The Business Secretary, Vince Cable, made his first speech about British science today. Sadly, what should have been a visionary statement was a speech that set out the parameters within which science spending will be cut.

Setting the scene, the Business Secretary said that we face the tightest spending round since post war demobilisation, and that his department is the largest in Whitehall without a protected budget. Science, alongside further and higher education, is one of its largest components. In this context, Vince Cable asked if we can achieve more with less.

Cable went on to say that the US is doubling basic science spend between 2006 and 2016, while China has seen a 25% increase in central government funds to the science and technology sector. However, he went on to say: “We in the UK are severely financially restrained. I want to pose the question to you: how do we economise without damaging science.” He also asked the question: how does government spending in scientific research contribute to the economy.

Separately, ‘The Times’s’ science editor, Mark Henderson, reports that the Medical Research Council has drawn up plans to withdraw the £105m that it spends annually on cancer to meet Treasury proposals to save at least 20% on its £700m budget. Threatened projects could include the Gray Institute for Radiation Oncology and Biology at the University of Oxford, the world’s leading centre for radiology research.

The TUC has said today that cutting science funding is completely the wrong thing to do. To answer Vince Cable’s questions directly, we probably cannot achieve more with less. And we probably cannot economise without damaging science. There may well be an odd pocket here or there that is performing below standard, but cuts of 20%, perhaps more, cannot be achieved without lasting damage to the UK’s science base.

That isn’t what a government obsessed with reducing the deficit wants to hear, but it is true. And, of course, curiousity-driven science  is a public good that cannot neatly be divided into that which contributes to the economy and that which does not. MRC research into cancer treatment isn’t designed to strengthen the economy, but history tells us it will have all kinds of economic spin-offs.

It would be more honest of the government to say that it wants to cut the deficit and if that means damaging UK science, then that is a price the government is prepared to pay.  The science community, including the thousands of trade unionists working in or teaching science, would have fought that approach with all their might, but at least the government would have been recognising the real position we are in. Because whilst always being vigilant in search of genuine efficiencies, we simply cannot achieve more with much, much less. The world, sadly, doesn’t work like that.

‘Science cracks code to feed world’, says the headline on page three of The Times today. Now I know the first rule of journalism is that the headline should grab the reader’s attention, but even so, this is a bold claim. Nevertheless, this article reports that a team of British scientists have, for the first time, read the genetic code of wheat. This means that genes which control critical traits such as drought and salt tolerance, disease resistance and grain production can be identified. Across the world, wheat is a staple crop second in importance only to rice. This breakthrough will allow the development of hardier and higher yielding strains of wheat and so could lead to greater food security and lower prices. ‘Feed the World’, which those of us of a certain age remember as the Live Aid slogan, could be about to take on a whole new meaning.

So it is ironic that this article appears on the same day that leading scientists argue that planned cuts of 25% in their budget could lead to big cuts in the UK’s scientific research capacity.

According to the Guardian, particle accelerators such as the £383m Diamond Light Source or the £145m Isis neutron source could be mothballed. An almost £1bn cut to the £3.5bn science research budget would entail the loss of significant numbers of postgraduate and post-doctoral researchers, creating a “lost generation”  of scientists and engineers and draining innovation out of the economy.

Brian Cox, the Professor of Particle Physics at Manchester University and often the public face of UK science, says the take up of science in schools and universities would be hit. This, at a time when the US and Germany are investing in science because they recognise that this stimulates economic growth and can help to rebalance the economy.

Congratulations to those scientists that may, indeed, have cracked the code to feed the world. What a marvellous achievement! But we have more codes to crack. Such as the code to stop the planet from overheating, the code to deliver long term, productive, profitable industries and the code to stop cancer cells from spreading.

To do that, we need our science base. I hope Ministers remember that in the run up to the Comprehensive Spending Review on 20th October.

There’s an interesting nugget about German trade union strategy in today’s FT (‘German unions seek pay rises on back of recovery’). This notes that, in negotiations for 110,000 steelworkers, due to begin on August 27, IG Metall,  Germany’s biggest union, will focus on pay rises and a reduction in contract labour, rather than job security. The union agreed a two-year pay deal for engineering workers in February, including a one-year pay freeze and a 2.7% rise in 2011, in exchange for guarantees of job security.

Confidence in the recovery of Europe’s biggest economy is such that the focus can now move from protecting workers’ jobs to ensuring they get a fair share from the future economic upturn. IG Metall boss Berthold Huber also rightly points out the role of faster wage rises in stimulating domestic demand.

However, I was particularly struck by the fact that Peter Bofinger, a member of the five man panel of economic advisers to the German Government, has also called for wage rises of at least three per cent, to sustain a broad based economic recovery.

