The UK government has a problem with its budget and the deficit of the budget is the most pressing issue of this parliament. Anyone that does not acknowledge that is gravely mistaken and not in touch with the problems that face the UK’s government at the moment. This was a key issue at the recent general election and an issue that there was consensus about, in so much as there was cross party agreement that it must be dealt with. The dispute at the election was about when and how to deal with the issues.
The Conservative Party argued that the deficit should deal with by cutting spending, from the moment they assumed office by £6billion. This they argued was a down payment to prevent worse pain further down the road. They gave very little detail about what they would cut, and they even promised a series of tax cuts as well to add some confusion, but the message was clear, they had no issue with cutting budgets now. The counter argument came from the then governing Labour Party and the Liberal Democrats, that at the moment the government needs to do more to support the economy and enable more growth, before its own cuts would begin in 2011. The Liberal Democrat leader, Nick Clegg, had at numerous points of this debate had used his adopted city of Sheffield to strengthen the case for holding the cuts back. These warnings had gone so far as claiming there could be riots if people in his city voted against cuts, by voting either Labour or Lib Dem, were the ones who suffered the most at the hands of Tory cuts.
There was a hope that the Tories being in coalition with a party that is or at least was, against cutting the economy this year would hold back the worst of their excesses. This hope or belief was held up by the rhetoric that Nick Clegg, himself a Sheffield MP, was using throughout this period. However, rhetoric, like talk of attacking the Tories VAT tax bomb, and Clegg talked of riots by his constituents, if they were unfairly targeted for cuts, ended as soon as Cameron waived the carrot of power at Clegg. Why is this? Why have the same party in a matter of weeks changed from investors, supporting government aided growth, favouring the age of austerity. It seems they are either incompetent or dishonest, or perhaps both.
The Lib Dems claim that they were not aware that the government accounts were as bad as they are. This talk would suggest that the outgoing labour government had not accounted for its spending, despite the fact there was a budget laying out all public spending for all to see. They even claim that in the case of Sheffield Forgemasters that, it was just spending in marginal constituencies, as a form of electoral bribery, which is quite some claim that needs to be dealt with the utmost seriousness. It also exploits the wider public’s ignorance at the political geography of Sheffield. Not only is there only one non-Labour MP in the area (Clegg), the actual constituency where Forgemasters resides is Sheffield Brightside, home to former minister David Blunkett, where it is fair to say the Labour vote is weighed, not counted. How does this amount to political bribery?
There is, furthermore the issue of affordability of the loan and whether the loan represents value for money in the age of austerity and whether it could be served elsewhere. The government, and particularly Lib Dems on the back foot, say that not serving the loan will not cost one job at the plant. In this they are right, but it is also to fundamentally miss the intention of the loan. Forgemasters want to me the only steel plant in Europe to produce vital parts for nuclear reactors. They have the knowhow, they have the skill and they have the potential facility. Note that last point, potential. The raison d’être for the loan is to provide the final piece that was missing, which is the capital to allow expansion. This loan, would have created 180 jobs immediately, would have bought Sheffield Forgemasters as a firm to not only the forefront of the industry, but also to one of the most lucrative markets, the post carbon economy.
Thus the whole point of this investment is that it is not a bail out, the point not to protect jobs, but to create them and at the same time support British manufacturing and allowing them to become world leaders. Furthermore, it was not a grant but a loan, to be paid back at 3.5% interest. This loan would have made money for the treasury, and would have actually bought spending in other areas down, like welfare. At the general election, this was the investment and spending that the Labour Party was defending, to allow growth and solidify the recovery. There is no doubt about the seriousness with which Alistair Darling took the cuts that were to come, but they should have started next year, precisely to allow this kind of investment. By withdrawing the support now, we not only risk a return to recession, but we are damaging the recovery after that double dip.
So where do the Lib Dems stand on this? We have not had a clear answer. They supported solidifying the economy, by resisting cuts until 2011 before the election, but now they are in government the same people are proposing that cuts must come now. They have not yet explained properly what has caused switch. Were they honest at the election? Or did they betray principals to get their mitts on power? This discrepancy must be highlighted by the Labour opposition. But whatever the cause of change of heart, it is clear that for now, they have become classical, anti-state, small government Tories. They are saying to British manufacturing, that regardless of the cause, or the long or short term benefits, it must survive on its own in the market place. If the market will not support it, it will not get support.
The British economy and manufacturing will not benefit from this economic vandalism.