Unintended consequences or not, Budget cuts for the very poorest will boost fuel poverty and undermine efforts to tackle climate change. Households in fuel poverty are already concentrated among exactly those families where the cuts will hit hardest. Worse, DWP Minister Steve Webb has not ruled out cuts in weekly Cold Weather payments this autumn. Media reports put Winter Fuel Allowance in the frame. Yet regressive Budgets sustain the high energy use of the most well off, widening the fuel divide between the poor and well-off.

The more unequal our society, the more remote are our CO2 reduction targets. Yet yesterday’s IFS report shows that the very poorest families with children lose more from the June Budget than any other group – facing a 5% cut in their total income. Yet the lowest third of households by income account for over 90% of those in fuel poverty in England.  Read more »

   Filed under: Economics, Energy, Environment, Equality | No Comments »

People arguing the case for cuts will sometimes claim that recent international experience shows that “spending cuts adopted to reduce deficits have been associated with economic expansions rather than recessions.” The quotation comes from a paper published last year by Alesina and Ardagna (subscription) that lists examples where it is claimed that countries that carried out a large-scale deficit reduction were rewarded with economic expansion and a falling debt-to-GDP ratio.

A paper published yesterday by the Roosevelt Institute studies these examples and finds that they show nothing of the sort. In fact, cutting during a slump “often results in lower growth and/or higher debt-to-GDP ratios. In very few circumstances are countries able to successfully cut during a slump, and this happens only when either interest rates and/or the exchange rates fall sharply.”

Read more »

   Filed under: Economics, Public spending | 2 Comments »

Today we have published a list of 100 cuts that will cause real damage across society. Published on the 100 day anniversary of the Coalition Government, our analysis shows that far from reducing ‘waste‘ cuts are impacting on the vital services and support that the poorest families in the UK depend on. Cuts that are particularly unfair and regressive include:

• The Sure Start Maternity Grant (which is only available to the poorest families) for all children after a family’s first baby.
• Hundreds of playgrounds for children across the country.
• Domestic Violence Protection Orders, which aimed to support women at risk of violence.
• The extension of Free School Meals to low income working families.
• The Future Jobs Fund which could have provided real job opportunities for thousands more young people at risk of long-term unemployment.

Read more »

   Filed under: Economics | 4 Comments »

According to the Nationwide Consumer Confidence Index, consumer confidence fell for the third month in a row in July, it now stands at 56, having reached 84 in February (the average during the recession is 63). The Expectations Index, which measures consumers’ beliefs about how things will stand in 6 months’ time has also been falling for five months, and now stands at 76 (the average during the recession has been 85). Read more »

   Filed under: Economics | 2 Comments »

One early indication of the impact of the Building Schools for the Future cuts cropped up in yesterday’s unemployment stats: an 11.5% increase in unemployment among architects over the past month. This is the first rise in unemployment in the profession for ten months after levels peaked in August 2009, reports journal BD.

   Filed under: Cuts Watch, Cuts Watch: Education, Economics, Labour market | 2 Comments »

Over at Left Foot Forward I’ve tried to summarise what we have learnt by producing Cuts Watch, listing some of the worst cuts and categorising them. Moving from analysis to criticism, the Other Taxpayers Alliance and Red Pepper have just published Countering the Cuts Myths, setting out facts and arguments to use against some of the commonest arguments for the cuts. (And while I’m at it, let me remind you about our own All Pain No Gain, which people have found pretty useful.)

   Filed under: Economics | 3 Comments »

Local transport outside London is likely to face massive cuts in the spending review, according to a report published today by transport group pteg. Read more »

   Filed under: Cuts Watch, Cuts Watch: Regions, Cuts Watch: Transport, Economics, Regional policy, Transport | No Comments »

Two articles this weekend explain the nature of the crisis in the USA. In the Financial Times, Edward Luce writes a long article about what’s gone wrong with the American dream -  not just the recession, but the great stagnation of the last thirty-forty years. And in the New York Times, Robert Shiller explains why jobs are crucial, rather than GDP growth. Both highlight the fact that what the US needs to do is to focus on better prospects for what they call the middle class (what we usually call the working class in the UK, or Middle Britain) – people with steady jobs who are the motor not just of economic but also social progress. Read more »

   Filed under: Economics, Globalisation, Health, Middle Britain, Recession, Social mobility | 1 Comment »

The private business sector has mainly been positive about government cuts, even gleeful at first. But, as we have pointed out, the private sector will also be hit by the cuts – about 30 per cent of public sector spending goes to private companies.

Connaught, the social housing services provider, was one of the first to be hit, issuing a profit warning, followed by a drop in their share price. Recent reports have warned that the FTSE 250 company is in talks with its lenders and share prices fell by more than 80 per cent. Other companies with large government contracts are now feeling the pinch as well: Read more »

   Filed under: Economics | 2 Comments »

Is the CBI right to attack Chris Huhne’s support for a tougher EU limit on carbon emissions, in today’s FT? He and his French and German counterparts argued through those pages recently that the EU should up its game from 20% to 30% by 2020, so not to lose competitive edge to low carbon industries in China and Japan. Industry seems divided on this issue – some sectors are certainly at risk, as our study shows. It must be time for Government to meet all sides of industry. Read more »

   Filed under: Economics, Environment | No Comments »

What would our low carbon economy look like without UK-based steel, cement, glass or brick manufacture? According to a new TUC study, the combined impact of the Government’s climate change policies is imposing significant costs on the UK’s energy intensive industries. Jobs essential to a low carbon future are at  risk. Without urgent review, current policies could see some prime UK companies leave the UK for good. Carbon leakage could be the net result – the loss of jobs, investment and our ability to regulate carbon emissions – as competitors with fewer controls on emissions benefit.

Read more »

   Filed under: Economics, Environment | 2 Comments »

The debate rages in the Financial Times comment columns – should we continue the fiscal stimulus as the TUC argues, or cut the deficit as fast as possible, as the Coalition Government is doing? And it rages around the world. The latest paper from the US-based Center for Economic Policy and Research, “Alternatives to Fiscal Austerity in Spain”, argues that the pro-cyclical policies of cutting the deficit being followed by the Spanish Government, as advocated by the IMF and EU, could lead the Spanish Government’s debt to be higher than if the maintained their fiscal stimulus. The main argument – which the TUC believes also applies in the UK – is that the most important element of debt reduction is growth, and cutting Government expenditure will reduce or restrain growth, leading to more debt (due to lower tax takes and more state benefit expenditure, for example).

   Filed under: Economics, Public spending, Recession | 1 Comment »