Tag Archives: avenews-economics-politics-cuts-UKuncut

UK Uncut – Unfortunate anagram!

21 February 2011

JR Max Wheel & Graham Reid

UK Uncut’s recent protests at High Street banks are, in part, an understandable reaction to excess and arrogance. That they targeted the big banks, [as well as many other companies that pay little or no corporation tax in the UK] is no surprise.

This is what tone-deafness and indifference produces- fierce public anger directed at over mighty barons and undeserved pay awards for the top management class, especially at the banks. This was inevitable given the almost complete lack of sensitivity by such institutions towards the national taxpayers that have bailed them out. We have argued before that the financial services industry is broadly incapable of any disaster/reputation management at all- virtually every case since Equitable Life is a sorry tale of incompetence, excess and appalling management.

UK Uncut follows in a well-known British radical tradition which has surfaced in times of severe downturns throughout British history, like the repeal of the Corn Laws, or in more recent times the poll-tax. It is also dangerously close to becoming a single issue rent- a mob, because it has conflated bank (and other corporate) excess with (almost) any spending cuts. This is a mistake.

We got here for a multiplicity of reasons, bad policy making, venal politicians and greedy property investors- remember all the endless TV make-over programmes, loose credit underwriting standards and poor Government. That we have to put this right is undeniable and going to be very painful. Look a bit closer and some other horror stories emerge. Depending upon whether you measure the increase in public sector jobs by ONS narrow or Labour Force survey figures, public sector employment has increased by between 692,000 and 1.2m since 1997. By any standards this is a huge increase of between 13 and 21 %. Most of the attributable increase has been in education and the NHS. Some of this increase may well be justified: the sheer scale however suggests otherwise. We all know of laughable examples of public sector non-jobs, as they have been rightly pilloried in the media. This public sector largesse with its colossal £79bn.  p.a.pension liability has to be reined in or the effects will continue to ricochet across the rest of the general public. If you include unfunded pension liabilities in the private sector the figure is over £1.1 trillion.

It is suspicious that certain councils have chosen to cut specifically headline grabbing front-line services with a high profile – disability and care of the aged, libraries, waste collection. Who is overseeing this? Local authorities can and should make savings- are we seeing well-paid jobs preserved at the expense of these essentials. This looks like sabotage rather than carefully thought through measures. Equally hurried initiatives will not work well. This bloated system has developed over years and largely unchallenged and it needs careful unpicking. Governments tend to push measures hard for obvious political reasons. It is politically easier  for any Government to cut quickly and then reposition itself in accordance with the election cycle. Tony Blair went sofar as to admit that he should have embarked on public sector reforms much earlier- hindsight is a wonderful thing.

Rebalancing, to use the jargon is misunderstood and will take years to achieve.  Many parts of the country highly dependent upon public sector jobs will not be able to adjust quickly enough, the North East and N.Ireland are good examples where the share of the public sector in the local economy exceeds 60 or 70%.

Britons recognise unfairness: they will also have to recognise realities. The world has changed. A degree was considered a passport to a job, not necessarily when that market has become internationally competitive. The cost of education and health has skyrocketed, and to a large extent the British public has been partially insulated against this. It is not realistic to expect Governments in a middling sized country of modest average earnings to create a bubble of protective insulation.  Siren voices on the Opposition benches would do well to focus on the areas where they failed to deliver as a Government rather than pretend that we were merely “blown off course” and that cuts are somehow a matter of Government “choice”.