships. That's really important. The Government's strategy will only work if there is growth in the private sector to replace the jobs we will be losing in the public sector.

And one final piece of good news is that Croydon will be one of 16 areas to pilot the concept of community budgets - different departments pooling their budgets to provide more effective help to families with complex needs.

I have two concerns however. First, funding for the police. They have not been cut by as much as some other services and the Chancellor referred to a report by Her Majesty's Inspector of Constabulary that said that significant savings could be made to police budgets without affecting front-line policing. He better be right. Crime is the number one issue in Croydon and cuts in front-line policing would not be acceptable.

Second, local government. The Spending Review envisages government support for local councils falling by about a quarter. That is going to make life difficult for councils across the country. It will be particularly difficult for councils like Croydon that have had tough settlements in the last few years and are already pretty efficient.

Overall then I think the Chancellor got the judgement about right. But there is no getting away from the fact that these decisions are going to cost some of my constituents their jobs and impact on some of the services we all use. I have a great deal of sympathy for public servants who are paying the price for the previous Government's mismanagement of the public finances and the behaviour of some banks.

One way in which the Government can save money is to relocate some of its operations from central London. As the local MP, I will be lobbying hard to try to bring some of those jobs to Croydon to mitigate the impact of yesterday's announcement.

Comment on this blog

 

Readers' Comments

On 01/11/2010 22:57:00 Anthony Miller wrote:
That is going to make life difficult for councils across the country...?

Well, it's not going to make life difficult for councils like Westminster. As soon as they implement the Housing Benefit cuts they're going to effectively be putting people out on the streets and those people have to go somewhere? Where are they going to go? The suburbs. Westminster will still be getting the same level of subsidy but councils like Croydon will be attempting to house more people with the same money? You might not think there's much "social housing" or slums in the Westminster City Council area but those of us who traverse the metropolis see plenty of dark corners. Whatever the morality of the state paying people to live in West End addresses these displaced people will have to go somewhere. And it isn't just Westminster. The policy is going to cause a massive displacement of people one way or another and if this is David Cameron's idea of a good idea then surely there should be a redistribution of council funding to help those areas that will have to cope with the influx? How is this to be managed?

A lot of people don't realise but there's actually a lot of people who the state currently pays to live in Central London. For example there's a huge block of subsidised key worker flats off Tottenham Court road because if there weren't UCL would be very empty of nurses. I'm pretty sure none of them are on housing benefit but they are state subsidised to live there otherwise they couldn't afford to work. So not all state subsidy of housing in expensive inner city areas is silly. And there aren't key worker flats for everyone who the state needs to work in central london ... Of course there may not be a problem in the end but I'm curious how this will work in practice.

Anyway the point is if places like Croydon are expected to pick up the tab will we get any money for it...?

 
On 04/11/2010 12:25:00 Carolyne Smith wrote:
I thoroughly disagree that the Chancellor 'got it right' and I am not surprised that your take on the spending review mirrors that of your party. However I am surprised that with your relatively small majority of 2969 votes that you aren't more interested or proactive in helping to protect potentially thousands of your constituent’s jobs. There is little evidence that the private sector will be economically stimulated by these measures to offer comparable jobs. Hard working people are facing redundancy because of the actions of the banking industry - how is this fair?

You speak about moral cases for action. I would be interested to hear about your views on tax avoidance and the billons of pounds that this Government could recoup from big business rather than cutting essential public services. Or how you feel about the £850 billon that this Government could earn by selling its interests in the banking sector?

We are all in this together? Why should we be? The majority of us had little to do with the supposed debt crisis that we face now.

 
On 25/11/2010 18:27:00 Gavin Barwell wrote:
Carolyne

You ask how it is fair that hard working people are facing redundancy because of the actions of the banking industry. Apart from pointing out that the blame for the current mess is shared between some bankers (not the whole industry) and the previous government (we were running a deficit before the banking crisis), I agree it is not fair. I said as much in my post - "I have a great deal of sympathy for public servants who are paying the price for the previous Government's mismanagement of the public finances and the behaviour of some banks"

You ask for my views on tax avoidance and the case for selling our interests in the banks. The Chancellor has provided extra money to tackle tax avoidance. We should do everything in our power to ensure that people pay what they owe. We should sell our interests in the banks once we can recoup our investment and we are confident they no longer need government support.

Finally, you ask why should we all be in this together. The answer is very simple. Because the people who caused the problem can't sort it out and if we don't sort it out we will all pay the price - if the banks lose confidence in the Government's ability to repay all this debt, they will charge the Government much more to borrow money and then we will see even more drastic cuts as the Irish are currently discovering.

 
 

 

 

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Gavin Barwell, House of Commons, SW1A 1AA, Tel  020 8660 0491      © Gavin Barwell  2017       Promoted by Ian Parker on behalf of Gavin Barwell, both at 36 Brighton Road, Purley, CR8 2LG