Englands Austerity Plan

[Gfted1]

British budget cuts to include nearly 500K job losses

 

By Rebecca Omonira-Oyekanmi

Wednesday, October 20, 2010; 11:50 AM

 

LONDON - The British government on Wednesday announced historic spending cuts, aimed at reducing the country's deficit, that will cost the public sector half a million jobs.

 

The measures announced by Chancellor of the Exchequer George Osborne will span four years and include an average cut of 19 percent in central government departments' budgets, an $11 billion reduction in welfare spending and an increase in the pension-eligibility age to 66. The government acknowledged that 490,000 public-sector jobs would be lost over the four years as result of the cuts.

 

Only the budgets for schools, the National Health Service and overseas aid were spared. Education spending is actually set to increase slightly by nearly $5 billion, despite the government scrapping a multi-billion-dollar school-buildings program. The Defense Ministry must find savings of about 8 percent, compared with the 19 percent average, but is facing a loss of 42,000 jobs over the next five years.

 

Even the queen will not be exempt from cuts. The civil list - spending on the royal family - will be frozen next year and then drop by 14 percent in 2012-13. However, Osborne said, a temporary grant of about $1.6 million will be put aside to pay for the queen's diamond jubilee in 2012.

 

Announcing the plan in the House of Commons, Osborne said: "Today's the day when Britain steps back from the brink. The decisions we have taken today bring sanity to our public finances and stability to our economy.

 

The cuts "deal decisively with the largest budget deficit this House of Commons has ever had to face outside of wartime," he said.

 

The opposition Labor Party said the cuts reflected ideology more than necessity. "Today is the day that abstract figures and spreadsheets turn into people's jobs and people's futures," the party's treasury spokesman, Alan Johnson, said.

 

The plan will be subject to a vote in Parliament, but because the coalition government has a majority, it is assumed that it will be passed.

 

Responding to popular anger about a government bailout of the country's banks, Osborne also promised to "extract the maximum sustainable tax revenues from financial services." Details of a new regulatory system for the financial sector will be revealed next year.

 

The government has already come under fire for not continuing the Labor Party's tax on bank bonuses and for its welfare reform plans, which include ending universal child benefits enjoyed in Britain for decades.

 

On Tuesday, Osborne's response to the criticism was: "We're all in this together."

 

"Fairness . . . means that across the entire deficit reduction plan, those with the broadest shoulders should bear the greatest burden," he said. "Those with the most should pay the most, including our banks. We neither want to let banks off making their fair contribution, nor do we want to drive them abroad."

 

On public-sector job losses, which come in addition to a two-year pay freeze and pension reforms, the chancellor said: "Yes, there will be some redundancies. . . . That is unavoidable when the country has run out of money."

 

The plan looks quite painful, and I wish the US would do the same, but what really caught my eye way the half million layoffs. Thats more than the entire US unemployment rate! I cant imagine the fallout of an additional 500k people on top of whatever is the current unemployment numbers. I know its spread out over four years but still. How do those of you in England feel about this? Good plan? Mad plan? You're marching on Parliment as we speak?

[Monte Carlo]

We don't march on Parliament, we write angry letters to the newspapers.

 

I might lose my job. It's a slim chance, but it's there. What can we do? The country is stony broke and the kids in their early twenties coming up behind us deserve a chance, so do my kids. The only way to do that is to grit our teeth now and fix the economy. Of course, the hedge fund managers will still be buying Aston Martins and yachts but vive la capitalism.

[Walsingham]

If there's a half million civil servants leaving to find work then I blame the last government for building such a wantonly huge civil service.

 

However, by saying this I don't blame the hiring and firing. It's a question of all the mindless rules and regulations we saw generated. Standards, guidelines, targets, fifteen different flavours of assault charge. Madness. Not to mention all the bull from Europe. The bureaucrats simply existed to process all the crap. And the crap existed so that noone felt obliged to make decisions. It was a machine to dodge responsibility.

 

You barely need to graze the surface of defence to see this in action. Aircraft carriers years behind schedule. A medium weight vehicle which isn't even built after hundreds of millions spent on it. Not the slightest coherence anywhere in the capability assessment process. What wars will wwe fight and against whom? Even the legal process surrounding combatants got crazier under Labour. BUt we had masses of forms and new IT systems, and new rigmaroles. Basically so no-one had to sign on the line and say "I say we go with this".