I wonder if we will see something similar in the UK. British trade unions showed just as much pragmatism as their German counterparts, agreeing to pay freezes and all kinds of flexible arrangements to protect jobs. When the recovery takes off in the UK, will David Cameron’s advisers be arguing for fair pay for our workforce too? I hope so. It’s always difficult to have a sensible discussion about workers’ pay here without hysterical voices crying fear of wage inflation. But we’ve seen the return of bankers bonuses and the Prime Minister has tried to tell us we are all in this together. So what about it, Dave? We aren’t calling for telephone number bonuses. Simply fair pay.

We are now three days into the FT’s excellent series, ‘The austerity debate’, looking at the pros and cons of an early repayment of the fiscal deficit. The issue of deficit repayment is the main political divide of the moment and the FT has performed a valuable service, bringing together commentators from both sides of the argument to thrash out this question. It is time for a TUC comment and Kenneth Rogoff’s article, ‘No need for a panicked fiscal surge’, published today, provides me with a hook.

Rogoff speaks of a “growing chorus for indefinitely sustaining aggressive post-crisis fiscal stimulus”. He adds: “Governments that instead propose gradually reducing deficits and ultimately stabilising debt to income levels – such as both Germany and the UK – are accused of pig-headed fiscal conservatism.”

Hmm. I accept that Kenneth Rogoff is a professor at Harvard and this may be the way things look to a conservative across the Pond, but nobody in the UK is calling for “indefinitely” sustaining the stimulus, or against “gradually” reducing deficits. The issue is simply one of timing.

The previous Labour Government had argued for “gradually” reducing the deficit. Indeed, in the Budget of March 2010, that Government proposed to more than halve the deficit over four years. The TUC felt even this was too fast, but we have never argued for either an indefinite stimulus or an indefinite fiscal deficit.

Kenneth Rogoff admits that “huge uncertainty” remains and that output growth is likely to remain “tepid”. To be fair to him, he accepts that aggressive fiscal stimulus was “reasonable as part of an all-out battle to avoid slipping into a depression”. He doesn’t say whether,  since a depression was avoided, he accepts that this strategy worked, but today, the panic having abated, “a more sober cost-benefit analysis is required”, he tells us.

In truth, as Martin Wolf said in the FT on Monday, we cannot be sure who is right in this debate. But we would be naive to lose sight of the fact that this is about politics, as well as economics. Many in the Conservative Party are sceptical about the size and role of the state and there are strong suspicions from some trade unionists that reducing the deficit is providing a convenient fig-leaf for undermining some of the state’s most visible and, to us, cherished institutions.

The TUC has also been keen to point out that reducing the deficit is not the only economic game in town. More important to us are policies designed to foster long-term economic growth, as issue that is arguable more urgent but is in danger of getting lost. We also believe that, when the deficit is reduced, it must be reduced fairly. In our Pre Budget Report submission last year, we identified six tax options that could bring in large amounts of revenue and would be much fairer than, say, freezing public sector pay for all those earning above £21,000, which is hardly a kings ransom, but is supposed to attract talent and commitment from workers to staff our schools and our hospitals.

As I said, this is about politics as well as economics and that applies to the TUC as well. We stand for a better deal for working people and a smaller gap between the haves and the have-nots. Our response to the deficit is defined by those principles, as well as our sincere belief that cuts of the magnitude announced by the Coalition Government could pull the rug from the recovery before it is established.

Sometimes, two separate news stories are presented in the same news bulletin and, taken together, make a wonderful statement about the world we live in.

This was my experience this morning as I watched BBC Breakfast. Today’s programme contained the worrying news that, according to figures from the university admissions service, Ucas, universities have received more than 660,000 applications and a record 170,000 students are thought likely to be denied a place this autumn.

The same news bulletin then informed me that the US bank Goldman Sachs had agreed to pay $550m (£356m) to settle fraud charges of misleading investors. This morning’s FT gives more information. This penalty is, we are told, about a week’s worth of trading revenues for Goldman Sachs.

What does this have to do with us? The BBC says that the Royal Bank of Scotland, which is now 84% owned by the UK taxpayer and lost about $840m in investments, will receive just $100m compensation.

Goldman Sachs’ share price went up after the ruling, suggesting that many analysts felt the firm had got off lightly. Goldman said the settlement was “the right outcome for our firm, our shareholders and our clients.” No kidding!

But it was hardly the right outcome for British taxpayers. Naturally, I went onto the Treasury website this morning, to read the UK Government’s statement condemning this shortchanging of the British taxpayer – that’s you and me – and setting out what action it would now take to get us fairer compensation. But, strangely, no such statement seems to exist.

Which is a shame. Because if we were to get a fair settlement, imagine how many extra university places we could fund. Many of those 170,000 students could take up the degree courses for which they have workes so hard. And the UK, seeking to compete in a globalised economy with China and India, who each produce about half a million engineers and technicians a year, would stand a better chance of building a strong economy in the future.

