The grim reality of “savage cuts”

By Sebastian Michnowicz

It was obvious in the lead up to the general election that any new government that included the Conservatives would mean savage cuts. Indeed, within a few days of the coalition government taking office, the happy couple had exhausted all of the available superlatives to describe the situation – well the economic one, anyway. Despite all the talk of ‘new politics’, the first few weeks of the brave new world have seen pretty much all of the Liberal Democrats in the Government fall in line with Tory policy.

Besides a few things (like the 1% National Insurance increase), it was impossible to tell where the hammer would fall – or how hard. Yesterday’s announcement by Treasury Secretary Danny Alexander to cut £2 billion worth of projects that had been announced by Labour since January of this year has exposed the cuts as a huge blow to two different but vital sectors of society: the manufacturing industry and young people.

Sheffield Forgemasters stands out as a casualty – losing an £80 million loan proposed by Lord Mandelson for the construction of a new 15,000 ton forging press. This press was to make forgings for the new wave of nuclear power stations planned to address potential energy shortages that could be caused as a result of existing nuclear power stations going out of commission. The decision is made more curious by the fact that the Tories are committed to nuclear power, and the only press in the world capable of making the necessary forgings is in Japan.

We may save £80 million now, but money will still have to be spent if these nuclear power stations are to be built and the money will leave the British economy instead of being used to create jobs in it. Furthermore, without the press there will be no chance of investment opportunities from other countries seeking to build their nuclear power stations, and the chance to create hundreds of jobs in Sheffield will have been squandered. With the TUC reporting that, at present, dole claimants outnumber job opportunities by five to one, it’s probable the Con-Dems are saving a lot less than £80 million by not investing in the press. Money will go out of the economy keeping people on the dole instead of paying them wages and attracting outside investment. Never let anyone say Labour creates welfare dependency: this is the economics of the double-dip recession.

The other tragedy of Danny Alexander’s hammer-blow was the slashing of investment in young people, the £290 million Future Jobs Fund and £450 million to extend the Young Persons Guarantee to 2011/12 – the scheme for 18-24 year olds which offers a job, training or work experience if they are unemployed for six months or more. Iain Duncan Smith slammed the Future Jobs Fund, saying that it only produced ‘temporary’ jobs and that welfare reform would “make sure that the money [young people] earn is real money and means that going to work pays”. Clearly Duncan Smith and Alexander have no idea what it’s like to be unemployed and don’t care about the effects of long term unemployment.

It’s well known that in a recession, an employer is more likely to give work to someone with experience under their belt and a proven track record, putting younger people who have just left college or university at a disadvantage. An article by Cllr Tim Cheetham shows the success of the Future Jobs Fund and, in the current climate, the importance of gaining as much work experience as possible and why we must help as many young people as we can onto the career ladder.

Even today, the young people who fell foul of the recession of the early 1980s, some of whom struggled to find employment for five years, are at a disadvantage because they have nothing to show on their CVs for that period.

Danny Alexander argues that there is no money to pay for these schemes which brings me back to the 1% National Insurance increase – it has been applied to employees, but the 1% increase on employers’ contributions has been scrapped: once again, the poor are being punished for somebody else’s mistakes. Roll on the Emergency Budget on the 22nd…