It's Official. Austerity Is Failing.

This is an old refrain, but as I once said at a Council Budget Meeting, it's the good old tunes that get the people up dancing. Last week the ONS reported that the Government had to borrow £24.2bn in the first 2 months of this financial year. As ever, you could be forgiven for missing this as it didn't get much attention. This is about £2bn more than forecast and makes it harder for the Chancellor to hit his borrowing target of £96bn for the whole of 2014/15. Whilst we can quibble about a few months' figures, the bigger picture is clear – the Coalition Deficit Reduction Plan is failing to deliver. The fact that deficit reduction has stalled is pretty clear from this chart I've pinched from one of Jonathan Portes's tweets:

When the Coalition came to power in May 2010, the deficit was around £157bn. By November 2011, some 18 months later, they had managed to get it down to around £120bn. Today, 2 and a half years later, the deficit is about £107bn. This is very far from 'eliminating the structural deficit by May 2015, otherwise we will turn into Greece', story we heard so much about at the beginning of this Parliament.

What's more, the 25% reduction in the deficit that was achieved in the early part of this administration was due to the massive cuts in public capital spending, that's things like flood defence, schools and social housing to you and me. This is something that is now generally seen as a mistake.  Again, this chart I have taken from www.economicshelp.org speaks for itself. 

The reason I keep going on about this is that, although Austerity has failed to deliver deficit reduction, it hasn't failed to deliver hardship for many of the most needy people as the rise in the use of food banks and insecure employment, amongst other things, demonstrates. What's more there is far more to come. Local government is only about halfway through its cuts programme. In Lewisham, this means we made £95m worth of cuts between 2010-14 and will have to make another £95m worth between 2014-18. This second wave of cuts will have to be made from a base budget of £268m, half of which is spent on children's and adults' social services.

I won't labour the cuts message. What I will say is that it would be one thing if the Coalition had belatedly decided to protect its capital spending and told us in local government that we needed to cut our spending instead. If we were now halfway through our cuts programme and had seen the Budget Deficit halve from £157bn to less than £80bn as a result while capital spending was protected, and there was therefore a realistic prospect of eliminating it by 2018 when the programme was complete, then we might feel regrettably that Austerity was a price worth paying. However, we are not in that place. On the contrary, our cuts appear to have been for almost nothing as far as reducing the deficit is concerned. It is, therefore, particularly soul-destroying to go through it all over again, knowing that the reward is unlikely to be worth the pain. I leave you with this well known and, I think, apt quote:

The definition of insanity is doing the same thing over and over and expecting different results.