update on the issue!
Christina
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TELEGRAPH breakingnews.com 16.9.09
UK unemployment jumps: Britain has the sad air of the 1970s this autumn
By Ian Campbell
The opposition Tory party – and probable next government – has called for sizeable reductions in public spending. The unions are strongly resisting cuts, warning that unemployment will rise to 4m and Britain may suffer a double-dip recession.
The problem for Brown and the UK is that both the Tories and the unions are right. Public spending needs to be slashed. And the consequences for the economy are going to be bloody.
“Tina”, short for “there is no alternative,” was a phrase associated with the harsh policies of Margaret Thatcher, the UK prime minister during the 1980s recession. Tina must now ride again. The UK’s £175bn budget deficit is a dangerously high 13pc of GDP. That is not just a reflection, as the unions would have it, of bank bail outs and a temporary bust. It is a structural deficit established through years of spending increases funded by buoyant revenues from housing transactions and City bonuses.
Public-sector employment was a major beneficiary of a sustained spending binge. Since 2002, when Brown’s Labour party began to increase public spending substantially, public-sector employment has risen by 549,000 to its current total of 6m. True, about one-third of that uplift reflects the nationalisation of financial institutions. The real increases have been in health, education and the police. In the past seven years, National Health Service employees have risen by 220,000, teachers and classroom assistants by 148,000 and police by 49,000.
The budget decisions facing Brown or his successor as prime minister will therefore be painful indeed. Brown put health and education at the forefront, aiming at a healthier and better-educated nation. The unions are right in saying that cuts will further increase unemployment and exacerbate the risk of the UK heading back towards recession – especially if the axe falls sooner rather than later.
But the cutting may have to start under the current government. "There is clearly a danger investors will take fright," the Institute for Fiscal Studies said in January. Investors may already have done so. The yields on UK government debt would surely be much higher had the Bank of England not bought £143bn of that paper with freshly printed money since March. But the bank cannot go on printing money and using it to purchase government debt. That is yet another day of reckoning.
Tina is coming, scythe in hand. As in the 1980s, the pain will be acute.
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EVENING STANDARD 16.9.09
@ 11:38 AM
Number 10 denies PM misled Parliament....after much pushing
- Paul Waugh
Never let it be said that the Lobby are unkind.
The Prime Minister's official spokesman was asked no fewer than three times today whether Gordon Brown had misled Parliament. Three times, the question was ducked with a reply stating instead that there were "no plans" for specific spending cuts beyond what was in the Budget.
Amid much incredulity, we were all set to write stories that the PM's official spokesman refused to deny that G Brown had misled Parliament.
I'm afraid this was so serious that I had to ask the question again. Finally, the spokesman coughed: "The Prime Minister would never mislead Parliament."
It was a darned close run thing though....
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REUTERS 17.9.09
Mandelson hits back over public spending
[Slip, sliding around - oooh! and wriggling too -cs]
By Adrian Croft and Darcy Lambton
LONDON (Reuters) - Business Secretary Peter Mandelson hit back at Conservative leader David Cameron in a row over public spending Thursday, accusing him of misrepresenting the government's plans.
In an interview with Reuters Television, Mandelson also said Britain and other economies were starting to make progress towards emerging from recession but no country would fully escape its clutches by next year.
Cameron, whose Conservatives lead the Labour Party in the polls with an election nine months away at most, accused Prime Minister Gordon Brown Wednesday of covering up plans for deep spending cuts to rein in a ballooning budget deficit.
Cameron cited a leaked government document to back up his assertion that Brown's government planned near 10 percent cuts in spending by 2013-14 while insisting publicly it had no plans for deep cuts.
"It's easy to take a leaked document, to selectively lift from that figures that are provided by officials but which don't represent ministerial plans," Mandelson said. [Note! He doesn’t deny that the figures are true -cs]
He accused Cameron of confusing official figures and ministerial plans to create "a false impression of the government's thinking and misrepresenting the process we are currently going through in order to adjust public spending in this country to a whole new climate for our public finances."
"You will see as the general election approaches in Britain all becoming fair in love, war and propaganda. We've started to see this week, although I must say I think it's started to raise some interesting questions about the Conservatives' and Mr Cameron's own candour," he added.
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THOSE CUTS - WHO’S SAYING WHAT? 16.9.09
Via Politics Home
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Vince Cable MP, Liberal Democrats Treasury spokesman
• BBC News
I wasn't misled over government spending plans, says Cable
Mr Cable disputed the Conservative claim that parliament had been misled by the Prime Minister over spending cuts, and accused the Conservatives of trying to make a "big political issue" in order to distract from their own plans.
"I don't understand what the Conservatives are trying to say," he said.
"I wasn't misled. I think we all realised that cuts were on the way."
[Of course “We” did - everyone except Brown admitted it . He denied it to the Commons - a capital crime! -cs]
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