Tonight Business Secretary Vince Cable will debate Shadow Chief Secretary to the Treasury Rachael Reeves on the motion 'This House believes there is no alternative to the cuts' at the Cambridge Union. Two students, Cambridge University Labour Chair Richard Johnson and Cambridge University Conservative Association committee member James Mottram debate the Government's austerity program here in the run up to the main event.
"This House believes there is no alternative to the cuts"
CUCA Committee member James Mottram argues the case for the Government.
Contrary to the pantomime view of politics so beloved of many left-wing pundits, the Conservative and Liberal government is certainly not gleeful about the current programme of fiscal consolidation. It is a policy of necessity, and one which eighteen months ago enjoyed a broad range of support across politics; all three major parties stood at the last general election promising major reductions in public spending, to address the fiscal disorder which followed the 2008 financial crisis. While the parties differed on the amount they wished to save, the rate at which they intended to reduce spending, and which if any departments should be ring-fenced, the was not a cigarette paper between them in terms of the reality that cuts needed to happen: the debate was one of detail.
Today, on the other hand, the Labour Party enjoys both a leader who is keen to disavow any connection to the Blair-Brown project of which he was a part, and the enviable luxury of Opposition. With over three years to run until the next General Election, it is hardly surprising that Labour is pursuing the politically astute policy of attacking the Government, rather than making their own arguments for dealing with the nation's problems; we shall have to wait and see how they adapt in a few years' time. Much of the most active opposition to the government's fiscal policy actually comes from trades and students' unions, groups hardly renowned for taking a considered, moderate view of political matters.
The problems caused by lax fiscal policy in the United States and the European Union prove the case for government policy. The difficulty of establishing a deficit reduction programme in America, thanks to the mutual intransigence of both President Obama and Tea Party extremists, was itself enough to provoke a downgrade of Americans debt. Similarly, a lack of confidence in the assurances of Mediterranean governments to take their bloated deficits seriously, and the inability of the Eurozone countries to coordinate a response to the crisis, now poses the main threat to a European (and British) economic recovery. Lacking the vast resources of the Eurozone or the United States, it is unlikely Britain would have been able to stave off a catastrophic debt downgrade, or potential default, in 2010, were it not for a realistic and committed policy of fiscal responsibility based on immediate savings and a definite target of eliminating the bulk of Britain's structural deficit within one Parliament. One only has to look at the downgrades in Europe and the US, and the chaos in stock markets which their fiscal crises provoked to see that without a Government which is so clearly serious about addressing Britain's deficit, we would be in a much worse economic situation.
It is of course unfortunate that reductions in government spending may make things more difficult for some people, and no one takes any pleasure in that fact. However, the reason that the Government is pursuing the course it has chosen is simple - there is no realistic alternative. While less money for some government departments may be an unpleasant fact, it cannot compare to the potential catastrophe of a downgrade of British gilts, and the rising borrowing costs and threat of default which that would bring. Libraries and youth clubs are good things, but they do not put bread on the table; in a time of crisis it is the duty of government to prioritise core services and, most importantly, to ensure economic stability.
CULC Chair Richard Johnson attacks austerity
Between 1997 and 2007, the Conservatives and Liberal Democrats promised to match Labour's spending plans. Then, the financial crisis hit, and the Labour government had a choice. The Tories argued that we needed to let the economy proceed on its cataclysmic path to destruction. Labour knew, however, that retrenchment and austerity wouldn't solve the recession. Cuts, of the unprecedented viciousness that the Tories proposed, would weaken the economy and make things worse, especially for working people with modest incomes and the vulnerable.
And so, Labour took strong measures to keep the financial sector going, to stimulate growth, and to fashion a global consensus on the need for swift, strong government action. Just as the economy was starting to grow again (growth figures from early 2010 were the best we've seen in the last three years), Labour lost the election.
'The deficit is the problem!' Britain's new coalition government cried. In characteristic neoliberal fashion, the Tories argued that the public sector was 'crowding out' private spending. Cut the 'bloated' public sector down the bone and private entrepreneurs and volunteers would fill the gap. Ayn Rand meets the Boy Scouts.
At first, it seemed that the coalition partners' incessant crowing about the deficit could just work politically. After all, it's easy to sell the idea that the country's economy should be run like an individual household. For many, the idea that spending more to pull yourself out of financial difficulties seemed counterintuitive.
But, the hard facts of the last fifteen months have pulled the veil away from the coalition's fiction. Unemployment is at 17-year high, with unemployment for women and young people the highest it's been since the '80s. In the last nine months, the economy has grown 0%. Britain has the worst growth figures of any G7 economy except for Japan. And, although Osborne and Cameron have tried to blame stagnant growth on cold winters and hot summers, I don't think they really can compare that to a tsunami or nuclear meltdown.
To top it off, the supposed mortal sins of the Labour government - borrowing and quantitative easing - have been committed by George Osborne himself. With higher than expected unemployment and social security payments this year, George Osborne was forced to announce an extra £44.4 billion of borrowing. This month, Osborne declared an additional round of quantitative easing, described by him in 2009 as 'the last resort of desperate governments'.
Clearly, the coalition's economic strategy is not working. There is an alternative to the cuts, and it requires a government that isn't blinded by an ideological distrust of state action. The possibilities are endless, but here are a few that the government could do right now: build 25,000 new houses using the revenue from repeating Labour's bankers' bonus tax; restart projects like Building Schools for the Future which will put adults back to work and improve education for the long-term; create a national investment bank, offering a boost to aggregate demand; cut VAT back to 17.5%; agree to a financial transaction tax; give a one year national insurance break for every small firm which takes on new businesses, using the money from the government's failed NI rebates for small businesses.
The list could go on and on. The tragedy of Britain's economic situation is not that we have no choice but austerity; the tragedy is that the government could take numerous steps to recover growth and reduce unemployment, but the Conservatives' and Liberal Democrats' inflexibility and callousness mean that they won't.
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