Tanks Back On The Lawn

THURSDAY, SEPTEMBER 17, 2009

Tanks Back On The Lawn

What happened to the lawn last time

All Labour governments end up in serious difficulty over their union paymasters. They spend their first years pandering to union demands, and their final ghastly Götterdämmerung months impotently trying to explain away the resulting inferno (and see Mr Dale's post yesterday with an update on the disgraceful issue of union Danegeld).

In the late 60s, Wislon famously ordered one union leader "get your tanks off my lawn" - just before Wislon himself abjectly capitulated on promised legislation to rein in their destructive antics, thus setting the scene for the dire strike-ridden 70s (In Place of Strife).

In the 70s, union man Uncle Jim Callaghan dragged us into a wintery nightmare of public sector strikes and unburied bodies lining the streets.

And now, the tanks are massing again. Bruvvers and sisters in the Post Office are already there, and their union is busy balloting for national strike action. Leeds refuse collectors are out, and rubbish is piling up on the Council Leader's doorstep. The Fire Brigade Union is threatening unspecified industrial action "of the like which they have never seen".

Thanks to the Iron Lady's reform of union law, and crucially the realism born of global competition, union power in the private sector is now properly limited.

But in the public sector there is generally no competition to concentrate minds. And union power is still a major block to necessary reform (a block that stands even where there is a clear and present danger from competition - eg with the Post Office).

As BOM readers will know, there is a huge difference in the unionisation rates of public and private sectors. As we blogged here, the public sector is four times more heavily unionised than the private sector, with a near 60% membership rate. Which means the unions have far more power in the public sector. Here are thelatest official stats:

And public sector workers are far more likely to strike (see this post): even in the relative industrial calm of the last five years, they have been 30 times more likely to go out.

The result is that the public sector loses many more days to industrial action than the private sector, even though it employs only a quarter as many people:


The outlook is pretty grim. Public sector pay, public sector pensions, and public sector employment are all going to come under the knife over the next couple of years. And with 60% sector unionisation we must expect a lot of strikes.

Will Cam be any better than Labour at facing them down?

It must be said patrician toffs don't have a great record in that regard - unlike a Thatcher or a Tebbit, they suffer from too much Jimmy Carter-style plantation guilt. But if Cam is serious about cutting spending, he has no choice. Wages and pensions constitute around a quarter of public spending, and will have to be cut (as everyone, including St Vince, now recognises).

Cam will have to face the tanks head on.

PS The union leader ordered by Wislon to remove his tanks was of course HughHughie Scanlon, the Marxist president of the Amalgamated Engineering Union from 1968 until 1978. "For most of his career he was the wild man of the Far Left, bogeyman of the Right and a vociferous critic of ermine-clad politicians, particularly the Socialist variety. Indeed, he had called the Upper House a "bastion of privilege". Naturally enough, on his retirement Callaghan offered him a peerage - for services to a grateful nation. And naturally enough, he accepted. Just like our old friend my Lord Kinnockio. Why do we put up with this again?

WEDNESDAY, SEPTEMBER 16, 2009

Brown's Secret File

Only watch if you want to scream

Aside from confirming the bleedin' obvious - that we are currently ruled by a barefaced liar - what else does the leaked HM Treasury file tell us? In particular, what does it say about the extent and shape of Brown's planned spending cuts?

Here's the critical spreadsheet, dated 21 April and fully consistent with the less detailed projections published with the Budget. Which is a crucial point. These figures are not some blue-sky scenario doodling - they reflect the Budget decisions actually made by Brown's government (click on image to enlarge):

Key points:

• Cuts - Just as the IFS worked out months ago, the budget incorporated big cuts in Departmental Expenditure Limits (DEL). DEL constitutes well over half our total public spending, including most of what we spend on the NHS, education, defence, and law and order. From 2009-10 to 2013-14, the Budget imposed a total cut across these programmes of 9.3% in real (inflation adjusted) terms. Not that you'd have guessed that from the lies spun by Brown and his wicked gang.
• Social security - after a projected 8.3% real increase this year, the Budget assumed further growth of just 6.3% over the whole of the next four years. With unemployment already up by 1 million since the downturn began, that is implausibly low... unless of course, the spending projection incorporates some undeclared cut in benefit rates.
• Debt interest - projected to more than double in real terms by 2013-14, reaching £64bn (this year's figure is put at "just" £27bn). As a percentage of GDP, it soars from just under 2% this year to 3.5% in two years time. Even so, the projection looks optimistic because not only will debt increase faster than the budget assumed, but also the average interest rate on that debt is most unlikely to decline, as we now know the Budget assumed (an assumed decline from 5% in 2008-9 to 4.6% in 2013-14).

So what should we conclude?

First, we've been lied to. Again.

Second, cutting departmental spending budgets by 9.3% will not be enough. We reckon spending on social security and debt interest will significantly overrun the HMT projections, implying the need for further cuts in departmental spending limits. Moreover, the Budget target to halve the deficit is insufficiently ambitious - the financial markets will not allow us to persist with a structural deficit of 5% of GDP indefinitely.

As St Vince told us only yesterday, a more realistic cuts target would be £80bn pa. Which, if it came entirely from departmental spending limits, would imply a cut of more like - gulp - 20%, more than double what Brown has been planning. Of course, departmental budgets could be spared some of that, but only if social security benefit rates got cut instead (hence the gathering pressure to cut "middle class welfare" such as Child Benefit).

But there is some good news: at least now we are starting to have a public debate about what to cut, rather than a yes/no slanging match about who's going to cut and who isn't.