I Used to Care But Now Things Have Changed

This post has a soundtrack from the wonderful Mr. Bob Dylan: Things Have Changed.

I've recently been giving some thought to how my views on cutting the budget deficit have changed over the past year.

In 2009 my bugbear was the Labour government's 'deficit-what-deficit?' policy. At the time, it seemed entirely irresponsible to ignore the budget cuts and tax rises that would clearly need to happen. Moreover, both opposition parties seemed to be colluding to cover this up. Prior to and during the election this year, none of the three parties put forward proposals for how exactly they would tackle the deficit. All of them said that it would be tackled, then waved away the details of how. The principle point of argument then turned out into when the deficit should be dealt with.

During this pre-election period, I was enthusiastically pro-cuts, as well as pro-restructuring taxation. During the time I've worked in the public sector, I've witnessed a lot of what felt like wasteful and pointless expenditure of time and resources. I found it deeply frustrating at times that public sector structures evolve so slowly, and are never quite suitable for the current challenge. So I thought that tackling the deficit could prove to be a great opportunity to restructure institutions in order to tackle climate change, inequality and social deprivation. To identify wasteful areas of spending and duplication, to reconnect public institutions with the public they serve, and to demonstrate that a low carbon future is actually cheaper than business as usual. What I hoped for was a long-term plan for reducing public spending whilst kick-starting a low carbon economy.

Naturally, many of the phrases I've used in the above paragraph were also featured in the manifestos of all three political parties. The coalition document probably included most of them too. But I've become a lot more cynical in the past few months, and the government's deficit reuction plans are not what I had in mind.

The most critical difference is that I thought the public sector should be restructured in a considered way, with a view to the long term. Specifically, with a view to 2050, when we will be emitting 80% less carbon dioxide. So says the Climate Change Act. In contrast, the coalition have made a point of doing everything very fast. They threw together an emergency budget, abolished all manner of institutions, and proposed almighty upheavals of every government department in their first month of government. In fact, they claimed proudly to be turning the entire concept of government upside down.

What has changed my view on cuts is that the public sector and population at large have been entirely absent from this decision making. I don't call a couple of websites inviting bright ideas sufficient consultation for turning government upside down. Indeed, even the usual impact assessments seem to have been skipped for many changes. Until October's spending review, it won't be clear exactly how much pain each agency, scheme, and fund will carry over the next few years. This uncertainty and feeling of utter helplessness results in a public sector full of very jumpy, disillusioned employees with a penchant for black humour.

I am no longer the enthusiast that I was because the suddenness and depth of the coalition's cuts scare me. I simply don't see how they can possibly help the economy to recover. The government's message seems to be that reducing the deficit, whatever the effect on the public sector, will miraculously fix the weak economy.

This ignores basic economic theory - government spending is part of GDP. Reduce spending and GDP falls. Cut jobs and unemployment rises. There is no automatic rebalancing whereby the private sector grows as the public sector shrinks; the two are interdependent. To illustrate, ministers often rail about the public sector wasting money on consultants. Well if that money wasn't wasted, those private sector consultants wouldn't have jobs. Wasteful it may be, but it's also a job subsidy. Likewise, infrastructure investment required private sector firms to actually build the bridges, roads, and railways, which they make a tidy profit on. Public sector support for education and research is absolutely vital to the private sector; if the UK doesn't offer the skills and innovation companies need, they will go elsewhere.

Reducing the size of the public sector will therefore reduce the size of the private sector, at least initially. A significant, possibly record-breaking, rise in unemployment next year looks inevitable. There's nothing like high unemployment to knock confidence amongst banks (mortgage arrears!), retailers (saving not spending!), and markets (recession!). Rising unemployment also has huge social impacts, reduces tax revenues, and, without significant intervention, perpetuates itself to the next generation.

In 2009 I thought that sensible cuts could bring about economic recovery, and feared that the government would just ignore the deficit and lumber on regardless. In 2010, I no longer have to worry about the deficit being ignored, quite the opposite. Perhaps this is a case of be careful what you wish for? The problem is that the cuts we're getting look like they will damage both the economy and our ability to tackle climate change and social problems.

Ironically, over the past year not that much has changed in relation to my job. In 2009 I didn't think that it would last beyond 2011. Now I'm nearly certain that it won't. Which brings me neatly to an elegantly written new blog that I found through Society Guardian, documenting how it feels to be a redundant public servant. The author writes from a much more level-headed perspective than me, as befits someone with 20 years in the public sector to my 4. I recommend that you take a look.