The Comprehensive Spending Review - David Heath MP Reflects

[Copy from David Heath MP for Western Gazette on Thursday 28th October 2010]

Nobody could pretend the Comprehensive Spending Review (CSR) makes other than grim reading. Having fought for public services for over twenty-five years, I am the last person to want to see massive cut-backs. But nor can I ignore the position the country is in, where we are spending £4 for every £3 taken in taxation. That can't go on, and the longer we put off dealing with the deficit the worse it will be. The country has genuinely been on the verge of bankruptcy.

The amount of work and effort that has gone into the thinking behind this CSR is huge – and it showed. Whilst undoubtedly tough medicine in parts, all that thought and effort produced something not only economically credible, but a radical reforming agenda. It wasn't just cuts – it was about a different way of doing things. And  George Osborne's clever rabbit out of a hat finish was telling, that all the coalition cuts (at 19%) still come out at less than the 20% cuts that Labour were proposing (without a single idea on the table as to what they would have been).

What are the positives? Well, there is a clear strand of what the economists call "progressivity", which most people would describe as greater fairness, with items like the £7 billion ‘fairness premium' including £2.5 billion to go into our schools with the funding following underprivileged children, which will directly help local schools, and with the NHS being protected. There is an emphasis on growth, with direct investment in capital infrastructure, in science and higher education. Next week there will be a whole raft of details on capital projects across the country. There was welcome news of very substantial new work for Agusta-Westland, incidentally. And I am pleased with the emphasis on the environment, with £2billion for the Green Investment Bank (for starters), public transport investment, feed-in tariffs, a funded Renewable Health Incentive, and a ports competition to encourage offshore wind manufacturing industry.

The CSR was only the beginning, giving the global percentage cuts in each department. How each department now takes the reduction forward will be the further test of the government's commitment to fairness during the deficit reduction. Of course there are real worries, not least for those who work in the public sector, where substantial job losses are inevitable over the next few years. And I remain concerned that Somerset County Council is threatening cuts even more draconian than required by the government which will have a real effect on local services. But given the scale of the problem we face, I am pleased that there is at least a degree of fairness and rigour which many were concerned would not be there in the proposals.

One area which we still need to grapple with is the state of our financial institutions and the corporate sector. I worry about the number of small businesses locally that still find difficulty in getting loans from the banks, despite all the rhetoric about "business as usual", and I look forward to the conclusions of the review of banking that was set up some months ago. Meanwhile, as Secretary of State Vince Cable recently set out, there are continuing concerns about the whole way big business works.

It cannot be right that chief executives continue to be paid up to 150% of their salary in annual bonuses, or that CEO remunerations went up 15% per year between 1998 and 2008 whilst the FTSE index went down 3%. There is a fundamental disconnect between top pay and performance, and a lot of it is down to short-termism. Back in 1960 shares were held for an average period of five years. By 2007 that had gone down to less than seven and a half months. If we are to have a sustainable recovery, one that avoids the bubbles which have bedeviled the economy over recent years, then this attitude, and the failures of governance which underpin it, needs to be addressed.

David Heath MP

Comments

Posts: 1

The Comprehensive Spending Review
Reply #1 on : Wed November 03, 2010, 10:24:02

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I’m all for tough love. I’ll support draconian measures to cut the deficit. But the word “fair” has been used several times here and I’d like to take issue with one aspect of the government’s cutbacks which is anything but fair.

Child benefit is to be scrapped for parents paying the higher rate of tax. If just one parent works, earning just over £44,000, the whole family loses child benefit, but both parents earning, for example, £39,000 respectively and bringing in a combined family income of £78,000 will still get child benefit.

You can’t justify this with euphemisms like “difficult but fair” and “the right thing to do”. I believe Mr. Cameron has also said that assessing the whole family’s income would have necessitated “an incredibly...intrusive system, means-testing the whole family’s income.” Oh, so he’s concerned about our privacy is he? But we already fill out reams of financial information about ourselves on the forms sent to us each year by HMRC; they must surely have enough data on us all to put means-tested child benefit within easy reach.

Mr. Heath, I agree that big business payouts need to be addressed. I humbly ask the government to turn their attention to those “fat cat” issues before it pounces on families where perhaps Mum stays home to look after the kids or works part-time, while Dad earns a moderate wage for the whole family. But while big business and entrepreneurs threaten to move overseas and drain the country of its industry and talent, I don’t believe any government will rattle their cage too hard.

