CAMERON ANNOUNCES 8% CUTS FOR DEFENCE OVER 5 YEARS

Devastating for the industries, communities and individuals concerned, and strategically questionable given Osborne’s determination for spending cuts, but it seems Fox’s recent intervention has given Cameron pause for thought on the extent of the cuts to defence. Compared to what’s coming for other government departments, 8% over five years is none too shabby.

Key points:

  • Harrier jump jet retired
  • Nimrod spy plane cancelled with closure of Kinloss
  • 5,000 RAF personnel axed over five years
  • 5,000 Navy personnel cut
  • 7,000 army personnel cut
  • 25,000 civilian MoD staff axed
  • Final decision on Trident postponed to 2016
  • £14bn defence training academy axed with loss of 2000 new jobs
  • Army to lose 40% of its tanks and 35% of its heavy artillery

http://www.bbc.co.uk/news/uk-politics-11574573

http://www.telegraph.co.uk/news/newstopics/politics/defence/8073455/Defence-review-David-Cameron-says-42000-jobs-to-go.html

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WHAT ABOUT THE BANKS EH?

Pictured here far left, our fate is now in the hands of the ideologically far right George Osborne.

As we approach today’s Comprehensive Spending Review let’s just briefly reflect on how and why we got here in the first place…

I’m no economist, but it’s true to say that under Blair & Brown public spending has risen consistently as a percentage of GDP since 2000 (New Labour committed to  Conservative spending plans for two years following the 1997 election). But it’s also true to say that New Labour won three successive mandates based on its commitment to improve key public services: primarily health and education.

Following years of decline under the Conservatives, most commentators would accept that this was largely achieved. Our hospitals are in better shape and the NHS itself consistently wins praise from service users at the thick end.  The sight of the unwell and the infirm blocking corridors in hospital beds has all but been eradicated. The infrastructure of our schools has been vastly improved and the standards of teaching and education delivered, with more kids equipped with basic numeracy and literacy skills, and more school leavers than ever going on to further their education.

As with all areas of government policy you can argue the statistical toss, but anecdotally I’d challenge anyone to tell me that schools and hospitals were in better shape 10 years ago.

In addition, huge amounts of money have been delivered to lower income families by way of the minimum wage, improved benefits and the introduction of (albeit complex) tax credits.

Yes there are inefficiencies, and yes there is doubtless management fat across the public sector that can be trimmed or, better still, rendered. But the increase in public spending (and therefore debt) largely happened for good reason and with a mandate from the British electorate.

Fast-forward to today. Today we have a spiralling deficit that everybody agrees has to be dealt with. But incredibly the key contributor to this debt (and catalyst of the entire economic crisis) appears to be all but forgotten. It’s thought that since the credit crunch the much lauded ‘British Taxpayer’ has bailed out the banks to the tune of 850 BILLION QUID[i]. That’s more than the £671bn total Government spending in the financial year 2009-2010. It pained me at the time, but I believed we had no choice but to prop up the banks or else face economic (and social) meltdown. But having done so, surely we have a right and indeed a responsibility to claw it back. Seeing banks and their bankers immediately return to huge profit and reinstate their bounty bonuses is sickening for all to see.

Fast-forward to today. Today we have a ConDem coalition government led by a Chancellor with no political mandate. A Chancellor that’s so out of touch with the British people that he belonged to the notoriously excessive Bullingdon Club. A Chancellor described by the FT as “metropolitan and socially liberal, hawkish on foreign policy with links to Washington neo-conservatives and ideologically committed to cutting the state.” A Chancellor that’s poised to deliver the biggest attack on spending and public services since the 1920s.

