It will be painful. There will be protests. There will be problems on the way. But I am happy to see the U.K. government has the courage to turn your public finance around. I'd only be so happy if the U.S. would try to do the same.The UK government will cut 490,000 public sector jobs over the next four years, the chancellor George Osborne said today, as part of an £83 billion cut in public spending.
Unveiling a comprehensive spending review, Mr Osborne insisted his plan of cuts would drag the country "back from the brink".
The chancellor told MPs: "Tackling this budget deficit is unavoidable. Today's the day when Britain steps back from the brink, when we confront the bills from a decade of debt."
And he added: "To back down now and abandon our plans would be the road to economic ruin. We will stick to the course. We will secure our country's stability. We will not take Britain back to the brink of bankruptcy."
On the job losses that will result, Mr Osborne confirmed that the UK's Office for Budget Responsibility had estimated that 490,000 could go over the four years.
But he sought to reassure the public, saying: "Much of it will be achieved through natural turnover, by leaving posts unfilled as they become vacant.
Estimates suggest a turnover rate of over 8% in the public sector.
"But yes, there will be some redundancies ... that is unavoidable when the country has run out of money. We feel responsible for every individual who works for the Government, and we will always do everything we can to help them find alternative work.
"In fact, in the last three months alone the economy created 178,000 jobs." Mr Osborne indicated that even the Queen was doing her bit.
He said she had agreed to a one year cash freeze in the Civil List for next year.
He added: "Going forward, she has also agreed that total royal household spending will fall by 14 per cent in 2012/13 while grants to the household will be frozen in cash terms."
The chancellor announced that people would have to work longer before they get their state pension.
He said the state pension age for men and women will reach 66 by the year 2020 - four years sooner than previously expected.
He said this would involve a gradual increase in the state pension age from 65 to 66, starting in 2018.
The move would save over £5 billion a year - "money which will be used to provide a more generous basic state pension as we manage demographic pressures", said Mr Osborne.
The chancellor pointedly observed that former Labour leader Gordon Brown was not in the Commons today.
He said "How ironic that it was the last Labour prime minister himself who once observed that the 'public finances must be sustainable over the long term. If they are not then it is the poor ... that will suffer most'."
Mr Osborne added: "That's why we are restoring order to our public finances before that is allowed to happen." As expected Mr Osborne confirmed that spending on the NHS, schools and overseas aid would be ring-fenced.
But he said spending on police would fall by 4 per cent each year.
However, he added: "By cutting costs and scrapping bureaucracy we are saving hundreds of thousands of man hours. Our aim is to avoid any reduction in the visibility and availability of police in our streets." Overall, the Home Office budget will fall by an average of 6 per cent a year. The Ministry of Justice's budget will be cut by 6 per cent a year. And the Law Officers Department will reduce its budget by a total of 24 per cent over the four years, with the Crown Prosecution Service "greatly reducing its inflated cost base", Mr Osborne said.
Savings of 24 per cent in the Foreign and Commonwealth Office budget were also announced.
The Conservative/Liberal Democrat coalition has already agreed to cut 17,000 military posts and 25,000 civilians from the ministry for defence, to close the British army's bases in Germany by 2020, sharply to reduce the number of tanks and heavy artillery and to delay the introduction of a replacement for the Trident nuclear submarine as it struggles to meet its targets.
The UK's defence budget will fall in real terms by 8 per cent over the next four years - though it will rise in cash terms. Prime minister David Cameron insisted the cuts would not affect the British army's Afghanistan mission, since it is paid for directly out of the treasury, and not out of funds allocated annually to the ministry for defence.
However, the UK will not be able to mount a similar mission once the cuts have been implemented. Instead, it will be able to keep a 6,500-strong force in the field indefinitely - 3,000 smaller than the force deployed in Afghanistan, though it would be able to send 30,000 troops into action for a one-off operation.
All branches of the military will face cuts. The Royal navy will lose its only aircraft carrier, the Ark Royal, while two replacements will not be ready until 2020. There is a danger that the aircraft necessary for them may not be in service at the time. Meanwhile, the Royal Air Force will lose its Harrier jets, Nimrod surveillance aircraft and several bases.
Conservative MPs are clearly unhappy about the measures, particularly the decision to delay Trident's replacement. Peter Tapsell, the longest-serving MP, said the national interest has been "subordinated to the coalition's interest" - a point that was echoed publicly by fellow MP Julian Lewis, and, privately, by many others.
Meanwhile, the BBC is to be forced to pay for all of the £300 million-a-year bill for the BBC World Service. The service has been funded for decades by the UK foreign office. The corporation also faces a six-year licence fee freeze in a bid to stave off demands from ministers that it should not be compensated for the £600 million bill left by paying for licence fees for the over-75.
Canada went through such "cut down" regime in the 90's, and we ended up from 38% of the public spending spent on debt to only 17%. We completely killed out deficit within 3 years of cutting in fat. Again, it wasn't easy at all, but we ended up much, much better-of in the long run.
Godspeed, UK.
(even if most of the teachers are idiots)