Nick Colbert
Posts: 2

Hypocrisy
Reply #2 on : Fri November 12, 2010, 12:14:53

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Whilst Mr heath lectures us on the public sector cuts needed, and they mostly are, I do not believe for a second that he believes what he is saying. I believe he is doing it because he is now on a ministerial salary putting him in the top 5% of earners in the country. If he followed his conscience he would be sacked and lose that nice fat ministerial salary. When he was leader of Somerset County Council, to support his ambitious spending plans he borrowed and borrowed which continued under the Lib/dems until Somerset was £350,000,000 in debt. He and his party did to Somerset what Labour did to the country, that is why Somerset County Council is having to endure 25% cuts now.
Quite clearly the economic stupidity he showed when leader of Somerset County Council, and the price we are paying for that, shows that he does not believe in his current actions of cutting spending in line with affordability. Never mind, if the coalition lasts 5 years Mr Heath will be all the richer for it.

johnbaxter
Posts: 2

Nick Colbert on Hypocrisy
Reply #3 on : Thu November 18, 2010, 00:47:56

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County Councillor Sam Crabb has sent the Window this comment.

What utter rubbish Nick Colbert put in his comment on David Heath on 12th November – hypocrisy even. Most MP’s work very hard indeed and get paid less than a Head teacher and in fact David Heath is getting no “fat Ministerial salary” at all for being Deputy Leader of the House.

David Heath was indeed the Leader of Somerset County Council bringing in a sound and common sense Liberal Democrat Administration after 99 years of Tory rule. My understanding is that in the recent past all County Councils had to borrow money to pay for roads, road maintenance and building school buildings under the last Labour Government and the Tory Government before that. Many other Tory run County Councils have larger debts than Somerset and are not whingeing about paying it back.

Somerset is a large County, with a lot of schools and a road infrastructure as large as Belgium. It is obvious that to keep assets in good order you have to spend money on them. Roads on average are resurfaced once every 75 years in Somerset and the work on repairing potholes has been done in a sensible way, to maximise the life of the road. It is ridiculous that the current Tory Administration has already taken cuts of £43 million when they have no idea of the settlement Government will give Somerset. It is silly that they are cutting over 3 years instead of the 4 suggested by the Coalition Government and it is daft to cut 25% or 30% when the actual cuts to Local Government may only be 16% or 19%.

When the Tory Cabinet holder for roads resigns in protest at the cuts to the roads budget and says that the cut will cost £203 million to put right in 3 years time - you know that a perverse sort of Tory dogma is at work in Somerset. When the Tory leader, Ken Maddock, admitted in Cabinet in front of hundreds of members of the public that he “was not good at sums” – you know it is time that he went.

johnbaxter
Posts: 2

Nick Colbert on Hypocrisy
Reply #4 on : Thu November 18, 2010, 10:32:44

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The above comment was sent to the WW as an email. Sam Crabb is County Councillor for Ilchester and is a Lib Dem. He has also pointed out that David Heath's political career began in 1985, when he was elected to Somerset County Council as a Liberal, remaining on the County Council continuously until May 1997. He served as Leader of the Council from 1985 to 1989, and leader of the opposition from 1989 to 1991. In 1989 he was awarded the CBE for political service. Subsequently he has been in Parliament. He is now a Minister as Deputy Leader of the House, aposition for which he receives no extra salary.

Nick Colbert
Posts: 2

David Heaths hypocrisy
Reply #5 on : Thu November 18, 2010, 11:39:12

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Sam Crabb tries to take a cheap shot at Ken Maddock, the man who is now having to sort out the financial mess left behind by the Lib/dems but why does he think the Lib/dems were voted out of office. Mr Crabb obviously has little grasp of economics himself if he thinks substantial borrowing is the way to run a council. All organisations whether councils, businesses or individuals put their financil well-being at risk by reckless borrowing. Businesses go bankrupt, individuals do likewise and have their homes repossessed, Lib/dems get voted out of office and leave the ratepayers in huge debt. Its not a responsible way to run things and now Ken Maddock and his Conservative friends are having to sort out the Lib/Dem financial mess left in Somerset just as the coalition is having to sort out the financial mess left in the country by Labour.

Last Edit: November 18, 2010, 16:40:17 by Nick Colbert  

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