 

Half a million unemployed is going to be ****ing painful. But the alternative is what? There isn't any. The best thing we can do is focus a bit of brain power on what the hell these folks do instead. Anyone need a civil service?

[Zoraptor]

Aircraft carriers years behind schedule.

Can you even call them aircraft carriers when they aren't going to get planes for, what, nine years (I'm still not sure I heard that right) after their launch? The ghost of Galtieri would be smacking his chops in anticipation.

 

Though it's not quite spending their entire commissioned life freighting oranges around the Med because they're entirely unsuited to the task they were purchased for as happened with one of our ships...

[~Di]

Oh, lord, my sincere sympathies to the Brits of the board. From what I've heard, this is the most massive government austerity plan since post WWII, and it's going to flat ruin the lives of hundreds of thousands of people. Seriously, my heart aches for them.

[Gorgon]

Ruin lives, hardly. You make do with less. Builds character.

[Moose]

Half a million unemployed is going to be ****ing painful. But the alternative is what? There isn't any. The best thing we can do is focus a bit of brain power on what the hell these folks do instead. Anyone need a civil service?

 

The civil service is for talentless people, so they should consider side stepping into I.T.

[Tigranes]

Clearly, there goes my PhD.

 

I expect half the universities will keel over and play dead for 5 years.

[HoonDing]

Are the British polite too polite to burn some cars?

[Walsingham]

I like to think that for our many other faults, we aren't so ****ing stupid as to think burning cars sticks it to the Man. It just burns some poor sods car. But in reality we're probably just too pig lazy to go out and do anything at all.

 

I actually think the handling of the carriers - given that they couldn't be cancelled - is pretty smart. We don't need a fast jet carrier for at least a few years, so delay that component. When we do get one, having one going spare is pretty smart. It means we can actually send the real one out on missions without being terrified of losing our only carrier. Then, if we can somehow get the second carrier to function as an amphibious HQ with helicopters and whatnot then hurray.

 

What I don't understand is all this waffle about how support to Afghan will not be compromised. We are getting a handful of helis, and cutting thousands of infantry. We need those sodding infantry in Afghan!

 

What I still don't understand is why the only people who haven't been hurt by this financial crisis are the ***-stained ****ers who got us into it. Whack a two year levy on the bastards. Not long enough in duration to make it worthwhile leaving the country, but squeeze the juice out of them.

[Humodour]

We don't march on Parliament, we write angry letters to the newspapers.

 

I might lose my job. It's a slim chance, but it's there. What can we do? The country is stony broke and the kids in their early twenties coming up behind us deserve a chance, so do my kids.

 

Move to Australia.

[Gfted1]

I just cant wrap my head around firing a half a million people. I mean I get it, fire them and you dont have to pay them, but wont that have a cascade effect on the economy? Almost every dollar paid to those people is directly injected back into the economy by them paying their mortgage/bills/groceries/etc..., so by removing such a large percent of your populations (on top of those already unemployed) ability to do that would seem to add a further strain to the system. Not to mention 500k more people "on the dole".

[Wrath of Dagon]

Being government employees, they're on the dole either way.

[Monte Carlo]

We don't march on Parliament, we write angry letters to the newspapers.

 

I might lose my job. It's a slim chance, but it's there. What can we do? The country is stony broke and the kids in their early twenties coming up behind us deserve a chance, so do my kids.

 

Move to Australia.

 

No thanks.

[Gorgon]

I just cant wrap my head around firing a half a million people. I mean I get it, fire them and you dont have to pay them, but wont that have a cascade effect on the economy? Almost every dollar paid to those people is directly injected back into the economy by them paying their mortgage/bills/groceries/etc..., so by removing such a large percent of your populations (on top of those already unemployed) ability to do that would seem to add a further strain to the system. Not to mention 500k more people "on the dole".

It's like when corporations downsize, makes them mean and lean for the recovery. Britain is entirely dependent on world trends in it's economy, they don't have anything to fall back on. This is all they can do, other than create a massive deficit which will hound them for decades.

