MAJOR CUTS in British government spending are now necessary urgently because of the crisis affecting the euro, Liberal Democrat leader and deputy prime minister Nick Clegg said yesterday.
During the election campaign, the Liberal Democrats argued that spending cuts were needed, but not this year. But Mr Clegg said he had changed his mind after an inspection of the exchequer.
"I don't think we anticipated then, I don't think anybody could have anticipated then, quite how sharply the economic conditions in the euro zone would have deteriorated," he told the Andrew Marr Showon BBC.
Today, chancellor of the exchequer George Osborne will detail £6 billion worth of immediate spending cuts, amid fears that 300,000 of the UK’s six-million-strong State workforce could be laid off over the next few years.
Defending his election campaign declarations, Mr Clegg said “no one could have predicted” the fallout from the Greek debt crisis, and the subsequent fears caused by Germany’s fury at having to bail out Athens.
“That’s why we need to show – at a more accelerated timetable than I’d initially thought – that we’re going to get grips with . . . with this great black hole in our public finances,” said Mr Clegg.
The Labour government, he charged, had thrown money around “like there’s no tomorrow – probably knowing that they were going to lose the election”, while they made promises “they knew they couldn’t honour”.
Much of Labour’s pledges on affordable housing had not been funded, thus leaving the Conservative/Liberal Democrats alliance to cope with both cuts and pledges that have no source of finance.
The cutbacks to come will be unpopular, the deputy prime minister conceded: “They’re painful, they’re difficult, but they need to be made to bring some sense back to the public finances.”
Government spending on advertising, consultants, offices and supplies will be slashed today by Mr Osborne, along with a £700 million cut in the annual budget of regional development agencies.
Labour is ready to mount a campaign over the regional agencies, which had been strongly supported by Lord Peter Mandelson while in office, with Labour MP Rosie Winterton warning the cuts “will suck everything down south”.
Yearly, the British government spends £125 million on taxis, £320 million on hotels, £70 million on flights and £580 million on office furniture, while £1 billion goes on advertising and £700 million on marketing. Half-a-billion is to be saved by abolishing a range of State quangoes set up by Labour during 13 years in office and supervised now by the department of business, headed by Liberal Democrat minister Vince Cable.
Today’s measures, however, are but a start, and more difficult decisions will have to be taken by the coalition in its June 22nd emergency budget and in the autumn once a comprehensive spending review is finished.
Conservative MPs, already angry with David Cameron for curbing the 1922 backbenchers’ committee’s powers, are opposed to the agreement to increase capital gains taxes.
In a bid to mollify them, the prime minister paraded his low-tax credentials, saying he was born “a low-tax Tory and a low-tax Tory I will die. I may be leading a coalition but I am a Conservative prime minister and my beliefs and values have not changed.”
Mr Osborne’s deputy, chief secretary to the treasury, Liberal Democrat David Laws said today’s spending cuts are but a start: “We are moving from an age of plenty to an age of austerity in the public finances.”
Saying the cuts will be made with “progressive values”, Mr Laws cautioned against hopes that too many areas can be “fenced off” from cutbacks.