Leading article: Mr Osborne should prepare a Plan B

Sunday 23 October 2011 08:36

The unions are gathering for their annual conference this morning in fighting mood. The TUC chief, Brendan Barber, warns of a winter of mass protests if George Osborne and David Cameron don't back down on the scale of their planned cuts. The police are raising the spectre of a Christmas crime wave if their numbers are cut by 25 per cent, as the Government has indicated is likely.

As the Chancellor completes the full spending review, due out in October, he may feel tempted to dismiss this as scare tactics and special pleading. There is nothing new about unions insisting in a Cassandra-like fashion that any reductions in staffing levels will cause a national catastrophe. Moreover, the unions today are a shadow of what they were in the late 1970s, when they were strong enough to bring the country to a halt in the so-called "winter of discontent".

Those considerations, however, should not tempt the Tory-Liberal Democrat Coalition into complacency, or to dismissing what the unions have to say. Until now, the Coalition has enjoyed an extended honeymoon with the electorate. It is fortunate for them that the Labour Party has been almost entirely preoccupied with its leadership battle. For its part, the public still appears to go along with the broad thrust of the Government's message, which is that the country has been living beyond its means and cannot carry on spending at the same levels as before.

But this relative equanimity towards the prospect of cuts may not last far into autumn. At the moment there is an air of a phoney war about what is happening, because although the word "cuts" is bandied around endlessly, relatively few people have actually been affected by them. This mood may change sharply in October when the spending review comes out and the full scale of reductions is revealed.

So far, the Government's response to union and Labour criticism of its policies has been to stick to the Thatcherite mantra: There Is No Alternative (TINA). But the public will only support this idea if the results are both prompt and beneficial. If the savage wielding of the surgeon's knife delivers a rapid recovery to the nation's finances, Mr Cameron and Mr Osborne will have pulled off their bold gamble. But if deep cuts have the same results in Britain that they appear to have had in Ireland, pushing the country deeper into recession, support for Mr Osborne's policies will collapse.

The Government will then be in serious trouble, not only with the unions – whose apocalyptic warnings of disaster will have proved prophetic – but with members of its own ranks. Many Liberal Democrat MPs hold seats in areas that will be hit hard over the coming months. Their patience with a strategy of TINA will run out if it looks as if the communities they represent are being sacrificed on the altar of ideology.

We must hope that the Chancellor does not turn out to be an economic fundamentalist, entirely committed to the pursuit of a single strategy after it has become clear that it isn't working.

It is, of course, incorrect to claim that there is no alternative to the Government's chosen path, even if Labour, with the recent exception of Ed Balls, has not been particularly good at articulating the other options. We could look hard and immediately for real economies, while maintaining public spending and holding off making drastic cuts until the recovery is stronger, just as Barack Obama's administration in the United States is doing.

It may be good politics to insist in public that there is only one way, but in private the Chancellor would do well to at least start considering Plan B.

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