Thursday, 7 October 2010

The impossibility of cuts

The coalition are taking some tough decisions on reducing the budget deficit; this is seen by most of the population and even the media as a necessary evil.

Yet I fear that they will fail to win the argument.

It is far easier to increase spending than it is to reduce it. The previous Labour administration tried to have it both ways: they increased spending without increasing taxes to the same extent. This led to people being happy about the increased spending, but not so unhappy about increases in taxes. The downside, of course, is that the deficit increases, but that is a long-term consequence that can be put off to the future.

Of course, those chickens have come home to roost, but Labour are no longer in power. It is easy for them to deny responsibility and attack the people having to make the hard decisions and sell the hard message.

There are three strands to the cuts argument. The first is that the deficit does not matter, and that no cuts are needed. The second is the position of the previous Labour government: that cuts will be needed, but not for another few years. The final position is the coalition's: that harsh cuts are needed more or less immediately.

It seems that almost all credible economic opinion falls on the second and third option, and the timing of the cuts is the major point of debate. Of these, most economists appear to be backing the coalition's viewpoint that cuts need to start immediately.

So cuts are necessary. The problem is the media's reaction to them.

When a political party says that they will increase spending, the media ask where the money will come from. However such questions are easily diverted, as Labour did so successfully over the last decade. Increased spending is invariably seen as a good news story, and the questioning tends to be less than robust.

Reductions, however, are a different matter. It is easy for the media to find men and women who will be affected by proposed changes, and many of these cases deserve sympathy. Try telling someone who is struggling to put food on the table that they have to take a reduction in income 'for the greater good'. Yet any change (and especially cuts), however small, will by their very nature disadvantage someone.

The removal of universal child benefits is a case in point. I can see no reason for anyone who earns a large amount of money should get these benefits. Yet the media have been busy inventing realistic yet rare scenarios that point to unfairness. They have a point, but the alternatives all look expensive or even more unfair.

Cuts are a bad new story, and the media are jumping on each and every one. Therefore, unless the media narrative changes (and there is no good reason why they should), it is going to become incredibly hard to push the cuts through without watering them down to the point of insensibility.

So I ask all the media organisations a simple question with an impossibly complex answer: what would you cut to save just one biillion pounds per annum? You can choose any department, but are not allowed to use the weasel words 'efficiency savings' It has to be a real, tangible cut. Then tell me that it does not hurt anyone, that I could not find a man or woman whose life will be made harder by that cut.

Cut Trident? It would save billions, but would cost thousands of jobs, many in rural areas of high unemployment.
Tax the bankers even more? Risk losing the tax income from them as they offshore.
Increase student fees? Reduce the ability of many people to access universities.
Reduce the health budget? Wait for the headlines about lack of beds or nurses.
Increase the retirement age? This is unfair to people who will have to work for longer than the previous generation.
And I could continue.

The media need to get real. There is no such thing as harmless cuts. By all means criticise and press the government; but also try to produce a balanced debate. Yet I doubt they will for one reason: bad news stories make good news.

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