Wednesday, 20 October 2010

The spending review

By the time you read this, we will know all of the details of the Comprehensive Spending Review and months of number crunching will finally have come to a conclusion. There will be announcements on a number of substantial decisions but there will also still be some local projects where decisions are postponed until later in the year.

There is no doubt that we need to get to grips with the scale of the debt that Britain currently has. Last year the government spent some £150 billion more than it received in taxes. That is more than the entire NHS budget and all of it had to be borrowed from other countries. As a result of all the borrowing that has been piled up over the last few years, next year this country will be spending more money on interest charges than it does on schools. You can’t keep borrowing money forever. In the end it catches up with you and the longer you leave it, the harder it is to put things straight. We have to bite the bullet now.

But I am also very conscious that the tough decisions taken this week will have a real impact on people’s lives. There will be public sector job losses, some projects cancelled and there will be cuts to some benefits.

No one relishes the prospect of job losses and I wish there was another way through. But given that there isn’t, I think there are two key things the government needs to get right. First is the importance of fairness. I think it’s very important that we share the pain and that no single group of people are singled out and expected to carry more of the burden. That is why in the budget George Osborne announced some tax rises as well as spending cuts. It is why the government has left the higher rate of tax at 50 percent, increased Capital Gains Tax and it is also why they have taken Child Benefit away from the highest earners who pay the top rate of tax.

Secondly, it is crucial that we do all we can to help those who lose their jobs or are affected by the cuts. The government has set up a £1 billion Regional Growth Fund to help develop new businesses and private enterprise. We need to support people who want to set up on their own and be their own boss. We also need to redouble our efforts to help people get off benefits and in to work. There are thousands who are trapped in poverty by welfare dependency and often it becomes a culture that spans generations. I have seen some really good projects that help break that cycle with effective mentoring given over a long period of time to instil a work ethic in people and give them the skills and the self confidence to get a job and earn a living. We need more work like that.