Savage cuts without pain
We could slash £160bn from public spending while protecting frontline services and ushering in a Green New Deal. Here's how
By Peter Tatchell, human rights campaigner
The Guardian - Comment is Free - London – 30 September 2009
Cuts, cuts, cuts. Axing public spending is the new consensus. The main three parties are committed to wielding the chopper. They take it for granted that cuts are necessary and inevitable. Most alarming of all, they plan to slash the wrong spending.
If Labour wants to win the next election, it should start by dumping the cuts mantra and the instead set out a practical, credible economic alternative – a raft of new green and social justice policies that will simultaneously safeguard social welfare, tackle climate change, create jobs and curb the budget deficit without harming frontline public services. It can be done. This is how.
Gordon Brown currently plans to spend roughly £160 billion, mostly on weapons of war and mass destruction. This needless, extravagent spending includes Trident nuclear missiles (up to £70bn), super aircraft carriers (£4bn), Eurofighter aircraft (£20bn), A400 air transporter (£3bn), national identity register (£10bn), the Afghan war (£5bn), motorway building and widening (£30bn) and NHS computerisation (£20bn). These eight big-spender projects will cost around £160 billion, mostly over a five to ten year period (or 25 years in the case of Trident). None of them is essential for the defence or welfare of the nation. We can live without them.
These projects should be savagely cut. If they were axed, the government’s accounts would be £160 billion better off. It would free up a staggering sum of money, equivalent to almost the entire budget deficit of £175 billion.
The deficit is a serious problem. It is not right-wing scare-mongering to say that it needs to be cut. If ministers carry on borrowing, spending and drifting deeper into debt, they could eventually bankrupt the government.
Despite the knee-jerk protests of some trade unionists and left-wingers, efficiency savings and waste-cutting are possible and can help bring down public spending. The idea that all government expenditure is cost-effective and value-for-money is nonsense. Every big bureaucracy breeds waste, including government departments, local councils, schools and hospitals.
Central and local government ought to offer financial rewards to employees who devise money-saving ideas that also maintain service delivery. They could be rewarded with a bonus equivalent to 2% to 5% of the savings made. This incentive is likely to generate some worthwhile, practical suggestions to get government institutions operating with lower overheads without undermining services to the public.
Efficiency savings are not, however, sufficient to pull the government out of its financial quagmire. Realistically, they may save only £10 billion to £20 billion. This not much compared to the deficit, but not insignificant either. Saving £20 billion, for example, would release funds to pay for an extra 60,000 teachers, 76,000 nurses or 56,000 police officers for 10 years. Very helpful, although not enough to make a major contribution to total public spending costs.
It would make good sense to bring down government debt by using a large slice of the £160 billion saved from the cancelled big-spender projects. Half this money - £80 billion - could be utilised to pay off a massive 45% of the budget deficit. This pay-back could be achieved, without any need for painful public spending cuts.
The other £80 billion saved could be invested in a Roosevelt-style Green New Deal to stimulate the economy through large-scale government investment in socially and environmentally valuable energy conservation, renewable energy and cheap, hi-tech public transport. This would slash carbon emissions and tackle climate change, as well as creating hundreds of thousands of green jobs.
At a time of rising unemployment - already 2.5 million and probably heading for three million next year - job creation is a priority. Unemployment is not only a waste of skills and a drain on the public purse, it is also linked to increases in crime and ill-health. Boosting employment therefore has a wide social benefit.
Creating jobs that are green is a bonus. Energy conservation is labour intensive, so it is a highly effective way to rachet up employment. A high proportion of the new jobs would be in skilled and semi-skilled trades and therefore well suited to the employment profiles of people who are out of work. Many of the unemployed already have the necessary skills to do these jobs or could be trained-up at little cost with the help of Green New Deal funding.
The government’s 2002 Energy Review advised that the UK could cut its energy needs by one-third through a comprehensive programme of energy conservation in homes, offices and factories, including double-glazing, loft and cavity wall insulation, pipe and water tank lagging, draft exclusion, energy-efficient boilers and appliances, and switching to low-energy light bulbs and to sensor lighting that only turns on in response to human movement.
A serious programme of energy conservation and efficiency would dramtically shrink the UK’s carbon footprint. It would also cut household fuel bills – a financial gain for everyone, but especially for lower income families and the elderly.
Currently, around 60% to 70% of energy is lost in conventional oil, gas and coal-fired power stations. There could be massive energy and cost savings - and carbon reductions - through investment in more efficient fuel-to-energy conversion technologies and by building combined heat and power plants to pump waste hot air and water into local factories and homes.
If the government cancelled defence contracts like Trident and the Eurofighter, some of the engineering skills that would have been used to construct these weapons could be transferred, as part of the Green New Deal, to the construction of wind, tidal, wave, geothemal and hydro schemes to boost Britain’s reneweable energy output. Some of these alternative energy methods are not yet effective enough. But with improved research funding they could become so. Investing in the development and refinement of renewable power sources could establish Britain as a world leader, and put us in pole position to export renewable energy technologies worldwide. This would have the knock-on effect of creating more jobs, boosting our export earnings and putting our balance of payments in the black.
Other defence project skills could be switched to the building of hi-tech public transport; in particular ultra-fast inter-city trains and enhanced urban light rail and bus networks. Making public transport cheap, fast, clean, reliable, safe and pleasurable could encourage lots more people to switch from car-use, which would have the follow-on benefit of less traffic congestion, pollution and accidents, and less government money needed for road building and maintentence.
Large-scale unemployment is pushing the government further into the red. In contrast, the Green New Deal’s job creation programme would reduce public expenditure by cutting unemployment and housing benefit pay-outs. It would also increase government revenue through more people in work paying more tax and national insurance. In addition, newly employed workers with extra money in their pockets would boost consumer spending, which would create more jobs to meet the increased demand; thereby strengthening the economic recovery stimulated by the initial investment in green jobs.
This alternative economic strategy is mostly nothing new. It is essentially FDR 2.0. The New Deal worked in the 1930s. The Green New Deal can work in the twenty-first century. Over to you Gordon, David and Nick.
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