P.S. According to the Daily Mail in January, Goldman Sachs awarded its bankers a 57% increase in their pay packages last year. The average employee scooped £308,000 in salary, bonuses and other benefits. Goldman even had the cheek to say it had showed restraint in this increase. Lib Dem Treasury Spokesman at the time, Vince Cable, now the Business Secretary, said that “the bonus culture in the banking system has got entirely out of hand and must be curbed”.

Too right it must. And British taxpayers should be properly compensated. Over to you, Vince!

Pat McFadden, the Shadow Business Minister, made a thoughtful speech to the Fabian Society this morning. He resolutely defended the last Labour Government’s economic record, questioned the Con-Lib decision to “cut faster and deeper than we (i.e. Labour) would”, rubbished the idea that the UK was in a similar economic position to Greece and made the case for active industrial policies in pursuit of growth. It’s well summarised by Sunder at Next Left.

It was all good stuff. The controversial bit came in the following two sentences: “‘Fight the cuts’ is a tempting slogan in Opposition, and there are indeed some that must be fought. But if that is all we are saying the conclusion will be drawn that we are wishing the problem away.”

True enough. But that is not all we are saying. Those arguing for an economic alternative to the coalition are saying that repaying the deficit now, before the recovery is entrenched, will risk a double-dip recession. When the recovery comes, the deficit must be tackled, in a timely and fair way. But as economic growth will make the biggest contribution to closing the gap, entrenching the recovery and rebuilding industry must be the first priority.

The problem with Pat McFadden’s speech is less what he said and more how it was reported. Perhaps it was spun this way or perhaps it was just journalists doing what journalists do. Either way, the Today programme reported that Pat would be making a speech saying that Labour must be prepared to talk about cuts and this was followed by an interview with Leadership contender Andy Burnham, who was then asked to pass a kind of virility test to show that he, too, was tough enough to promise cuts to the British people.

This misses what should be the main debate. How do we get growth back and secure it?

Either the coalition believes what was said in the Thatcherite handbook, that cutting taxes and public spending leads to ever-higher private sector growth, even in the current situation, in spite of the historical evidence to the contrary; or they have simply given up on growth in the short to medium term.

This is a political space that the opposition could and should occupy, especially as the impact of the cuts in the both the private and public sector starts to bite.

I had never heard this anecdote before this morning, but apparently when plans for the Large Hadron Collider, the biggest science project in the world, were first mooted, along with the costs, UK Ministers baulked. They were, however, wrong-footed by the scientist who also happened to be Prime Minister at the time, Margaret Thatcher, who said, “Yes, but isn’t it interesting?”

Given Lady T’s attitude towards trade unions, we don’t often speak of her in flattering tones, but she was right. Yes, it is interesting. It’s also very worthy for reasons of both economic growth and scientific discovery.

David Willetts, the new Science Minister, fleshed out his own thoughts on the future of science in a speech at the Royal Institution this morning (and it was in his speech that I heard the anecdote set out above). The good news is that the Minister is well aware of the importance of blue sky research. Given the pressures on the national finances, this is reassuring, since we sometimes hear a short-sighted argument that unless a project has a defined economic output, it shouldn’t be funded. Most science spin-offs were unidentifiable in advance, but had huge benefits for the economy. The World Wide Web is just one example.

David Willetts also spoke of the importance of procurement and its value in fostering innovation. This gets a thumbs up from the TUC, as does his endorsement of James Dyson’s report (“very valuable”, in the Minister’s words) ‘Ingenious Britain’. It was good to hear the Dyson Review get a mention. The Coalition Agreement says the Government will “consider” it, but I have heard nothing of it for weeks and I was afraid it might have sunk without a trace.

Now for the difficult bit. David Willetts admitted what we all know, which is that the finances are tight and, in his own words, “there are areas which we can only really advance once the comprehensive spending review has been concluded”. Indeed. What’s more, science is relatively easy to cut, since many projects are so complex that they are often not understood. There will be no public outcry against cutting funding for that which isn’t understood in the first place.

David Willetts is a thoughtful man and seems well suited to his role. I hope his political skills are as sharp as his intellect. If we are to get the economy back on track, cutting the deficit is just one part of the story. Growing our way to recovery is by far the more important task. Science will be so important to stimulating economic growth in the coming years that we really cannot afford to cut it. David Willetts needs to argue that case continually in the months ahead.

Science-led economic growth? Now that would be interesting!

Graham Honeyman, the Chief Executive of Sheffield Forgemasters, put a brave face on today’s decision to axe an £80m government loan, which would have created 180 jobs at the company. Describing this as a “huge disappointment”, he said it is important now to focus on other elements of the company’s development.

Good for him. But the TUC can’t be this sanguine. We are trade unionists, so of course we care about the loss of 180 potential new jobs. But we also care about investment in the future strength of British industry.

