Business, Economics and Jobs

The British Bust: The pain of austerity measures has yet to reach the public


Trade unionists and students take to the streets of Manchester to protest against tuition fees and public spending cuts on Jan. 29, 2011 in Manchester, United Kingdom. The police stood watch over the demonstrations, but their department will also suffer painful cuts.


Christopher Furlong

MANCHESTER, United Kingdom — A bleak mid-winter Friday night and this northern city is living up to its reputation as Britain's good-time capital. Since late afternoon trains from all around the compass have been disgorging people for 48 hours of heavy-duty partying in the city's hundreds of dance clubs.

Some head to the city's Gay Village, others to the University Quarter, still others to the renovated Salford Quays area, some never make it out of downtown. The noise inside the Mint Lounge is fearsome and a good time — possibly chemically aided — is being had by all. If conversation weren't impossible, the question a reporter would ask is, "Haven't you guys heard about the austerity cuts that are coming? This party is about to end!"

Beginning in April — when the city's new financial year starts — more than 109 million pounds ($177 million) will disappear from the city's budget. Thousands of people are about to lose their jobs or be forced into early retirement.

Read The British Bust, Part II on whether Manchester can use the same tricks it has in the past to recover from economic recession.

Beyond the local government employees directly affected, every single person in this region of 2.5 million will feel the pinch. Britain's Conservative-led coaltion government has decreed war on the national deficit and is cutting funding to local government. Libraries and public swimming pools will be closing; care for the elderly, help for young working mothers are all being cut back.

The biggest single employer in Britain by far is the state, the direct source of somewhere between 27 and 30 percent of all jobs. (It is almost impossible to calculate how many jobs indirectly come from government spending). The NHS is the single biggest employer in Britain with more than 1 million people on the payroll. So Prime Minister David Cameron's austerity cuts risk the very foundation of British employment.

In the northwest region of the country, dominated by the Greater Manchester conurbation, three quarters of all new jobs created in the last decade were public sector jobs, according to the independent employment think-tank, the Work Foundation. This may explain why Unison, which represents government workers, is the country's largest union and has 210,000 members in Manchester and the surrounding region alone.

Earlier that Friday, at Salford Town Hall in the vast interconnected network of towns that make up Greater Manchester, Unison has organized a small picket line of union members and local Labour Members of Parliament. In the freezing cold, they are handing leaflets to people going into the building, which is also home to the headquarters of Greater Manchester Police (GMP).

Following union rules, GMP has sent out notices to all its staff informing them their jobs are under threat. Up to 2,000 jobs must be cut from force, from cops on the beat to the non-uniformed support staff who work the radio communications desks and do the evidence filing.

From inside the town hall, management, which has the burden of doing the firing, sends out hot tea to the 20 or so Unison activists. Peter Fahy, chief constable of the GMP, the man who is ultimately in charge of making the cuts, stops by to offer words of sympathy.

"We know how dreadfully difficult this is," he tells the group. "This is not something I want to do. We are trying to find every one a job."

Fahy added, "I have never been in this situation before. In the 30 years I have been in policing our budgets have gone up every year. This is the first time we are being asked to make cuts and let people go."

The numbers are stark. Beginning in April, GMP, funded by the British government in London, must trim 134 million pounds ($218 million) from its budget over the next four years. The bulk of the cuts are scheduled for years one and two. The GMP currently employs 12,000 people. About a sixth of those jobs will go.

Managers hope that a hiring freeze and offering voluntary severence will account for most of the shrinkage.

That may turn out to be a forlorn hope. In a country where the economy returned to negative growth in the last quarter of 2010 and unemployment is still rising, people are not keen to try and start a second career. Plus, the voluntary severance packages are pretty small.

Outside Salford Town Hall, Patricia Horn is stamping her feet to keep warm. She has never walked a union line and hasn't dressed properly. She has worked as support staff at GMP for 25 years. Her husband is a policeman and will be taking the buyout. While he retrains, they need a steady paycheck. Horn confesses she was initially tempted to join him but then was offered "7,655 pounds severance ($12,400) — around four months pay. That's not much for 25 years, is it? So I'm hoping I'll be kept on."

Labour MP Tony Lloyd watches the scene and shakes his head. The Conservative-led coalition government's insistence on draconian cuts to eliminate the country's structural deficit in four years is unprecedented, and in his view unnecessary and highly risky. The Labour party’s platform in last May’s general election, in contrast, called for halving the deficit in four years, then waiting for recovery to reach the stage where jobs are being created before reducing the deficit further.

Lloyd can't understand why the government is taking this huge risk, the only explanation he can come up with is, "Britain is conducting an experiment on behalf of the U.S. in shrinking the state. We've been here before, in the days of Margaret Thatcher and Ronald Reagan."

There are no sacred cows for the coalition's cutters. Law and order, for one, is a Conservative issue. Cutting back the number of bobbies on the beat won't please the party's core supporters.

"This is a dangerous area for them," said Lloyd, "cutting back on policing. After the National Health Service it is the most totemic public service."

The British military is also a traditional Conservative totem. But Cameron and co. are wielding the scalpel even there, despite the ongoing war in Afghanistan. Eleven thousand armed forces personnel will be laid off. One hundred Royal Air Force jet pilot recruits, many of whom were nearing the end of their expensive training, have already received their pink slips. Britain's defence secretary last week was forced to make a statement guaranteeing that troops returning from Afghanistan would not immediately be handed their walking papers.

Even the iconic aircraft carrier, the Ark Royal, has been de-commissioned.

At Salford Town Hall, the picketers have been invited inside to address a meeting of the Greater Manchester Police board. Jim Moodie, the Unison rep for GMP's civilian workers gets up. He expresses sympathy for the board members who have to decide who to lay off. "The cuts you are being asked to make go far too deep, far too quickly."

Moodie suggests using the cash reserves from local council funding that accountants always insist are kept on hand for a rainy day. "The rainy day has arrived," Moodie tells the board. He reminds them that it will cost 13.9 million pounds ($22.7 million) to lay people off. "Use that money to buy time. Pay people to re-train before re-deploying them."

The board is polite but the die has been cast. There is no way to push back at the British government's plans, says Chief Constable Fahy, "So long as the politicians have an appetite for risk."

So far there is no reason for Cameron and his cabinet to feel concerned about the risk they are taking not just with British economy, but with people's livelihoods, acknowledges Tony Lloyd. "Right now austerity is an abstract to most people but as cuts begin to bite ... the situation won't become real until people begin to see fewer uniforms on the street." He could add and libraries close down, and home visits by nurses and social workers to the elderly and infirm cease.

But that won't begin to happen until April, so the party in Manchester can continue for a little while yet.

Read The British Bust, Part II on whether Manchester can use the same tricks it has in the past to recover from economic recession.