29th November 2011Len McCluskey, general secretary of Unite the union, urges the government to "change tack" over its programme of austerity, as George Osborne prepares to deliver the Autumn Statement.
The key question for George Osborne to answer when he stands up in the House of Commons today is what is he going to do about demand? Having killed it stone dead with his addiction to austerity, how can he induce it, Lazarus-like, to rise again?
And his plans will look very threadbare if much of the cash for these capital infrastructure projects is to be paid for by spending cuts elsewhere across Whitehall departments.
What the economy needs, to avoid the very real prospect of a double-dip recession in 2012, is 'new' money to kick-start demand and create new jobs, not 'recycled' cash that is already in the system.
Relying on institutional pension funds or the Chinese government to come to the rescue – some time in the unspecified future – of the beleaguered British economy that is crying out for a coherent growth strategy today, smacks of the last throw of a desperate gambler.
And it is not as if George Osborne has not had plenty of warnings, including from natural Conservative supporters.
When billionaire and government adviser, Sir Philip Green, decides he must shrink his empire, closing 250 high street stores, then something really is wrong. Sir Philip says that consumers are "spooked". It is a polite way of saying that they're terrified; terrified to spend because they fear what is around the corner.
And little wonder. Not only is unemployment at a generational high, the threats to our quality of life are emanating daily from Whitehall. Benefits will be cut. Jobs are going, from defence to the NHS. Housing is unstable – new mortgages are as rare as hen's teeth, and those in local authority housing cower in anticipation of the axe being taken to the help they receive.
Public sector workers are being told to pay 50 per cent more into the pensions, but get 50 per cent back, all the while juggling wage freezes, kids' education costs and hikes in living costs. Into this volatile mix is thrown the threat that the law could be changed to make it easier to sack workers on sight, and consumption will freeze.
Yes, Sir Philip is right. People are spooked. And when they are spooked, they keep what little money they do have tightly shut up in their wallets. Same goes for the corporates, like Sir Philip's, which would rather hoard their money, hunkering down against further bad news, than go for growth in an uncertain time.
Last week's Evening Standard, hardly an organ of the left, told it how it is:
"What he (Osborne) ought to do is set aside his obsession with cutting the deficit – an ambition that is going pear-shaped anyway – and find the money for serious spending on infrastructure and housing."
It is no good looking to consumers to lead the charge to recovery when you have stricken them with fear.
What George Osborne must absolutely do is ignore the calls from his back benches to cut taxes for the better-off. Trickledown economics didn't work for Margaret Thatcher and they won't work now.
Interestingly, these same backbenchers claim that the markets could cope with a loosening of the austerity straitjacket; that, indeed, they would welcome the injection of cash into the economy.
These are the self-same backbenchers baying for the public sector to be scythed back, even though the private sector is in no fit state to absorb the strain this will cause. But it is an important admission that the markets look at the UK economy and see that there is room for flexibility.
Unite has always argued that the call for cuts is misguided. The only way to recover our economy is for the government to embark on a programme of growth, similar in scope and intelligence to that pursued by the post-war government.
There are solid measures that ought to be announced this week to show that No 11 understands that Plan A has spread austerity, and that this will never engender the growth the economy craves.
Capital projects to build the houses the millions on the waiting list need, and improved highways to get Britain moving efficiently, will create jobs immediately and send a clear message to the markets that this country is determined to grow itself to recovery. They would also end the threat to make this a `hire and fire' country; people will only spend, or buy homes, or make use of services when they can feel safe.
George Osborne should realise the public are not interested in fiscal pyrotechnics. They want reassurance. They want to know that you can create real jobs, that these will be stable, and will allow people a dignified working life. They want to stop the fear heaped on top of fear, with the attacks on earnings and job stability.
This country needs leadership, not Private Fraser claiming "we're doomed". The fear this government is spreading may be crucial to its plan to roll back our state and to destroy the social architecture which has sustained this country since 1945, but as analyst after analyst states, it isn't working. Time to change tack, and fast.