This loan, announced in March, was designed to make Forgemasters one of two in the world able to make large forgings for the nuclear energy industry. Alan Whitehouse of BBC Look North had previously written that the loss of this loan “could end the chance of South Yorkshire becoming a centre of excellence for a new civil nuclear power industry”, adding: “Unions and MPs are arguing that, in the grand scheme of things, £80m is not a lot of money. But it could make all the difference in the world to South Yorkshire.”

Treasury Chief Secretary Danny Alexander said today that he had “taken the decision to cancel certain projects that do not represent good value for money”. Meanwhile, Business Secretary Vince Cable said the Government “hopes [Sheffield Forgemasters] secures private investment for this worthwhile project.” But what private investor would possibly wish to support a development that a Treasury Minister says is not good value for money?

Sheffield MP and Deputy PM Nick Clegg has described the loan as “a calculated ploy” by Labour to win support in Sheffield “when they knew all along that there simply wasn’t the money to keep to that pledge in the first place”.  Hang on, we are talking about an £80m loan. Not a gift. A loan. As part of a stimulus package to support seed corn industries and stimulate the economy to bring us out of recession.

Today’s decision is not just a bitter blow for Sheffield Forgemasters and the people of Sheffield, but raises real questions about whether the Coalition Government is serious about manufacturing, rebalancing the economy away from finance and the transition to a low carbon economy.

It couldn’t have been clearer. The Conservative Party election manifesto – their invitation to us to join the government of Britain – set out the situation in plain language:

“we will take immediate action to cut a net £6 billion of wasteful departmental spending in the financial year 2010/11, with further savings in future years … Former government advisers Sir Peter Gershon and Dr Martin Read have advised us that savings of £12 billion across all departmental spending are possible in-year without affecting the quality of frontline services”.

So voters could put their cross in the Conservative box, safe in the knowledge that only “wasteful spending” would be cut this year, “without affecting the quality of frontline services”.

Would-be university students, many of them voting for the first time, could confidently vote Conservative, secure in their belief that a cut of 10,000 university places in the forthcoming academic year would never happen, because higher education couldn’t possibly be classified as “wasteful”. More vulnerable would-be employees, who might look for support from the Future Jobs Fund, could support the Conservatives, since efforts to help them into work clearly depended on a high quality of frontline services.

Indeed, to highlight their point about efficiencies, the Conservatives, in their manifesto, spoke of a freeze on new ICT spending, negotiations to achieve a better deal from government suppliers, better public sector recruitment, reductions in discretionary spending and reductions in public sector property costs.

So when David Cameron gave his first interview as Prime Minister on the ‘Today’ programme this morning, the least he could have done was to apologise to those who have already been let down, after only two weeks of his Government. But not a bit of it. Gone was his confidence in the efficiency savings to be had, identifiable while in Opposition, so much so that he could make such a bold promise to voters. Instead, he offered us this justification: “until  you are actually in charge of the ship you can’t actually see what the penalty clauses are and what projects have been signed up to.”

Then he falls back on that old politician’s trick of telling us, the voters, what is important:

“the key thing is we promised £6bn of spending reductions, we have delivered £6bn of spending reductions”.

No, Prime Minister, the key thing is you promised to cut £6bn of waste, which wouldn’t affect real people’s life chances, such as future students or those needing help to get into work. What’s more, the country was awash with organisations, the TUC prominent among them, who told you that this couldn’t be done. Now that you’ve been proved wrong on this, please talk to public sector organisations and all those affected before the next cuts happen. Otherwise, there really could be trouble ahead.

I very much respect the detailed analysis prepared by the OECD on international economic issues. However, I’m afraid the Paris-based think-tank has got it so very wrong in its call for UK interest rates to rise by the final quarter of this year, as reported on the Guardian website today.

Incredibly, the OECD is calling for base rates of 3.5% by the end of next year, a move that would strike a major blow to businesses and homeowners.

True, CPI inflation is currently running at 3.7%, well above its symmetrical target of two per cent. However, the Bank of England expects CPI to fall back to target in 2011. Last week, in his letter to George Osborne, the Chancellor of the Exchequer, Bank Governor Mervyn King specifically said that temporary factors, including high oil prices and the effect of putting VAT back to 17.5%, were “masking the downward pressure on inflation from the substantial margin of spare capacity in the economy”.

And even more important is the fact that the UK achieved economic growth of just 0.3% in the first quarter of 2010, lower than the 0.4% achieved in the fourth quarter of 2009. Again, there might have been specific factors involved, namely the severe winter weather of January that may have kept consumers in their homes and out of the shops.

However, growth in the UK is by no means assured.  Less so, in fact, since the Coalition Government has taken the highly questionable decision of cutting government spending by £6bn this year, even though one coaltion partner, the Liberal Democrats, specifically argued against that very policy in last months General Election campaign.

The UK’s inflation targeting regime is structured very precisely. The Monetary Policy Committee of the Bank of England meets every month to weigh the economic evidence before making its decision on base rates. To start prescribing interest rate rises well into the future, when we don’t know what economic circumstances we face, is precisely what the inflation targeting system is not supposed to do.  The MPC must ignore this knee jerk statement from the OECD.

