Quote: Cameron: 'Difficult decisions' on pay and benefits

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David Cameron: "Britain will come out stronger on the other side"

Prime Minister David Cameron has warned of "difficult decisions" on pay, pensions and benefits as he set out the case for "painful" cuts ahead.
He said dealing with the deficit would be "unavoidably tough" and affect "our whole way of life".
He said he would not cut the deficit "in a way that hurts those we most need to help" or "that divides the country".
Shadow chancellor Alistair Darling said Mr Cameron was talking "nonsense" and did not understand the need for growth.
Spending 'splurge' The Conservative-Lib Dem coalition government has already outlined plans for £6.2bn cuts this financial year - and is preparing for a Budget on 22 June.
Mr Cameron started his speech by saying problems were "even worse than we thought" and blamed the last Labour government for the "debt crisis".
He said they had let the economy get "out of balance" by "hitching our fortunes to a select few industries", not tackling worklessness and through a "public sector splurge" - even when the private sector was shrinking.
Continue reading the main story

Labour stopped recession becoming depression

Liam Byrne Shadow Treasury chief secretary Have your say: How will cuts affect you?
Economic growth had been based on "things that could never go on forever" - "unsustainable" booms in financial services, immigration and government spending, he said.
And he said figures which the Labour government had refused to publish showed the UK would be paying £70bn in debt interest within five years - more than it spent on schools in England, tackling climate change and transport.
'Difficult decisions' "What a terrible, terrible waste of money... this is the legacy our generation threatens to leave the next," he said.
He argued that, without tackling the deficit, confidence in the British economy would take a hit which could risk pushing up interest rates and increasingly taxes would be used to pay interest on the national debt, rather than being spent on public services.
Mr Cameron said decisions were needed with "enormous implications" which cannot be ducked or got wrong, adding: "I want this government to carry out Britain's unavoidable deficit reduction plan in a way that strengthens and unites the country."
CORRESPONDENT VIEW

Continue reading the main story Peter Hunt,
Political Correspondent
It was a speech peppered with bleak language, but which contained no fresh insight into where the axe will fall.
Instead, this was David Cameron preparing the British public for what he called the "inevitably painful times that lie ahead".
He was also trying to persuade people that doing nothing about the deficit was not credible.
At one stage, Mr Cameron told his audience: "This government will not cut this deficit in a way that hurts those we most need to help, that divides the country, or that undermines the spirit and ethos of our public services".
He will be held to account over these words and they could help to define the success, or not, of his premiership.
Flanders: Changing world UK lessons from Canada's cuts?
He added: "Because the legacy we have been left is so bad, the measures to deal with it will be unavoidably tough, but people's lives will be worse unless we do something now."
Speaking after the speech he acknowledged it would "mean difficult departmental decisions and yes it will inevitably mean some difficult decisions over big areas of spending like pay and pensions and benefits - and we need to explain those to people".
But he insisted he would protect NHS spending and international aid - both of which the Conservatives have promised to ringfence.
He did not spell out exactly where cuts would be made, saying there was a "proper process" for doing so - in the Budget on 22 June - followed by a "proper debate" involving as many people as possible about detailed three-year spending plans later this year.
Shadow chief secretary to the Treasury Liam Byrne said Labour had "stopped recession becoming depression" and had made the "right calls".
"The coalition has inherited an economy that is growing, borrowing which is falling, and unemployment lower than in America or Europe," he said.
"Everyone agrees that the deficit must fall, but we must do it fairly. And on that basis the coalition has made a poor start, cutting support from young people out of work, and breaking their promise to protect frontline services."
Hugh Lanning, deputy general secretary of the Public and Commercial Services Union, told the BBC Mr Cameron's speech was "trying to paint the public sector as a problem".
"But the debt wasn't caused by the public sector - it was caused by the banks and the financial crisis and we would like to see them share some of the pain, not just us."
He added that 100,000 civil service jobs had been cut in the past five years.
And Unison general secretary Dave Prentis said the speech was a "chilling attack on the public sector, public sector workers, the poor, to the sick and the vulnerable and a warning that their way of life will change".
"There was nothing in this speech that told the rich, the banking and financial sector or the city speculators that their privileged way of life will change," he said.http://news.bbc.co.uk/2/hi/politics/10250603.stm