So let’s see what happens. Let’s see how hard he’s going to cut and who he’s going to target. Will the wealthy be asked to pay a little more tax? Will the banks be held to account? I think we already know the answers. But let’s watch this space…


[i] How to spend £850bn bailing out the banks… and £107.1m on financial advice

£76bn To purchase shares in RBS and Lloyds Banking Group
£200bn
Indemnify Bank of England against losses incurred in providing over £200bn of liquidity support
£250bn
Guarantee wholesale borrowing by banks to strengthen liquidity in the banking system
£40bn
Provide loans and other funding to Bradford & Bingley and the Financial Services Compensation Scheme
£280bn
Agree in principle to provide insurance for selection of bank assets
£32.9m
Slaughter & May – Commercial legal advice
£15.4m
Credit Suisse – Financial advice on a range of measures, including Bank Recapitalisation and the Asset Protection Scheme
£11.3m
PricewaterhouseCoopers – Advice on APS
£8.7m
Ernst & Young – Due diligence on APS, Northern Rock
£7.7m
KPMG – Due diligence on APS
£7.4m
Blackrock – Valuation advice on APS
£5.3m
Deutsche Bank – Financial advice on a range of measures
£5m
Citi Financial – Advice on Aps
£4.9m
BDO Stoy Hayward – Valuation of Northern Rock
£4.5m
Goldman Sachs – Financial advice on Northern Rock
£1.5m
Morgan Stanley – Financial advice on Bradford & Bingley
£2.5m
Other advisers – Financial advice on a range of measures and proposals to revive Britain’s ailing economy

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A FEW CHOICE OSBORNE TIDBITS…

The one and only George Gideon Oliver Osborne

Just ahead of the Spending Review, did you know…?

  • George Osborne was in fact born Gideon Osborne – he changed his name at the age of 13 after his grandfather.
  • He took Modern History at Magdalen College, Oxford, where he gained a drinker’s degree 2.1.
  • He was a member of the Bullingdon Club (But I think we already knew that 😉
  • During the expenses scandal it emerged he had ‘flipped’ his second home bagging him an estimated 55,000. He also claimed £47 for two copies of a DVD of his own speech on “value for taxpayers’ money”.
  • The Financial Times describes Osborne as “metropolitan and socially liberal. He is hawkish on foreign policy with links to Washington neo-Conservatives and ideologically committed to cutting the state. A pragmatic Eurosceptic”.
  • He has an estimated personal fortune of around £4 million, as the beneficiary of a trust fund that owns a 15-per-cent stake in Osborne & Little, the wallpaper-and-fabrics company co-founded by his father, Peter Osborne

So… a phoney, not very academic, none too bright, Bollinger swigging, dodgy dealing, rabidly right wing, trustafarian rich kid. Happy days.

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POOREST 10% HIT HARDEST BY SPENDING REVIEW

Official graph from Spending Review showing that poorest 10% will be hardest hit...

Early signs are that despite George’s insistence on fairness it will be the poorest 10% that will feel most of Osborne’s Spending Review pain. The Institute for Fiscal Studies has told Sky News the spending plans are “regressive” and a chart on page 98 of the official document reveals the bottom 10% of earners will lose the most money from the cuts.

Big surprise that.

http://tiny.cc/dpzv2y74fm

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500,000 PUBLIC SECTOR JOBS TO GO. WELFARE SLASHED. SOCIAL HOUSING HAMMERED. LOCAL GOVERNMENT TROUNCED.

Osborne lays it on the line

  • 500,000 public sector jobs to go
  • £81bn cut from public spending over four years
  • 19% average departmental cuts
  • £7bn extra welfare cuts, including changes to incapacity, housing benefit and tax credits. That’s on top of the 11 billion previously announced
  • Retirement age for men and women rises to 66 from 2020
  • 7% cut for local councils per annum from April next year. That’s nearly 30% across the parliament
  • Social housing rents to rise to 80% of market value

Good luck. More later…

http://www.bbc.co.uk/news/uk-politics-11579979

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BANKS HIT WITH WHOPPING 1.15BN LEVY

Back in the trough: Barclays, HSBC, RBS and Lloyds. Fit for the slaughterhouse the lot of 'em.