One major Bill included in this morning’s Queen’s Speech was the Office of Budget Responsibility Bill. The principle behind this is simple enough. An Office of Budget Responsibility will become the official forecaster for growth and borrowing. After assessing government liabilities, the OBR will make recommendations for fiscal loosening or tightening in order to have a better than 50% chance of achieving the Government’s targets for the public finances.

The OBR will be at arms-length to the Government and will be designed in such a way as to minimise political interference with the overall objective of keeping the public finances in order.

So far, so straightforward. The problem with this idea is that it gives the public finances – “budget responsibility”, in the parlance of the Bill – primacy over other objectives.

We all want to keep the public finances in order. That can be taken as read. But had the previous Government made the public finances its top priority in the last two years, it would not have introduced the fiscal stimulus and in all likelihood we would now be living through something akin to the Great Depression.

Yet had it followed that path, leading to economic depression, in the logic of this Bill it would somehow have been “responsible”. Or to turn this argument around, by introducing the stimulus, the last Government was “irrresponsible”.

Critics will say that the recent downturn is a special case. In such circumstances, priorities can justifiably change. If I were to hazard a guess at private thoughts, I’d imagine that this is what Lib Dems believe, if not Conservatives. The Tories did, after all, oppose the fiscal stimulus at the time.

But if that is true, when is a case special? A special case, when the public finances are less important than, say avoiding recession, is a matter of opinion. It is those opinions that we elect our politicians for. We expect them to use their judgement. Not tie their hands in advance, preventing them from acting.

Refusing to exercise that judgement could be described as, yes, that’s the word, irresponsible!

Today is the day that we find out where the first tranche of spending cuts will hit. No doubt the TUC will have more to say on this as the day progresses. For the moment, I was struck by a story in this morning’s FT, entitled ‘Berlin prepares for 10bn euro yearly cuts’.

The meat of the story is encapsulated in the headline. These cuts will run until 2016 and will be introduced, in part, to comply with a “debt guillotine” that is written into the German constitution.

But two details are particularly interesting.

The first is that the cuts are consistent with repeated promises by German Chancellor Angela Markel and her Finance Minister, Wolfgang Schauble, to reduce their 80bn euro record net borrowing requirement from next year. Yes, that’s right. The cuts won’t be introduced until 2011.

The second is that, in the words of the article, “the scale of the measures was likely to shock the other 15 members of the eurozone” who “were hoping Germany would be the one source of economic growth for the monetary area”.

The opposition Social Democrats have condemned the cuts as an attack on the poor. In an argument with which the TUC would sympathise, the SPD has instead called for tax rises on the bankers and speculators who caused the crisis in the first place.

But leaving aside the question of how the deficit is repaid, this situation in Germany raises two arguments very similar to those that have been raging in the UK.

Firstly, many economists, and certainly the TUC, have argued that spending cuts this year, before the economic recovery is entrenched, would be dangerous and could lead to a double-dip recession. Comparing the situation in the UK and in Germany requires some caution, of course, because no two countries face exactly the same challenges. But this principle argument of progressives, that any spending cuts should not be introduced in 2010, seems to be supported by the actions taking place in Germany.

Secondly, Germany’s eurozone partners recognise that if there are cuts in Germany, this will threaten their own economic growth. At a time when private sector demand remains sluggish, that argument has resonance. And with 60% per cent of UK trade taking place in Europe, this situation affects us too. So let us state the fact, once again, that the cuts being announced today will threaten the UK’s economic growth. The idea that £6bn can be taken out of the economy, before the recovery has taken root, and this will somehow increase, rather than diminish our chances of sustained economic growth, is pie in the sky economics.

Nick Clegg admits that the cuts will be “controversial” (which surely wouldn’t be the case if they were simply efficiency savings) and asks us to judge the Government in five years time. Sorry, Nick, you’re in government now and it doesn’t work like that. If you are complicit in a Government that plunges us back into recession, forgive us if our patience can’t hold out that long!

The Con Lib Coalition has published its full agreement this morning. The agreement runs to 36 pages, which makes it impossible to cover in any great depth here. There are, however, a few points that deserve an immediate mention.

The agreement states: “we recognise that deficit reduction, and continuing to ensure economic recovery, is the most urgent issue facing Britain”. Sorry, which of those is the most urgent issue? Deficit reduction or economic recovery? The two aims are not the same. In the long-term, we all want the deficit eliminated and the recovery secured, but that won’t happen quickly. So let’s be clear: economic recovery must come first, with the deficit being paid back gradually as growth is entrenched. The dangers of rushing to pay back the deficit before the recovery is secured really are too gruesome to think about. This will be a major TUC theme in coming months.

