Never waste a good crisis

Tonight, a decade of public sector plenty will end abruptly. ‘The public sector recession has just started, and we are all aware of that,’ says Paul Carter, the Conservative leader of Kent County council.

In preparation of cuts announced tomorrow and to be detailed by the Autumn, he is already outlining £300m in cuts from a discretionary Budget of £1.3bn (ie, outside schools).

These huge cuts can not fail to redefine what the state really does in Britain.

Areas of public spending that few even realise occurs, such as the 20 per cent of buses that are subsidised by between one and four pounds per passenger journey, are in acute peril throughout the country.

So all-encompassing will be the triple whammy of spending cuts, tax rises and benefit cuts announced tomorrow, that even areas as ‘true blue’ as Kent will feel the bite.

On the number 26 bus from Maidstone to Goudhurst in the Kent countryside I spoke to Norman Kemp, who runs a local bus company Nu-Venture. Although Kent County Council seem keen to try to keep the rural bus services, despite grant cuts, Mr Kemp says:”we can’t live in a bubble where we don’t understand what else is going on in society”.

The industry feels rural bus services may face “withering on a vine”, he says, adding that passengers should “use it or lose it”.

There were a fair few passengers paying a pound to travel the route into the Weald. But the service is “socially necessary but not commercially-viable” so gets a per passenger journey subsidy of a further pound. Around the country this subsidy can get as large as four pounds, and many of these services will get slashed.

Kent is considered to be a relatively prosperous area. It is the only part of the UK with a high speed train link to London. Yet on some measures calculated by the Work Foundation, over half of net new jobs were, even here, created in the public sector.

In Maidstone, the county town, that study suggests all new jobs came from public sector. Tomorrow will be the end of that. Mr Carter expects 1000 out of 13000 council jobs to go.

So what is there to take up the slack? On the government’s own independent expert calculations, tomorrow’s austerity plan will reduce growth and increase joblessness in the short term.

As I’ve said before, the slightly less worse than expected public finances, combined with the cuts too pensions and benefits (Annually managed expenditure) means that the coalition could ease the gas on the savage 17 per cent cuts to unprotected departments (transport, housing, universities) over the parliament, implied though not admitted to under the March Labour budget.

Far from that, I understand that they will go even further, and that number, colloquially known as ‘the IFS cuts’ number will be announced in the budget speech tomorrow, and I expect that at 25-30 per cent.

To be clear that will not be a policy announcement, but the indicative number from the Office of Budget Responsibility’s analysis of George Osborne’s number. My sense is that the chancellor will want to get some of this out tomorrow as part of the ‘kitchensinking’ process – getting all the bad news out of the way early and blame it on Gordon Brown. But the actual number can’t be announced until the Spending Review determines how much Britain’s £200bn benefit bill is shrunk.

Put it all together and you get an attempt to smash the deficit in one parliament, and a triumphant chancellor announcing actual reductions in the level of national debt. But something else too.

Lurking behind the ’emergency’ is an attempt to reboot the economy away from dependence on public sector jobs, and the millions in Britain’s welfare state off state dependence.

The Chancellor is not intending to waste this crisis.