The Tories must have thought that announcing their National Insurance cut proposal had been a tactical triumph. Lining up their rich friends from big business to back up their proposal must have seemed a good idea to both. Now the Tories proposals are quickly unravelling, and both the Tories and their rich, big business backers must be beginning to think they have made a big mistake.
As I said a couple of days ago, if you take £6 billion out of the economy, as the Tories and their big business friends propose, then this MUST lead to a big immediate reduction in jobs. The basic economics is simple. One person's spending is someone else's income. If I spend £10,000 buying a new car, then some of this ten thousand pounds, goes to the car dealership, which in turn pays the wages of the people working there, into the profits of the dealer, to the people who supply them with electric etc. Some, obviously also goes to the company that produces the car, which in turn goes to pay the wages of its workers, and so on. If I don't spend that £10,000 then all these differrent people also suffer a collective loss of income of £10,000. But, also if not only me but a few thousand other people decide not to spend £10,000 buying a car then that cumulative loss of income will be shown up, directly in job losses, because their will be less need for car dealerships, those that exist will require fewer staff, and the car producers will need to produce fewer cars, again requiring fewer workers.
The same is true if the Government cuts back the money it spends. Stop building roads, and construction companies go bust, for example. But, the same is true if you just cut back on the incomes of Government workers. At the Council offices where I used to work, there was a sandwich shop next door that did a good trade in a morning, and at dinnertime. If fewer Council workers were employed, or if their incomes fell, there would be an immediate loss of trade for the sandwich shop, possibly even causing it to close down.
As I said the other day, if you take the average wage of £25,000 p.a., and divide that into the £6 billion the Tories propose to cut, you get the equivalent of 240,000 people. Today, the Tories adviser Peter Gershon, has said thaat to save just £2bn the Tories would have to cut 40,000 jobs. But as a said above that 40,000 jobs would not be the end of it. Suppose all of those 40,000 jobs were lost in one place, and you will see the consequence. Consider the extent to which some areas have been devastated economically as a result of some large employer closing down with the loss of far fewer jobs than that. It immediately means those people cut back or stop spending on a whole range of things that affect the corner shop, to the supermarket, to the car dealer, to the cinema, the furniture store, and so on, each in turn causing those businesses to lay workers off, cut their hours and wages and so on. It is easy to see how this immediate loss of 40,000 jobs in the Pubblic Sector would lead to double that number of jobs in total as the effects spread out to affect private sector firms.
But, that is probably an underestimate of the number of jobs that would have to be cut in the Public Sector to achieve that £2 bn saving. Imagine then the consequences if the Tories DID implement their plan to cut £SIX BILLION, this year from Public Spending. It would be economically catastrophic. Yet, cameron says that rather than actually cutting jobs, it could be done by just not filling vacancies. This shows a complete lack of understanding of the basics of how the workplace runs. Firstly, if you do not fill vacancies that are needed then services do not get provided. Would Cameron propose, for example, not filling vacancies for Nurses, would he propose not filling vacancies for police on the beat, or for the cook in the residential home, without whom the residents don't get fed, or else the home has to pay over the odds for outside catering. Rather than saving money, as this last example shows, they normally end up costing far more money. For example, many Local Authorities that do not fill ICT vacancies immediately, employ agency staff. But, the agencies supplying such workers get paid anything up to 5 times the amount that the actual programmers and operators would have been paid! In addition, especially in the manual sections of the Public Sector, where the work is hard, and stressful, the conditions as it is lead to high sickness levels. Fail to fill vacancies, and thereby put even more pressure on the remaining workers, and you will see sickness levels soar, creating a vicious circle.
But, so far we have still not seen either Cameron or any of his rich, big business friends give us any details of how they would make these cuts. Stuart Rose of M&S, who signed this letter backing Cameron is not noirmally shy in appearing in the media. He should come forward and tell us which jobs in the Public Sector he would cut to pay for this Tax Cut, he should tell us what services he would see deteriorate as a result. But, of course, Rose, like all the very rich, big businessmen who have backed the Tories do njot have to worry about such things. With their massive existing wealth, with their multi-million pound a year salaries and bonuses, their million pound redundnacy packages they get every few years when they move from one company to another, gthey are not dependent on the Public Services like the ordinary worker or middle class person.
Someone like Rose and the other very rich big businessmen backing the Tories will not be affected by anti-social behaviour in their neighbourhood escalating as a result of Public spending cuts, becuse even if they don't live in some multi-million pound mansion tucked away in several acres of its own grounds, they can afford to live in some exclusive gated community. These very rich backers of the Tories are not worried if the number of teachers deteriorate, or schools don't get built becuase THEIR kids, like the Cameroons, can go to Eton or Harrow, or some other exclusive school whose annual fees will be way in excess of what most people earn! They will not be bothered if it affects the local hospital, because they have enough money to fly to any hospital in the world to get the best treatment from the best doctors.
WHY WOULD ANY ORDINARY WORKER OR MIDDLE CLASS PERSON BE IN ANY WAY CONCERNED WITH WHAT THESE RICH TORIES SAY ON SUCH MATTERS?
And, that seems to be the case. According to a poll in the Times the other day, a majority of people were shown as NOT paying much attention to what these business people said, because like the Bankers who led us into this crisis, these rich bosses are not held in very high esteem by the majority of people. The same poll showed a majority of people agreed with the Government's proposals on N.I. and opposed the Tories proposals. That was before, the FT today began to pick apart the economics of it, and demonstrate what every rational person knew - the economics of the Tories and their big business backers simply don't add up. It was a cheap election bribe, that is increasingly coming to seem to be a sign of the desperation the Tories were going through a week ago as their poll lead continued to slip.
More pressure, and the Tories and their big business backers will crack.
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