Quote:IMF Fears 'Social Explosion' From World Jobs Crisis

America and Europe face the worst jobs crisis since the 1930s and risk "an explosion of social unrest" unless they tread carefully, the International Monetary Fund has warned.

by Ambrose Evans-Pritchard
"The labour market is in dire straits. The Great Recession has left behind a waste land of unemployment," said Dominique Strauss-Kahn, the IMF's chief, at an Oslo jobs summit with the International Labour Federation (ILO).
Unemployed workers protest on the steps of Federal Hall across from the New York Stock Exchange on August 12 in New York. (AFP/Getty Images/File/Chris Hondros)
He said a double-dip recession remains unlikely but stressed that the world has not yet escaped a deeper social crisis. He called it a grave error to think the West was safe again after teetering so close to the abyss last year. "We are not safe," he said. A joint IMF-ILO report said 30m jobs had been lost since the crisis, three quarters in richer economies. Global unemployment has reached 210m. "The Great Recession has left gaping wounds. High and long-lasting unemployment represents a risk to the stability of existing democracies," it said.
The study cited evidence that victims of recession in their early twenties suffer lifetime damage and lose faith in public institutions. A new twist is an apparent decline in the "employment intensity of growth" as rebounding output requires fewer extra workers. As such, it may be hard to re-absorb those laid off even if recovery gathers pace. The world must create 45m jobs a year for the next decade just to tread water.
Olivier Blanchard, the IMF's chief economist, said the percentage of workers laid off for long stints has been rising with each downturn for decades but the figures have surged this time.
"Long-term unemployment is alarmingly high: in the US, half the unemployed have been out of work for over six months, something we have not seen since the Great Depression," he said.
Spain has seen the biggest shock, with unemployment near 20pc. Britain's rate has risen from 5.3pc to 7.8pc over the last two years, a slightly better record than the OECD average. This contrasts with the 1970s and early 1980s when Britain was notoriously worse. UK jobless today totals 2.48m.
Mr Blanchard called for extra monetary stimulus as the first line of defence if "downside risks to growth materialise", but said authorities should not rule out another fiscal boost, despite debt worries. "If fiscal stimulus helps avoid structural unemployment, it may actually pay for itself," he said.
"Most advanced countries should not tighten fiscal policies before 2011: tightening sooner could undermine recovery," said the report, rebuking Britain's Coalition, Germany's austerity hawks, and US Republicans. Under French socialist Strauss-Kahn, the IMF has assumed a Keynesian flavour.
The report skirts the contentious issue of whether globalisation lets companies engage in "labour arbitrage", locating plant in low-wage economies such as China to ship products back to the West. Nor does it grapple with the trade distortions caused by China's currency policy, except to call on "surplus countries" to play their part in rebalancing.
The IMF said there may be a link between rising inequality within Western economies and deflating demand.
Historians say the last time that the wealth gap reached such skewed extremes was in 1928-1929. Some argue that wealth concentration may cause investment to outstrip demand, leading to over-capacity. This can trap the world in a slump.

Quote:The motion rejected the idea that cuts were necessary to pay for the deficit and said they were a "savage and opportunistic attack on public services" which "goes far further than even the dark days of Thatcher".
TUC general secretary Mr Barber told delegates: "These are not temporary cuts, but a permanent rollback of public services and the welfare state. Not so much an economic necessity as a political project driven by an ideological clamour for a minimal state.
"What they take apart now could take generations to rebuild. Decent public services are the glue that holds a civilised society together and we diminish them at our peril. Cut services, put jobs in peril and increase inequality, that's the way to make Britain a darker, brutish, more frightening place."

Quote:The PM's spokesman said they wanted "partnership" with the unions to tackle the deficit.

Quote:Bank of England governor Mervyn King will address the TUC later - only the second holder of the post to do so in the union umbrella group's 142 years.
He is also expected to answer questions from congress delegates in Manchester, who have voiced concerns this week about government spending cuts.

Quote:Cambridgeshire's Chief Constable has warned the police service may be forced to deal only with 999 calls.
Julie Spence is retiring from the force on Sunday and has spoken out over government plans to cut its budget by up to 40%.
The force faces £33m cuts over the next four years.
"It would be Armageddon. The police service that you see today would not be the police service that you would see in the future," Mrs Spence said.

