Put down the shovel, George…

According to George Osborne there’s “only one thing worse than listening, and that’s not listening”. This justifies his series of disperate – and desperate – budget u-turns on pasties, caravans and charitable donations. In his words, it is a big problem when “politicians keep digging when they are in a hole because they are too embarrassed to put down the shovel and climb out.”

The Chancellor needs to apply his own theory to the Tory-led coalition’s failed austerity programme. A recent ComRes poll found 70% of the public believe a u-turn on Osborne’s economic plan is needed, but the Chancellor is stubbornly ploughing ahead regardless – arguing that what the patient needs is short term pain for long term gain. A squeeze on living standards and an assault on vital public services comes with an offer of reassurance to the public that, to steal a slogan, things can only get better once this period of austerity is under our belts.

But this argument ignores the mounting human cost of austerity. Whilst a fall in inflation yesterday was welcome, it remains stubbornly higher than average wage increases, meaning the average family’s spending power is still in decline. Unemployment has also fallen slightly today, but hidden in the figures are a strong growth in part time working, masking the real cost to jobs of the coaliton’s cuts.

This unprecedented squeeze on living standards has lead to 73% of UNISON members cutting their spending on food. And with one public sector job lost nearly every 2 minutes since the coalition came to power, and one in seven public sector jobs being scrapped by 2017, the pain will only get worse for public service workers and thier families.

As predicted – the pain of austerity has all been for nothing – the government’s dangerous gamble has not paid off. We now face an extra two years of austerity after the 2015 general election. Whichever party wins the next election, the government in residence at Downing Street will still be dealing with a limited budget nearly ten years after the global financial crisis first began.

Despite the sweeteners the government has offered to business – the corporation tax cuts, removing so-called barriers to entrepreneurism like the 50p top tax rate – UK companies are still sitting on £724bn in currency and deposits. The private sector isn’t investing or creating the jobs that will grow the economy as the Chancellor crossed his fingers and wished for – and it won’t whilst companies continue to believe that that growth will be flat, or at best, meagre over the next few years.

George Osborne’s “funding for lending” package announced last week, which is aimed at providing billions of pounds to the private sector to improve the liquidity of financial institutions in the City – will most likely follow the pattern of his previous attempt to stimulate the private sector by not working. Rounds of credit-easing and lending, such as ‘Project Merlin’, failed to get money to the struggling SME sector. The “funding for lending” package can offer nothing new for either the banks or businesses whilst the future of the economy, and consumer confidence, looks so bleak.

The Chancellor needs only to glance at the history books for his solution to our economic woes. He must be bold. The public sector must step in where the private sector cannot and will not. Ditching austerity’s job and pay cut would boost confidence and get people spending.

We urgently need measures to stimulate the economy through direct investment. The nation can, unlike businesses, borrow at historically low interest rates and use that money to directly fund jobs, services and infrastructure development. Serious attempts to tackle tax evasion and avoidance by individuals, companies and other organisations, including the introduction of a General Anti-Avoidance Principle as promoted by Owen Smith MP earlier this year, can raise billions more than the Government’s current plans. Large scale infrastructure projects deliver broad benefits in the long-term, but they take time to put in place.  A more immediate solution is needed – reversing the public service pay freeze, reducing VAT and cutting National Insurance will help increase consumer spending and can give small and medium businesses a financial shot in the arm.

Without such an alternative plan for jobs and growth, George Osborne is left, in his own words, as a man frantically digging his hole, too embarrassed to put down the shovel and climb out.

Ben Kind is a UNISON policy officer. This post forms part of our coverage of Unison Conference 2012.