The agreement will “consider” the implementation of the Dyson Review, “to make the UK the leading high-tech exporter in Europe”. The Dyson Review was one of the best things to come out of the Conservative Party before the election. If it were implemented, especially in conjunction with Liberal Democrat ambitions for the growth of green industries, it could give the UK a powerful industrial policy that would help us to build the post-crisis economy. I hope the coalition does not “consider” for very long, but gets on with implementing Dyson as soon as possible. I’m a little afraid that “consider” is a polite word for “kick into the long grass”. Please, Government, prove me wrong on this one!

The decision to set up a green investment bank is welcome. There was pretty much cross-party consensus on the need for such a bank before the election, so going ahead with this is common sense.

The fact that the coalition “will maintain the goal of ending child poverty in the UK by 2020″ is very welcome. The TUC will have much to say about this in coming weeks, but the way in which this interacts with benefit reforms and spending cuts will be a major issue. Again, “maintaining the goal” is great, but some flesh about how this will be practically pursued is needed.

Finally, the sentence ”We will use our relationships with other countries to push for unequivocal support for gay rights” is also very welcome. The temptation to contrast this with some of the comments attributed to Conservative allies in the European Parliament is almost too strong to resist, but I’ll leave that one to the sketch writers!

We are now five days away from the first really signficant economic announcement of the new government. On Monday, we will be given more details of the £6bn spending cuts for 2010-11, which were previously opposed by the Lib Dems as a threat to economic growth, but which will now be introduced by their Chief Secretary to the Treasury, David Laws.

Yes, next Monday politics will get serious. A small taste of what is to come could be found in yesterday’s story in ‘The Times’ which argued that £759m to support the UK’s car and nuclear sectors could be under threat. A nervous-sounding Treasury source played down that prospect, but whether this particular cut materialises or not, there will be frayed nerves and chewed fingernails aplenty in 1 Parliament Street next week.

David Laws will have welcomed the comments of Bank Governor Mervyn King, who appears to have endorsed plans to cut the deficit early. Interestingly, however, other news reports suggest that these cuts will be based, in part, on plans identified in Labour’s Budget in March and in the Pre Budget Report last November. A Treasury source quoted in the Guardian said: “If you are going to look at waste, you are, by definition, going to look at similar areas around waste, around procurement and around IT.”

So far, so good. Nobody would object to saving money from reducing waste, better procurement or improved IT contracts. So why am I nervous? Well, one reason is that I don’t buy the same Treasury source’s argument that “The previous government identified a whole bunch of waste. It just wasn’t doing anything about it”. Why would any government, mindful of the huge pressures on the public finances, not push ahead with eliminating waste early if to do so was so pain-free?

The answer, I suspect, is that it won’t be pain-free. I’m fascinated that cuts to discretionary spending, such as consultancy and travel costs, savings in IT, cost reductions from major government suppliers and “significant reductions to the cost of quangos” (in George Osborne’s words) will be imposed on all departments except health, defence and international development. Does this mean there is no waste in health, defence and international development spending, but there is waste in all other areas of government spending?

Of course it doesn’t. But the Government cannot apply these cuts to ring fenced departments, because when they take effect, the public will see what they really are. They are cuts. Not efficiencies. Cuts. From next Monday, the public will start to feel the pain. And then, the Lib Con honeymoon really will be over.

As I’ve been leading the TUC’s development of science policy for a few years, it would be remiss of me to let today pass without wishing the best of luck to the many physicists working at the Large Hadron Collider at CERN, on the French-Swiss border. Today is the day that scientists at CERN will attempt to collide beams of protons at high energy. The aim is to recreate conditions that occured microseconds after the Big Bang, when the earth was formed.

This is the most important scientific project since the Moon landings. It would not have been possible without the work of thousands of physicists, many of them trade union members, from the UK and across Europe.

It is particularly timely that, in the UK, today’s development coincides with the beginning of a General Election campaign. That campaign is likely to be dominated by arguments about cutting the deficit, securing the economic recovery, jobs, immigration and crime. Science will no doubt come much lower down the pecking order. Yet whoever forms the Government after 6th May, I hope they give scientific endeavour the priority it deserves.

Britain’s public spending on science has doubled in real terms over the past 10 years, to more than £6bn. That’s impressive, whichever way you look at it. Gordon Brown has recognised the value of science to building a modern economy. We have an excellent Science Minister in Paul Drayson, who has worked with the TUC in recent months.

Yet science has also suffered funding shortfalls. This has hit programmes including research into breast cancer, agri-engineering and animal diseases. Research into climate change, pollution and diversity all face substantial cuts.

Meanwhile, Adam Afriyie, the Conservative Science Spokesman, was quoted in the London Evening Standard on 8th February as saying: ”Right now, our country is virtually bankrupt, so major science budget cuts are inevitable.”