[Gfted1]

It's like when corporations downsize, makes them mean and lean for the recovery. Britain is entirely dependent on world trends in it's economy, they don't have anything to fall back on. This is all they can do, other than create a massive deficit which will hound them for decades.

 

What about less of a all-or-nothing plan? Maybe a 15-20% reduction in their salaries or forced furlogh days (thats one of the things they are doing here). It may take a bit longer but wont hit as hard. According to this UK government site the total workforce for England is only 29 million, so a 500k reduction in that is what, 1.7% or so increase in unemployment in one fell swoop, pushing their unemployment to around 9.2%.

 

The bigger problem I think will be the loss of those peoples spending power which may result in other indutries (housing, credit) having to absorb the costs because people simply wont have the means to pay their bills.

[Slowtrain]

As a solution it would appear to cause more problems that it solves.

 

If it was people at the top of the income pyramid getting axed it might have a more positive effect since the amount saved per rolled head would be greater.

 

But since it's going to be the people at the top making the cuts, we all know it is going to be the broom pushers and the coffee makers getting the axe.

 

So in the end, you're going to be left with 500,000 relatively unskilled people trying to find a way to survive on top of your all ready unemployed while all the big money people wil still be collecting gov't paychecks. ANd of course, even less work will be getting done since people with the big paychecks rarely do any actual day to day work.

 

So good luck with that.

[Gorgon]

The main problem with the US credit crisis as you know was all the bad debt starting a vicious cycle as more and more foreclosures meant people were living in houses worth less than their mortgages. I don't think that's likely to happen again here. Although households where both wage earners lose their jobs are going to have a tough time with it.

[Wrath of Dagon]

Their spending power comes from budget deficits, that's never a solution. Speaking of which, it's scary when the Russians have a more clear-headed understanding of global economics than our own government:

Pankin criticized Washington for piling pressure on emerging markets to lead a rebalancing when it was loose U.S. policy settings that were sending capital pouring into developing economies, generating pressure for their exchange rates to rise.

 

"We think that such policies will not come to any good," he said. Things would not turn out well unless the United States cut its budget deficit and tightened monetary policy, he added.

http://news.yahoo.com/s/nm/20101021/bs_nm/us_g20 Edited October 21, 2010 by Wrath of Dagon

[Gorgon]

Don't all countries who can try and do that, affect the currency to their own advantage. It's a bit much to expect countries to be responsible when there is an advantage in not doing so.

[Wrath of Dagon]

Ideally you should let the market determine exchange rates, and it will in the long run regardless. The funny thing about US policy is that the Chinese are able to keep their currency artificially low precisely because US can't control its own spending and keeps borrowing from abroad.

[Slowtrain]

The government shouldn't be simply a giant industry that pays a huge percentage of the workforce just to keep them unemployed. But once that situation has been set up, you can't just cut a huge chunk of them lose without causing bigger problems.

 

A better solution would simply be to cut ALL government paychecks, long term visionaries and broom pushers alike, by 30% across the board over 5 years. Hurt everyone equally and give them time to adjust.

 

But like that would ever happen.

[Gorgon]

Ideally you should let the market determine exchange rates, and it will in the long run regardless. The funny thing about US policy is that the Chinese are able to keep their currency artificially low precisely because US can't control its own spending and keeps borrowing from abroad.

Governments are players in the markets, always have been, and like anyone else they try whatever they can to emerge ahead. So in a sense we are allowing the market to set the exchange rates.

[Wrath of Dagon]

The government shouldn't be simply a giant industry that pays a huge percentage of the workforce just to keep them unemployed. But once that situation has been set up, you can't just cut a huge chunk of them lose without causing bigger problems.

 

A better solution would simply be to cut ALL government paychecks, long term visionaries and broom pushers alike, by 30% across the board over 5 years. Hurt everyone equally and give them time to adjust.

 

But like that would ever happen.

Most organizations prefer to select who gets cut themselves, lowering everyone's pay only makes it more likely the most competent will leave for greener pastures, while the deadwood who can't get another job will hang around forever.

[Calax]

I like to think that for our many other faults, we aren't so ****ing stupid as to think burning cars sticks it to the Man. It just burns some poor sods car. But in reality we're probably just too pig lazy to go out and do anything at all.

Don't you guys have riots if a soccer game doesn't go your way?