The Axe man cometh

A very busy week: still coming to terms with the local government spending assessments.

Cumbria CC got off comparatively lightly, but Copeland BC has taken an even worse caning than we expected, apparently mainly as a result of the withdrawal of various "Top Up" grants.

Wednesday's delayed Full Council meeting was dominated by screaming about this, with various Labour councillors putting the blame firmly in the wrong place. The reality is that painful measures were inevitable whoever had won the election, because the outgoing Labour government left the country bankrupt.

Labour – up to their necks in debt

Because Gordon Brown doubled the national debt,

* This year, 2010-11, the burden of interest on government debt will be £42 billion in 2010-11. If we didn’t have to pay this money, we could abolish council tax overnight, and still have £16 billion left of change.

* Unless we cut the borrowing, interest on the Labour Government’s toxic legacy of debt will hit £70 billion a year by 2014-15. This is more than is currently raised from council tax, business rates, stamp duty and inheritance tax combined.

Spending four pounds for every three in income is simply not sustainable, and a black hole of that magnitude in the public finances simply cannot be closed without pain. Even Labour recognised this, which is why ...

Labour too were planning deep cuts

* The Labour Government was planning spending cuts of £52 billion by 2014-15. These were frontloaded cuts - with a hit of £14 billion cuts falling in 2011-12 (HM Treasury, Spending Review 2010, October 2010, p.78).

* Some of these cuts were made public in small print. Labour’s Budget in March 2010 planned £300 million of cuts to RDA regeneration spending, to the Working Neighbourhoods Fund, to the Local Enterprise Growth Initiative, and to Housing and Planning Delivery Grant. On top of this were another £185 million of back-of-a-fag-packet cuts to ‘time-limited communities programmes’ and ‘rationalising other smaller CLG programmes’. This is even before so-called ‘operational efficiency’ savings (HM Treasury, Budget 2010, March 2010, p.93).

Labour politicians are pretending that these cuts are all down to the wicked coalition, but what would they do?

* If Labour do not believe that savings should be made to the local government budget, they need to explain which other department they would cut more.

* Labour's plans also included big cuts to housing, regeneration and local government - possibly bigger than we are now making. The Labour Government’s plans implied average real cuts for non-protected departments (DEL) of 20 per cent. Because of the further efficiency savings and the savings on Annually Managed Expenditure (AME) (welfare and debt interest) found by the Coalition Government, the average real cuts to non-protected departments will only be 19 per cent.

* Labour in office failed to deliver proper efficiency savings. The DCLG failed to deliver £947 million of planned efficiency savings that were scheduled in the 2007 Spending Review and Budget 2009, of which £734 were supposed to be from affordable housing savings (DCLG, Core Financial and Performance Tables Report, July 2010, p.30 and Public Accounts Committee, Progress with VFM savings, HC 440, October 2010, p.9).

* Labour would have slashed regeneration spending if they had won the general election. In April, Ed Miliband said: ‘As we look forward it’s [regeneration spending] not the biggest priority we face as we look at other competing priorities’ (Ed Miliband, BBC Radio 4 Today, cited in Regeneration and Renewal/PlanningResource, 12 April 2010).

* Labour would have slashed housing investment if they had won the general election. Gordon Brown admitted during the election: ‘Housing is essentially a private sector activity. Let’s be honest about this, Jeremy. Housing is essentially a private sector activity… I don’t see a need for us to continue with such a big renovation programme’ (Gordon Brown, BBC 2, Newsnight, 30 April 2010).

And as Labour’s departing Chief Secretary told the incoming Government: ‘I’m afraid there is no money. Kind regards – and good luck! Liam!’ (The Guardian, 17 May 2010).


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