More spending cuts will damage economy, TUC report warns


The government’s “fixation” on the size of the state is straining vital public services and undermining social stability, according to a report from the TUC, which argues that further cuts could damage the economy.

The study commissioned from the Fabian Society suggests that spending cuts under the coalition have undermined essential services in health and education, lengthened NHS waiting times, deprived half a million adults of social care and brought the closure of hundreds of Sure Start centres for children.

Released before the autumn statement and spending review on Wednesday, the report also argues that the effects of George Osborne’s austerity drive, by suppressing demand in the economy, have led to the UK having its slowest economic recovery on record. Additional spending cuts would risk reducing economic output again.

The report warns that if the chancellor does not rethink his strategy, the public sector will face major recruitment and retention problems. More years of pay restraint will mean that hospitals, schools and other essential services will struggle to hold on to their best staff, it says.

In the years leading up to the financial crash, UK public spending was in line with other countries including Germany, the report points out, adding that many economically successful countries spend more on services and social support than the UK.

However, cuts since the crash have meant that local authorities in England provided social care to around 500,000 fewer adults in 2013 than in 2009, a fall of 29%, the report says.

The number of people waiting for a week or more to see a GP rose by almost 50% between 2012 and 2014 as health spending slumped to the lowest rate since the NHS was founded. Reductions in local government spending reduced the number of Sure Start children’s centres to 3,019 in June 2014 from 3,631 in April 2010.

The TUC general secretary, Frances O’Grady, said: “This government’s fixation with reducing the size of the state is the wrong political choice. Public spending is essential for sustainable long-term growth and for maintaining a cohesive society. A high-productivity recovery needs world-class public services, which means local authorities, hospitals and schools need to be properly funded, not run into the ground.”

The report also warns that cuts to services and benefits will reverse past improvements made on reducing inequality and poverty.

In the decade before the financial crisis, public spending in the UK moved from a very low base in the 1990s to levels similar to Germany, but still well below the Nordic countries. This increase in funding helped reduce NHS waiting times, which had risen by 50% between 1988 and 1998, and drove up educational standards.

The report argues that for every £1 spent on infrastructure, economic activity is boosted by £2.80.

In a separate report, the Royal Institution of Chartered Surveyors (Rics) has said the UK’s biggest infrastructure programmes could grind to a halt unless the government adopts new measures to tackle the skills and funding crisis.

The country needs investment in transport, broadband networks and energy infrastructure, Rics said, but faces a £400bn funding crisis and the worst skills shortage in construction for 20 years.

Jeremy Blackburn, Rics’ head of policy, said: “It is clear that we need to attract greater levels of foreign investment, but the chancellor is shortsighted if he believes that Chinese cash alone will address our investment needs.”

The government recently agreed an £18bn deal with China’s main nuclear operator and the French energy company EDF to build the first nuclear power plant in Britain for 20 years. But with smaller infrastructure projects struggling to get investment, Blackburn is calling for a central register to attract international investors.

During the recession, an estimated 400,000 people left construction – one of the highest rates of redundancy across any sector – and the loss of expertise will worsen when those left in the workforce retire.

The Rics survey found that 43% of surveying firms are turning down new business opportunities due to a lack of skilled workers, each passing up an average of five contracts a year. By 2019, this is set to rise to 54%.

Rics recommends introducing incentives such as reduced national insurance contributions for employers and tax relief for local investment in construction colleges, academies and school programmes. Local government should co-invest with industry in construction-focused technical colleges and school career programmes to encourage diversity, it says.

Powered by article was written by Julia Kollewe, for on Monday 23rd November 2015 00.01 Europe/ © Guardian News and Media Limited 2010


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