50 mistakes in 100 days (1-5)

By Howard Dawber

100 days ago, Britain woke up to a new coalition government. In that time they have already displayed extraordinary economic illiteracy and are beginning to champion a dangerous mix of cruelty and cheerful incompetence, perhaps already worse than any government in living memory.

Only when I started to put this list together did I realise just how many really stupid decisions have been made in such a short space of time. Cuts to services, programmes abandoned, organisations disbanded – it’s been an astonishing 14 weeks in Whitehall. But the speed of the changes highlights the fact that this cut-and-shut, pushme-pullyou of a government cannot possibly be thinking these cuts through. At the rate of one really bad idea every other day (and I have had to leave a lot of other cuts out of the list), the government is outperforming even the worst case scenarios presented in the most virulent Labour leaflets of the General Election.

Here are the first five of the top 50 things they have done wrong …. so far…

1. ABOLISHING THE UK FILM COUNCIL
On July 26th the coalition announced it would abolish the UK Film Council, the body which promotes the British film industry, and through which many top British films have been funded.

Why is it a bad idea? Because it pulls the rug from under the British film industry, lots of independent cinemas and production companies will close. And it won’t save money – research suggests every £1 of lottery money invested in film generates £5 for the economy. Armando Iannucci explained in the Observer in wittier and grittier detail why this is something the sounds like it came out of “The Thick of It”.

2. RAISING VAT
During the election the Tories said they had “no plans” to raise VAT. The Lib Dems put out a poster attacking VAT and Simon Hughes called it a “regressive tax”. Of course when in power they immediately put it up as soon as they could. The Tories always put up VAT. Remember Labour cut VAT to help stimulate the economy during the recession.

When anyone asks in future why you can’t trust the Tories (or Lib Dems) on tax – remind them of these quotes:

• ‘There are no secret plans for an increase in the VAT rate.’ George Osborne, August 2009
• ‘Our plans involve cutting wasteful spending and stopping the National Insurance rise, our plans don’t involve an increase in VAT.’ David Cameron, April 2010
• ‘The tax increases are already in place, the plans do not include an increase in VAT.’ George Osborne, April, 2010
• ‘There are no plans in the Conservative Party to raise VAT. I think the Lib Dems can pipe down about this now.’ William Hague, April 2010
• ‘We will not have to raise VAT to deliver our promises. Their (Conservative) tax promises on marriage and jobs may sound appealing. But they come with a secret VAT bombshell close behind.’ Nick Clegg, April 2010
• ‘I think I would predict within a few months they [a Conservative government] would have increased VAT to 22.5 to 25 per cent. We’re in a totally different place to where the Tories are.’ Vince Cable, September 2009.

Why is it a bad idea? VAT hits the poorest hardest. It will have a very bad impact on retailers and SMEs. It will encourage people to move business overseas. And it will choke off the recovery. Economists including Professor David Smith of the Shadow Monetary Policy Committee say that the VAT rise will cost around 235,000 jobs and reduce GDP by 1.4% over the next decade. It’s generally a very bad idea.

3. ATTACKING THE FREEDOM PASS
During the election debates, David Cameron demanded that Gordon Brown apologise for leaflets produced by local Labour campaigns, saying that the Conservatives would put the Freedom Pass at risk. Gordon had to eventually say that they had not been authorised centrally. Within 60 days of taking power, the coalition started talking about raising the age at which people qualify for the freedom pass. The local leaflets from the Labour Party were true.

Why is it a bad idea? The freedom pass is a lifeline for older people in London and around the country. The cost is relatively modest compared to the benefits it brings to pensioners. It also helps stimulate the economy by enabling older people to remain economically active and promotes better health by helping people get out of the house.

4. ENDING THE BUILDING SCHOOLS FOR THE FUTURE PROGRAMME
Education Secretary Michael Gove decided to cancel the Building Schools for the Future programme, ending hopes for more than 700 schools around the UK to be refurbished or rebuilt. Schools are still unclear about how the list was made up, with some being told they were safe only to find out two days later that their funds had been cut after all. Many decisions appear completely arbitrary with one local council area getting all its projects cancelled and others having them all approved. Hundreds of schools remain in limbo waiting to find out if their work will be approved. The money saved is going to be redistributed to better off areas for the creation of “free” independent schools.

Why is it a bad idea? The BSF programme was popular and cost-effective. Hundreds of schools were rebuilt or refurbished around the country and finally British schoolchildren were being taught in buildings which were modern and did not leak. Now with money being diverted into the “free” schools programme for dogmatic reasons, many schools in deprived areas will suffer. There are schools which had got planning permission and contractors ready to move in this summer – who have arranged temporary accommodation for the school during the rebuilding – who have been told to put everything on hold. So in some cases, it’s actually wasting money rather than saving it.

5. CANCELLING THE LOAN TO SHEFFIELD FORGEMASTERS
The coalition decided as part of its £6bn “efficiency savings” package to cancel an £80m loan to Sheffield company Forgemasters. The loan was to help them invest in new equipment to build parts for the next generation of power stations. That work is likely to now go abroad.

Why is it a bad idea? This was not a grant but a loan and was designed to help Britain keep a key piece of national infrastucture. It will cost jobs and lose us international standing, as well as losing the ability to deliver critical pieces of technology, but will not save a single penny of taxpayers’ money.

Worse it turns out that the original request to government that the company should not be given a loan apparently came from Tory Donor Andrew Cook who wrote to ministers saying that the loan might breach EU competition law. Mr Cook was trying to make his own bid for a stake in Sheffield Forgemasters at the time. So in summary – a Tory Donor wants to see the government stop supporting a company so he can personally buy a stake in the company, the coalition goes along with that idea. Bad judgement calls all round.

Don’t forget to check back tomorrow to see what’s next on Howard’s list.