Trade unionists take a close interest in science. After all, it was a member of a TUC-affiliated union, Prospect, who, while working at the British Antarctic Survey, discovered the hole in the ozone layer. So we will be watching all three parties over the coming month, as they set out their pitch to run the country. For us, the biggest priority is entrenching the recovery. After that, it is building an economy, based on modern, high tech, high skill industries, that can compete in the era of globalisation. It’s difficult to understand how that can happen without continued investment in science.

Add in the need to attract more kids to study science and the role of science as a fundamental part of human endeavour, and the case for science is very strong. Politicians, please take note!

I’m rather disappointed by the immediate reaction to the Budget from the CBI. They do seem to have missed the target again.

In his response, Richard Lambert, CBI Director General, has called this a “clever, political Budget”, expressed anxiety about the repaying of the deficit and welcomed support for business as “modest but helpful”. He then adds, intriguingly, “However, it is the fiscal decisions over the next twelve months that will really determine the UK’s economic future.”

Surely that’s too simplistic?

There are a huge number of factors that will determine the UK’s economic future. By setting a course for investment in strategic, green industries today, the Chancellor has established an exciting direction of travel for UK industry. Richard Lambert himself mentions the extra money for science places at university, which will be part of a drive for UK excellence in industries that provide growth, competitiveness, exports and jobs in the years to come.

These announcements are very welcome for the TUC. And given the many manufacturers in the CBI, surely they are welcome at Centre Point as well?

None of us like paying tax. But if the deficit is a cause for anxiety, it is inevitable that tax must play its part in getting the books in order. Saving £11bn through greater “efficiency”, as the Chancellor announced today, stretches credibility to breaking point. These cuts will hit our communities hard, yet it seems that the CBI would rather they take even more of a hit than for people, including some very well paid people, to contribute a bit more in tax.

This will be a key debate throughout the election campaign and beyond. The TUC will argue against cuts which threaten the fabric of our society. And in favour of progressive taxation, where those who can pay more and those who did most to cause the downturn (who are often the very same people) pay their fair share.

In today’s Budget, the Government took a further step towards supporting strategic industrial sectors. Many of  those sectors will be ‘green’, both because there is a huge future in those sectors and because it is simply the right thing to do.

Central to this development is the £2bn Green Investment Bank, operating on a commercial basis  and involving public and private sector capital. The GIB’s mandate will be to invest in the low carbon sector, considering new energy and transport projects in particular, and focusing initially on offshore wind generation.

The TUC had called for a £5bn strategic investment fund, taking minority stakes in strategic companies, in pursuit of long term growth and competitiveness. We didn’t get everything we wanted – but this is a very important step in the right direction. Surely the days of laissez faire industrial policy, when only the “market” decided what was in the country’s economic interests, are well and truly behind us?

This announcement comes after the £20.7m investment to support Nissan’s development of electric battery and car production, which wll support 550 high skilled engineering jobs. Ford has also been supported with a £1.55 billion loan guarantee to developer greener engine and vehicle technology.

Another key announcement today was up to £60m for the development of port sites, to meet the needs of offshore wind turbine manufacturers looking to locate new facilities in the UK. This will help secure investment for offshore wind in the UK, and support jobs in the wind energy sector and its supply chain.

I see a theme developing here. Following ‘New Industry, New Jobs’ and then ‘Going for Growth’, the Government is becoming more and more committed to developing those industries, including in the ‘green’ sector, that are vital to the UK’s prosperity in the globalised economy. This approach came later than we would have liked, but we are glad it is here at last.

As political attention turns towards next week’s Budget, I was happy to be asked to comment on the needs of industry for Left Foot Forward. Regular readers will know of the TUC’s recent call for a French style strategic investment fund, with a £5bn budget, taking long term stakes in strategic companies. However, access to finance for companies, especially green tech companies or those that will improve the nation’s infrastructure, must be a priority as we move out of recession. I hope the Chancellor takes the opportunity to address this vital issue.

It is a sign of the pressure being felt at the heart of the eurozone that France and Germany, the main drivers of the European project, have had such a public spat in the last 24 hours. Yet the subject of that spat is a subject that has exercised many an economist as the economic downturn has progressed.

To recap, France has argued that years of moderate wage rises in Germany has raised the competitiveness of the latter country at the expense of its neighbours. Christine Lagarde, the French finance minister, has told the Financial Times that Germany should raise domestic consumption, helping weaker eurozone nations to boost exports and shore up their finances. Germany has responded by arguing that its success is based on strong companies and has suggested that other countries would be better off building their own industrial sectors in the German fashion than crying foul about German success.

Who is right? Well, both.

The TUC has argued before that the imbalance between producer/exporter countries, such as Germany and, even more obviously on the world stage, China, and consumers, particularly the US but also, to a lesser extent, European countries such as the UK, is unsustainable. It’s all very well for Germany to say that others should follow its lead, but if we all tried to produce and export as much as Germany does, while dampening down domestic consumption, supply would massively outstrip demand. The situation in the world automobile industry, where more cars are  produced than people can buy, but no producer wants to cut supply, would be a microcosm of the economic dilemma facing the world.

