'Missed opportunity' to end economic pain

05 December 2012

George Osborne's Autumn Statement has failed to win him many plaudits from the private sector, while his assault on public sector wage rises has been condemned by trade unions as "pain without purpose".

The Chancellor's proposed £5bn infrastructure investment and corporation tax cut were widely welcomed by industry, but his refusal to depart from Plan A for deficit reduction proved to be a source of ongoing frustration for many observers.

The Centre for Economics and Business Research applauded the "bold measures" to make the UK more competitive, but said the Chancellor's toned-down economic forecasts were still too optimistic.

Senior economist Scott Corfe said: "Today was the day the Chancellor started to acknowledge that this is a long-tail recovery rather than a trampoline bounce back to good times. The Eurozone debt crisis will hold back growth for years, and austerity will drag on for longer than anticipated."

Corfe also described the infrastructure investment pledge as "relatively small change at just 0.3 per cent of GDP".

"The impact of this spending on growth, particularly if is is spread over several years, will be limited and very marginal indeed," he added.

And the Chartered Institute of Housing criticised the Chancellor's promised £225m investment in housebuilding as "a missed opportunity to get to grips with the urgent housing shortage".

Chief executive Grainia Long said: "Housing can help the economy return to growth, but only with the right backing. I'm afraid the government has failed to fully capitalise on the momentum generated by earlier pledges to boost housing."

Ian Brinkley, the director of The Work Foundation, described the Autumn Statement as "a mix of the welcome, the populist and the wasteful", and "another missed opportunity to make a real difference to the UK's economic prospects".

But the harshest criticism,of the Chancellor came from trade unions and local government leaders, who expressed fears for the future of vital services in light of the additional two per cent cut in departmental resources in 2014/15.

Local Government Association chairman Sir Merrick Cockell described the extra cutbacks as "unsustainable".

He said: "Cutting council funding to help pay for nationally-administered economic stimulus programmes would be bad for local frontline services and makes no sense economically.

"A blinkered, centralist approach will undermine national economic prosperity, as the Government's own reports make clear."

TUC general secretary Brendan Barber likened the protracted austerity cuts to "self-harming" and called for "a fundamental change of direction, not more muddling through".

He said: "Cuts, austerity and squeezed living standards stretch seemingly without end into the future. What is missing today is any vision of a future economy that can deliver decent jobs and living standards – it's pain without purpose."

And Prospect general secretary Paul Noon said: "Today's announcement is much worse than simply robbing Peter to pay Paul. The government wants to punish civil servants for years to come in order to pay for short-term fixes that are just too little and too late."

However, John Wilkinson, managing director of May Gurney Public Sector Services, said that the cuts would provide added stimulus for redesigning public services.

He said: ""As local authority funding changes in 2013 to allow a proportion of business rates to be retained by councils for use in funding infrastructure, we expect to see more authorities using 'creative commerciality' and entrepreneurial thinking to deliver services and revenues streams for their districts."