Thread: British budget cuts to include nearly 500K job losses

British budget cuts to include nearly 500K job losses
By Rebecca Omonira-Oyekanmi
Wednesday, October 20, 2010; 11:50 AM

LONDON - The British government on Wednesday announced historic spending cuts, aimed at reducing the country's deficit, that will cost the public sector half a million jobs.

The measures announced by Chancellor of the Exchequer George Osborne will span four years and include an average cut of 19 percent in central government departments' budgets, an $11 billion reduction in welfare spending and an increase in the pension-eligibility age to 66. The government acknowledged that 490,000 public-sector jobs would be lost over the four years as result of the cuts.

Only the budgets for schools, the National Health Service and overseas aid were spared. Education spending is actually set to increase slightly by nearly $5 billion, despite the government scrapping a multi-billion-dollar school-buildings program. The Defense Ministry must find savings of about 8 percent, compared with the 19 percent average, but is facing a loss of 42,000 jobs over the next five years.

Even the queen will not be exempt from cuts. The civil list - spending on the royal family - will be frozen next year and then drop by 14 percent in 2012-13. However, Osborne said, a temporary grant of about $1.6 million will be put aside to pay for the queen's diamond jubilee in 2012.

Announcing the plan in the House of Commons, Osborne said: "Today's the day when Britain steps back from the brink. The decisions we have taken today bring sanity to our public finances and stability to our economy.

The cuts "deal decisively with the largest budget deficit this House of Commons has ever had to face outside of wartime," he said.

The opposition Labor Party said the cuts reflected ideology more than necessity. "Today is the day that abstract figures and spreadsheets turn into people's jobs and people's futures," the party's treasury spokesman, Alan Johnson, said.

The plan will be subject to a vote in Parliament, but because the coalition government has a majority, it is assumed that it will be passed.
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Responding to popular anger about a government bailout of the country's banks, Osborne also promised to "extract the maximum sustainable tax revenues from financial services." Details of a new regulatory system for the financial sector will be revealed next year.

The government has already come under fire for not continuing the Labor Party's tax on bank bonuses and for its welfare reform plans, which include ending universal child benefits enjoyed in Britain for decades.

On Tuesday, Osborne's response to the criticism was: "We're all in this together."

"Fairness . . . means that across the entire deficit reduction plan, those with the broadest shoulders should bear the greatest burden," he said. "Those with the most should pay the most, including our banks. We neither want to let banks off making their fair contribution, nor do we want to drive them abroad."

On public-sector job losses, which come in addition to a two-year pay freeze and pension reforms, the chancellor said: "Yes, there will be some redundancies. . . . That is unavoidable when the country has run out of money."

Omonira-Oyekanmi is a special correspondent.

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