Having said that, which of us could say, hand on  heart, that if we had an economic model as successful as Germany’s, especially German levels of industrial success, we’d voluntarily dismantle it?

In recent years, the TUC has called for policies to rebuild Britains industrial base. The aim was not particularly to build an industrial infrastructure to rival Germany’s, which would be setting the bar incredibly high, but to balance our economy away from an over-reliance on financial services and towards more strength in manufacturing and green-tech jobs. Most recently, we called for the establishment of a Strategic Investment Fund, based on the French model, to help build some of those industries. Later this week, we will call for a Budget for growth to be unveiled by the Chancellor on 24th March. We know the Government has more than a passing interest in the type of industrial investment banking that exists in Germany. All of this augers well. Were the UK, and other countries, to eventually improve their industries to the extent that they threatened German dominance, we might need to think about a European industrial policy, so the beggar thy neighbour approach that was taken by countries with regard to Vauxhall/Opel last year does not become the norm. In this sense, France’s criticism of Germany hits the mark, in my view.

What is more, I’m glad that Christine Lagarde raised the issue of German wages. In a way, Germany would be justified in saying that this matter is none of her business, but as the TUC is a member of both the ETUC and the ITUC, and as this has been an issue for German trade unions for so long, I feel justified in commenting. Economic commentators have got so used to presenting wages as a cost, and portraying trade union negotiators as wanting to undermine companies’ success when they bargain for pay increases, that many have forgotten the importance of wages. Of course I declare an interest, as a trade unionist. But wages equals demand for goods and services, and demand for goods and services means a well-functioning economy. What is more, the wages of the lower paid equals proportionately higher demand, as well as social justice. Ministers imposing public sector pay freezes in the mistaken priority of early action to tackle the deficit, please take note. Conservative politicians and European Commission officials who want even earlier/more aggressive action to cut the deficit, please do likewise.

I would really have liked to be positive about the CBI’s Budget Submission, given the gravity of the economic situation in which we find ourselves. Here we are, probably two months before a General Election, holding our collective breath and hoping the next growth figures will show the economy still recovering, rather than back in recession. It would have been great if we could agree on the major challenges facing us. Sadly, that is not to be.

The CBI’s prescription is wrong because its objectives are wrong. Running through its submission seems to be a belief that only the economy matters. The needs of society are not worth a mention. What’s more, the most important things about the economy are those that the markets think are important.

The debate about the UK’s AAA debt rating is important, but cannot be allowed to overshadow a serious discussion about how we move the economy forward. What is more, politicians - from whichever political party wins the next election – will need to judge repaying the deficit with holding social solidarity together. If, as the CBI suggest, PBR 2009 showed a downward revision to the level of the structural deficit, relative to the Budget 2009 estimates, that allowed either an earlier repayment of the debt, room for lower tax increases or slightly higher spending than previously expected. Public spending is about to take such a hit that softening the cut slightly was surely no bad thing.

This brings us to the crux of the CBI submission. The CBI calls for fully transparent public finance plans in the Budget. That can’t happen in a Budget so close to a General Election, for political reasons (seasoned observers like me remember John Smith’s Shadow Budget in the 1992 Election Campaign and the  target this gifted the Tories at that time). However, I hope we get that level of transparency from all the major parties when the campaign starts and probing questions are being asked. Such transparency would allow voters to judge the relative merits of each party and cast their votes accordingly. Knowing who wants to cut, who wants to spend, by how much and with what objectives in mind, would be a victory for democratic debate. It might even allow an election campaign that isn’t dominated by trivia around Gordon’s handwriting or David’s airbrushed posters. But I won’t hold my breath.

The CBI then argues, quite rightly, for the importance of capital investment, before reaching the wrong conclusion that the priority, therefore, is to slash current spending. Balancing the budget by 2015-16, two years earlier than the Government plans, which the CBI calls for for no apparent reason, would require current spending to fall by around 8% of GDP from its 2009-10 peak by 2015-16.

The CBI doesn’t say where the axe should fall. The CBI never says where the axe should fall. It argues for a public sector pay freeze (while, on the very next page of its submission, expressing concern about the tax burden on those on high incomes, including non-doms) and lower public sector pension costs, but this can’t hope to make up the spending cuts that the CBI calls for. So should schools be cut? Or hospitals? Or help for the elderly? I think we should be told.

Freezing public sector pay and reducing its pensions won’t solve the problem either, it will simply create a recruitment crisis in the very public services that we need to get us from downturn to recovery.

The TUC will call for a Budget for growth this year. We won’t grow by prioritising markets at the expense of society. We’ll do so by recognising that a strong society and a healthy economy go together. The TUC will keep an eye on this debate, which will dominate the election campaign, with great interest in the weeks ahead.