Well, it’s happened. The Government’s Comprehensive Spending Review has finally been unleashed on to a barely-comprehending public, and we await the onslaught to find out what the specific effects will be (beyond it being pretty bad, to say the least).
I am more than a little worried. As examples, I am worried about the cuts to the DfT budget, and the amount of large capital schemes that are going ahead. This may mean that there will be less money available for smaller schemes or those promoted by local authorities. I am worried about the cuts to local authority grants, as this will also have a similar effect on the spending on such schemes. As a result of these, I am very worried about the amount of work that my company – which relies very heavily on work from a local authority – will have in the immediate aftermath.
These are very selfish reasons, and I acknowledge this, but unfortunately selfish reasons are often those that are considered first. In addition to these, I am worried about the 490,000 public sector jobs that are predicted to be lost. This is bad enough in itself, but Messrs Osborne and Cameron are assuming that the private sector will hoover up all the staff suddenly released into the job market.
This seems to me to be a very naive proposal (note – I’m not an economist so probably don’t understand the wider implications. These are just my opinions based on what I’ve read). For a start, there will not be a direct fit between the skill sets of the people who will be made unemployed by the public sector and the available vacancies of the private sector.
Secondly, this also assumes that there are enough jobs to satisfy the demands of the inflated unemployed workforce – there aren’t enough jobs to go around at the moment.
Thirdly, this assumes that there will be sufficient work available for these people to do. I know first-hand how much of a downturn the private sector has taken in the last few years, what with my enforced move back from Ireland; the reduction in workloads both in my own company and elsewhere; and the number of colleagues, friends and family looking at redundancy.
Fourthly, the combination of a reduction in jobs available, increase in competition for positions, and reduction in benefits available to people looking for what jobs there are still available, mean that there will be less impetus for people to go out and spend, spend, spend and kickstart the economy.
Osborne et al seem to be assuming that the recovery will be driven by an injection of cash from some as-yet-undetermined drive from the private sector to start building and investing. My question though is from where will this money come, and who will buy the products on which this investment would be based? If everyone is tightening their belts and preparing for the worst, luxuries and extravagant purchases are fewer and further between than during the good times of even just a few years ago. I myself have had to scrap my car and walk everywhere because the cost of running it became just too expensive.
I leave the issue of “fairness” to other, more informed folks to comment upon. My issue is that this all seems to have been rushed through and not very well thought out.
Like I say: I’m worried.