Wednesday, 20 October 2010

My CSR Response

Well, there we have it. The coalition has given it's detailed response to the financial predicament in which it, and the country finds itself in.

I can't say that I'm happy with it in its entirety. Quite frankly, if you can find a single person who is happy with it in its entirety, then you will have found a mad man.

That's the point. This isn't nice. This isn't pleasant. This isn't easy. But what it is, is necessary.

Labour planned undetailed cuts of 20% (£48 billion). Today the Coalition announced cuts of 19% (£47 billion) with details on savings and investments.

I must say, that after all of the scare-mongering of recent days and weeks, I feel much more at ease with the overall package than I thought I may be. Indeed, as much as it will be derided by members of the opposition, I feel that there is a sense of 'fairness' running through what we have heard today.

The Good Points (in no particular order)
  1. As mentioned above, the average percentage cut for departmental budgets over the next 4 years at 19% is much lower than the expected 25% cuts that were expected. 
  2. Universal benefits for pensioners will be retained and the temporary increase in the cold weather payment will be made permanent.
  3. Winter fuel allowance, free bus passes and TV licences for 75-year-olds are protected.
  4. There'll be funding for 75,000 adult apprenticeships.
  5. The science budget will be frozen and not cut as had been expected.
  6. The Monarchy will have to pull their belts like the rest of us and stomach a 14% cut.
  7. Free Museum entry will remain.
  8. The BBC license fee is to be frozen for the 6 years.
  9. The decision on renewing Trident is to be put back to the next Parliament.
  10. Confirmed £2.5bn "pupil premium" for teaching for disadvantaged pupils and a real-terms increase in funding for schools in England from £35bn to £39bn.
  11. The NHS in England will see a real-terms increase in funding every year, budget to rise to £114bn by 2015. New cancer drug fund to be provided. But £20bn in efficiency and productivity savings sought by 2014. An extra £2bn for social care by 2014-15.
  12. This support for health and education should pass down to Wales via the (albeit discredited) Barnett Formula
  13. £1bn for green investment bank.
  14. A doubling from the expected £3bn to £6bn of cuts emanating from Whitehall.
  15. A cut of 3,000 Prison places expected by 2015 and plans for a new 1,500-place prison have been dropped.
  16. The Bank Levy to become permanent.
  17. £1.5bn in compensation to Equitable Life policyholders hit by its near collapse.
  18. £900m to target tax evasion that is hoped to bring back £7bn to the Treasury.
  19. Cuts to child benefit for higher rate taxpayers to generate £2.5bn.
  20. £2bn investment in a new universal credit.
  21. Weekly child element on child tax credit to rise by £30 in 2012 and £50 by 2012.
The Worrying Points
  1. The Severn Barrage scrapped on cost grounds. Many environmentalists will indeed welcome this but I see it as an opportunity missed.
  2. The scrapping of the planned £14bn defence academy at St Athan.
  3. Police cuts of 4% a year. This however wasn't as bad as I had feared and there should be enough scope to cut bureacracy within the service to ensure that front-line numbers aren't affected.
  4. The 18% cut for the Business Department which will have a knock-on effect on University funding.
  5. Ring-fencing of local authority revenue grants to end and with a 7% annual vut in budgets.
  6. The aim to built 150,000 new affordable homes is welcome but what of the redefinition of social housing and changed terms for new rental agreements?
  7. The BBC's funding of S4C. However this works out, S4C must be ensured that it's editorial independence continues. What does irk me particularly here isn't so much the decision which has merits, but the way it was done with apparently no discussion with S4C before it was leaked on the BBC last night. Sorry, but that's not good enough. S4C are apparently this evening to launch a judicial review against the decision. It'll be interesting to see what happens with that.
  8. £1bn for green investment bank - it had been hoped that there'd be more available than this.
  9. Cuts in the Justice Department threaten local justice with the possible closure of Magistrates Courts.
  10. The added welfare cuts are tough but hopefully will act as an incentive to work.
The Cole Analysis
There's still more details coming out as I type this evening, but this review has passed a number of the hurdles of 'fairness' that I wanted to see and which I feel shows the strength of having Liberal Democrats in government.

In particular, the elderly have been protected. By retaining their universal benefits and ensuring that their winter fuel allowance, free bus passes and TV licences (for 75-year-olds)  are maintained, I feel that we've really done a good thing. The increase in the retirement age to 66 by 2020 is noticeable particularly as it included both women and men. That's quite a jump.

The benefits squeeze is going to be a challenge but I see nothing wrong in incentivising those on benefits to work. For once, and it seems go be a given across political lines, there's a sense that Ian Duncan-Smith has really made some significant progress with his radical, progressive reforms. Indeed Steph Ashley puts it much better in her blog some months ago - Dib Lemming: You know when Nick Clegg said that this was going ...:

I'm pleased to see that the Government is going to take a much greater hit in Whitehall too. Does this mean job losses? Undoubtedly. But then who in their right mind can put forward a deficit reducing plan that doesn't involve job losses? I've not seen one yet. If some of those losses are in the city, then in my book it reduces the losses that will be felt in the regions and here in rural Wales particularly.

In the 'fairness' stakes, I'm happy to see cuts to child benefit for higher rate taxpayers. It just sounds like common sense to me.

I'm also pleased to see, for the first time in a generation, a Government announce that it expects prison numbers to fall. There's far to many people going to jail for minor offences who are better placed paying their debts to the community, in the community.

Tough decisions will need to be made by the governments in the devolved parliaments of the UK but I was pleased to hear George Osbourne make the point that the Barnet Formula will indeed be reviewed - we need it to ensuire fair funding for Wales. The Welsh Assembly Government has cuts of around £450m a year to deal with which in % terms is closely comparable to the kind of cuts that Scotland and Northern Ireland will have to deal with.

It would've been much worse
Had the Liberal Democrats not been a part of this coalition, there's no doubt that it would've looked a lot worse with a Tory-only led Government. There's some good stuff in here and whilst there's much that I'm not happy with, I feel it's much better than it could well and indeed looked like being only days ago.

1 comment:

  1. Overall you've made a fair assessment of the things you've covered, there (and thanks for the plug!)

    However, you didn't mention the two things that have the journos and Labourites up in arms.. How are we meant to defend or stomach time-limited benefits for the infirm, or the linking of social housing rents to market value (which, when coupled with the linking of housing benefit to the 30th centile rather than the 50th earlier this year, means that vast quantities of the poorest people will now end up spending more than they can afford paying the shortfall between their benefit and rent)? Those are the things that keep me awake at night!