David Cameron is expected in a speech in Milton Keynes today to warn that the UK’s whole way of life will have to change. The cuts that will have to be made to public spending will affect everyone in the country.
The Prime Minister will warn us that the scaleof the problem is far worse than he realised on first taking office and that ‘momentous’ decisions will have to be made with ‘enormous implications’ for everyone. Not only is there a huge deficit, the economic projections the previous government were basing all their assumptions on were far too optimistic. This say the coalition will mean that cuts will have to be swift and decisive.
Whilst in opposition the Tories looked at how Canada solved their budget problems in the 1990s with what became known as the ‘bloodbath budget’. The Canadians turned a budget deficit of about 9.1% of GDP into a surplus in under four years. But it forced 20% budget cuts on all government departments to achieve it. On the way thousands of public sector jobs were also lost.
The Coalition government are expected to copy the Canadian model of a ‘star chamber’ of maybe four senior ministers who will review departmental budgets before they are agreed, with ministers forced to justify their budget clams before their colleagues.
But they are also looking to revolutionise how government relates with the needs of the people by announcing a huge public consultation exercise. This will completely change the traditional top down ‘government knows best’ model.
Nick Clegg has softened this with a commitment to no return to the heartless days of the 1980s when Margaret Thatcher had been forced into a similar exercise.
It is hard to see how this can be anything other than very painful and could well inadvertently ruin many lives in the process. Mervyn King may well have been right when he said just before the last election that the winners would have to take decisions that would make them unelectable for a generation.