Quote:Cambridgeshire's Chief Constable has warned the police service may be forced to deal only with 999 calls.
Julie Spence is retiring from the force on Sunday and has spoken out over government plans to cut its budget by up to 40%.
The force faces £33m cuts over the next four years.
"It would be Armageddon. The police service that you see today would not be the police service that you would see in the future," Mrs Spence said.

• The Observer, Sunday 24 October 2010 Jon Cruddas: 'It is tantamount to cleansing the poor out of rich areas – a brutal and shocking piece of social engineering.' Photograph: Richard Saker /Rex Features Ministers were accused last night of deliberately driving poor people out of wealthy inner cities as London councils revealed they were preparing a mass exodus of low-income families from the capital because of coalition benefit cuts.
  Representatives of London boroughs told a meeting of MPs last week that councils have already block-booked bed and breakfasts and other private accommodation outside the capital – from Hastings, on the south coast, to Reading to the west and Luton to the north – to house those who will be priced out of the London market.
  Councils in the capital are warning that 82,000 families – more than 200,000 people – face losing their homes because private landlords, enjoying a healthy rental market buoyed by young professionals who cannot afford to buy, will not cut their rents to the level of caps imposed by ministers.
  The controversy follows comment last week by Iain Duncan Smith, the work and pensions secretary, who said the unemployed should "get on the bus" and look for work. Another unnamed minister said the benefit changes would usher in a phenomenon similar to the Highland Clearances in the late 18th and early 19th centuries, when landlords evicted thousands of tenants from their homes in the north of Scotland.
  In a sign that housing benefit cuts are fast becoming the most sensitive political issue for the coalition, Jon Cruddas, the Labour MP for Dagenham, last night accused the government of deliberate social engineering.
  "It is an exercise in social and economic cleansing," he said, claiming that families would be thrown into turmoil, with children having to move school and those in work having to travel long distances to their jobs. "It is tantamount to cleansing the poor out of rich areas – a brutal and shocking piece of social engineering," Cruddas added.
  The National Housing Federation's chief executive, David Orr, described the housing benefit cuts as "truly shocking". He said: "Unless ministers urgently reconsider these punitive cuts, we could see more people sleeping rough than at any stage during the last 30 years."
  The issue is fuelling tension inside the coalition. Simon Hughes, the Liberal Democrat deputy leader, said last night he would table amendments to change housing benefit rules. He said: "I would fully expect to be one of those putting forward proposals for changes in the housing benefit rules, particularly for London."
  Under a clampdown on housing benefit, the chancellor, George Osborne, announced that housing benefit will be capped from April next year at £400 a week for a four-bedroom house, £340 for a three-bedroom property, £290 for two bedrooms and £250 for a one-bedroom property. In addition, from October 2011 payments will be capped at 30% of average local rents.
  At a meeting of the Commons work and pensions select committee last Wednesday, the day Osborne announced £81bn of cuts in the spending review, MPs were told by London council chiefs that the housing benefit cuts could have devastating results.
  Nigel Minto, head of sustainable communities at London Councils, who works closely with the capital's housing directors, told the committee that since June London councils had been "procuring bed and breakfast accommodation" in outer London and beyond. The committee was told similar problems would occur in other cities with high-priced property such as Brighton and Oxford.
  Jeremy Swain, chief executive of the homelessness charity Thames Reach, said he was particularly worried about the impact on numbers sleeping rough in London. "We have reduced rough sleeping dramatically and we have a target of zero rough sleeping in London by 2012. For the first time I'm thinking that we will not achieve that," he said.
  Karen Buck, shadow minister for work and pensions, said: "The sheer scale and extremity of the coalition proposals means almost a million households are affected across the country."
  In today's Observer, Labour leader Ed Miliband says last week's spending review took Britain back to the 80s. "This was the week that took the compassion out of David Cameron's claim to compassionate Conservatism," he writes, accusing the Tories of displaying "arrogant ideological swagger".
  But last night Cameron insisted the cuts were tough but fair. "Departments have to make savings. I don't underestimate how difficult this will be. But we are doing what we are doing because it is the right thing to do – right by our economy, right for our country."
  A DWP spokesperson said: "The current way that it [housing benefit] is administered is unfair. It's not right that some families on benefits have been able to live in homes that most working families could not afford. However, we are absolutely committed to supporting the most vulnerable families and have tripled our discretionary housing payments to provide a safety net for those who need it."
  http://www.guardian.co.uk/politics/2010/oct/24/exodus-poor-families-from-london