LONDON—Britain’s poor and powerful argued Thursday over who’ll lose out most under harsh austerity measures which will slash benefits, jobs and government services in order to reduce the country’s crippling debts.
Treasury chief George Osborne has announced 81 billion pounds ($128 billion) in spending cuts through 2015—which will ax welfare payments, savage government services and see as many as half a million public sector jobs lost.
Government departments will, on average, see their budgets cut by around 19 percent, leaving them with difficult choices regarding whether to lay off staff and or limit the scope of their work.
It means Britain will reduce police forces, pay less to those without jobs and send fewer criminals to prison. Prestigious embassies will be shuttered, as will courts and military bases. Ordinary Britons will lose billions in benefit payments, must retire later, and pay more for day-to-day items like train tickets.
Even the Royal Mint faces cutbacks: It will use cheaper metals in British coins in an attempt to deliver savings.
Osborne insists that “those with the broadest shoulders should bear the greatest burden,” claiming Britain’s highest-earners would be worst affected.
But economists and the public disagree, fearing that the measures will instead cause most hardship for lower paid government workers, or Britons reliant on welfare checks.
Some legislators have expressed worries that women will lose out more than men, as about 65 percent of the public sector work force is female. Pension plans for women are changing more quickly than those of men, standardizing the retirement age at 66 for both genders by 2020.
“The benefit cuts … on average will impact those in the bottom half of the income distribution more than the top half of the income distribution,” said Carl Emmerson, the acting director of the Institute for Fiscal Studies, an economic think tank. Cuts to services will have a similar impact, he said.
Britain’s opposition Labour Party—in office for 13 years until May, and responsible for handling the fallout as the financial crisis began—claimed the Conservative-led coalition government is exploiting the economic gloom to reduce the size of government—a long held Conservative ideal.
“When you look at it, it is the state retreating. It is a blueprint for a smaller, meaner and nastier society and we think the government has got it wrong,” Labour lawmaker Angela Eagle told the BBC.
Osborne said Wednesday that the cuts were an unavoidable remedy after Britain piled up debts during the global financial crisis. The Labour government spent billions of taxpayer money to bail out two major banks—the Royal Bank of Scotland and Lloyds Banking Group—and took full ownership of mortgage lender Northern Rock.
“I hope people feel this morning that here is the plan—we’ve got a plan now, we know where we are going, we are going to deal with our debts,” Osborne told ITV.
The Treasury on Thursday confirmed there will be a permanent levy on the balance sheets of banks—expected to raise about 2.5 billion pounds ($4 billion) a year by 2014—and further consideration of measures to curb bonuses paid to bank employees.
Following Osborne’s lengthy statement to Parliament on Wednesday, hundreds of Britons demonstrated against the cuts outside London’s Downing Street—the official residence of Prime Minister David Cameron. Police said three people were arrested after breaking into the premises of the government’s business ministry.
Jack Clark, a self-employed 55-year-old, said Wednesday that the cuts would likely provoke a strong public reaction.
“They need to make less emotive cuts. They’re really playing with people’s emotions,” he said.