Yep, having been bailed out the banks to the tune of 85 BILLION QUID (see previous post http://tiny.cc/owsvk), and having got us into this mess in the first place, more details have today emerged of the much anticipated bank levy. Turns out the banks will incur a derisory tax of £1.15bn next year, rising to £2.5bn in 2014 – that’s peaking out at the same amount that the government clawed back from Child Benefit.

Worse, likelihood is that the big banks will actually be better off because of favourable changes to corporation tax.

Worse still, certain bankers have the audacity to complain that taking capital out of the banks will damage the recovery.

Worse worse still, the banks continue to make it difficult for borrowers, while the bankers themselves are back in the trough awarding themselves record bonuses.

Expletives fail me.

http://www.guardian.co.uk/business/2010/oct/21/bank-levy-what-the-experts-say

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POLLS SHOW PUBLIC DIVIDED OVER SPENDING CUTS – BUT NEARLY ALL AGREE ON THE LIB DEMS

A YouGov survey conducted for The Sun shows that the country is split down the middle when it comes to the ConDem’s austerity cuts.
41% believe the coalition’s cuts are good for the economy, 41% think they’re bad, and 18% don’t know. However, asked if the cuts were too harsh or too cautious, 44% said too harsh, only 6% too cautious and 38% just right. Takes me back to the divisiveness of the 80s… and we haven’t even started yet.

Meanwhile, another YouGov poll shows Lib Dem support plummeting to just 10% – its lowest rating in thirteen years. Row, row, row your boat…

http://www.guardian.co.uk/politics/2010/oct/22/public-divided-spending-cuts-poll

http://www.newstatesman.com/blogs/the-staggers/2010/10/poll-party-lib-labour-support

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BRITISH WOODLAND AND FORESTS FOR THE CHOP

Beautiful beech woods under threat from hell-bent coalition

The ConDem coalition is all set to announce plans to sell off up to 50% of the 748,000 hectares of woodland overseen by the Forestry Commission. An integral part of our natural habitat and indeed our culture, many of the UK’s forests have been protected since the Magna Carta of 1215 and beyond. But hey, never mind all that, we have a deficit to deal with and a banking industry to protect.

So, at the stroke of a chainsaw, the Environment Secretary Caroline Spelman is proposing environmental vandalism on a monumental scale to bring in another couple of billion quid.

So what will become of our cherished woodland? A source close to the department said: “We are looking to energise our forests by bringing in fresh ideas and investment.” Not sure our forests need “energising”, but either way it’s thought that once sold to private companies much of the estate will be used to develop more Center Parcs-style holiday villages, golf courses, adventure sites and commercial logging operations.

Aghhhh.

http://www.telegraph.co.uk/earth/countryside/8082756/Ministers-plan-huge-sell-off-of-Britains-forests.html

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Housing benefit cap plan will backfire, ministers told

One of the more ill thought out plans announced in last week’s Spending Review already in the firing line…


Powered by Guardian.co.ukThis article titled “Housing benefit cap plan will backfire, ministers told” was written by Randeep Ramesh, Allegra Stratton, Hélène Mulholland and Amelia Gentleman, for The Guardian on Thursday 28th October 2010 20.24 UTC

Government housing reforms were under attack on multiple fronts as council home associations predicted they would backfire by driving up overall welfare bills and Boris Johnson warned against “Kosovo-style social cleansing” of poorer people from cities such as London.

Downing Street moved to squash growing ministerial dissent by signalling there would be no retreat from the biggest shake-up to social housing since the welfare state was created, with a series of radical changes to rents and savage cuts to the budget for building new homes.

Last week George Osborne, the chancellor, announced that the housing budget for England would be cut from £8.4bn over the previous three-year period to £4.4bn over the next four years with any new properties being built by “massively increasing” rent to up to 80% of the market rate.

But the National Housing Federation, which represents housing associations, says the scheme would increase welfare bills as most tenants charged the new rates would have their rents paid for through housing benefit.

The federation says that in areas where rents are already high, such as the London boroughs of Camden, Hackney and Haringey, many tenants moving into new social homes would face bills of £340 per week for a three-bedroom property. Even if people could get a job, their earnings would disappear in high rent repayments.

This would mean they “would have to earn at least £54,000 before they could get off housing benefit and be in a position where they could keep the bulk of their additional salary and find themselves better off in work”.

The changes, including the removal of lifetime tenure for council tenants, are designed to ease the pressures on social housing, with 1.8m households on the waiting list for a subsidised home – almost double the number since the Tories were last in government in 1997.

David Orr, chief executive of the National Housing Federation, said: “Because it is based on near-market rents, the new funding model will trap thousands of tenants in welfare dependency because they will simply not be able to earn enough money to pay for their homes without the support of housing benefit – which means the benefit bill for new low-cost housing will go through the roof.”

He warned “the government’s strategy will turn the traditional understanding of what constitutes social housing on its head by creating a system based around high rents and short-term tenancies. Ministers need urgently to rethink their plans and give housing associations the flexibility to respond to the growing housing crisis in the most effective manner possible.”

The coalition has been under pressure for days over accompanying changes to housing benefit, designed to cut £2.5bn from public spending. The changes include a 10% drop in housing benefits for those out of work for more than a year and new caps of up to £400 a week for the largest homes.

Tonight the housing minister, Grant Shapps, insisted the government was not insensitive to concerns being put forward by housing groups. “I think that every family who has to move for whatever reason, that is somebody’s life being deeply affected, I absolutely recognise that,” he said an interview with the Guardian.

“Just because you are on housing benefit, that shouldn’t give you the ability to live somewhere, where if you are working and not on benefit you can’t. We’d all love to live in different areas, but I can’t afford to live on x street in y location. The housing benefit system has almost created an expectation that you could almost live anywhere, and that’s what has to stop.”

Downing Street has moved swiftly to smother dissent over how the welfare bill is being slashed as the government tries to narrow its record budget deficit.

Johnson, the Conservative London mayor, had expressed concern about the possible effects of government plans to reduce social-housing subsidies, a step that may force people on low incomes to move to areas where rents are cheaper.

“The last thing we want to have in our city is a situation such as Paris where the less well-off are pushed out to the suburbs,” Johnson told BBC London. “What we will not see and we will not accept is any kind of Kosovo-style social cleansing of London.”

The business secretary, Vince Cable, said Johnson’s language was “ludicrously inflammatory”, while the prime minister’s spokesman said: “The prime minister doesn’t agree with what Boris Johnson has said or indeed the way he said it. He thinks the policy is the right one and he doesn’t agree with the way [he] chose his words.” Johnson later insisted he had been quoted “out of context”.

His views were echoed in less lurid language by the children’s minister, Tim Loughton, who stressed he was not criticising the reforms, but said they were “very real concerns about poorer families being forced out of central London into the outer boroughs and I think that’s a very legitimate concern”.

guardian.co.uk © Guardian News & Media Limited 2010

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GET ‘EM OUT BY FRIDAY! CHANGES TO HOUSING BENEFIT WILL SEE LONDONERS THROWN OUT OF THEIR HOMES

A study conducted by Cambridge University and commissioned by Shelter shows that coalition plans to cap Housing Benefit will leave large areas of London unaffordable for thousands of people.With the average two-bedroom London house costing more to rent than would be covered by the new cap, benefit recipients will have no choice but to relocate to the suburbs.

Chief executive of Shelter, Campbell Robb, said “We are concerned this could mean tens of thousands of households forced from the centre, creating concentrations of poverty and inequality and adding to the already significant levels of homelessness and overcrowding in the city.”

http://www.guardian.co.uk/society/2010/oct/31/london-housing-crisis-benefit-cuts

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