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UK Rolls Out Austerity Cuts ‘Not Seen for Generations’

Gary Gibbon of Independent Television News reports on Britain's decision to dramatically cut the budget to tackle the country's mounting deficit.

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    And now: The British tackle their big government deficits with deep spending cuts.

    We begin our coverage with a report from Gary Gibbon of Independent Television News.


    The coalition government today went into uncharted territory, unveiling cuts on a level not seen for generations.

    We know what similar exercises have brought in Greece after emergency spending cuts. Mass demonstrations have come to Ireland in the two years since their drastic cutbacks. And France is in the grip of strikes and shortages.

    George Osborne hopes that he has packaged his unprecedented cuts in a way that would avoid all that, will bring growth and better times in time for the next general election.

    GEORGE OSBORNE, chancellor of the Exchequer: Today is the day when Britain steps back from the brink, when we confront — when we confront the bills from a decade of debt, a day of rebuilding, when we set out a four-year plan to put our public services and welfare state on a sustainable footing for the long term, so that they can do their job, providing for families, protecting the vulnerable, and underpinning a competitive economy. It is a hard road, but it leads to a better future.


    The chancellor predicted that half-a-million public sector jobs would go. He's expecting to make six billion pounds of savings from administration, which will mainly consist of job cuts.


    Yes, there will be some redundancies, and that is up to the decisions of individual employers in the public sector. That is unavoidable when the country has run out of money.


    And those that stay in the public sector will find their pension contributions go up by 3 percent, saving the government close to two billion.

    The biggest hit was on welfare, seven billion pounds worth of cuts, on top of the 11 billion announced in June. A million people who currently qualify for what used to be invalidity benefit will find they lose the benefit altogether after one year.

    Withdrawing the employment and support allowance for anyone whose household gets above the minimum wage will bring in two billion pounds. It turns out that the withdrawing of child benefit for higher-rate taxpayers actually pulls in 2.5 billion, not the one billion originally announced. The Treasury had given out the wrong number.

    But the bulk of the other welfare measures agreed by the coalition hit poorer families, tightening housing benefit, trimming council tax benefit, freezing the working tax credit. The biggest exception is a hike in the child element of child tax credit. The government hopes that will help its argument that it's cutting in a progressive way.


    We are all in this together, and all must make a contribution.


    The housing budget takes one of the biggest hits. It's cut by around four billion pounds. The government is upping chargeable rents, and hoping that will get private builders and housing associations building.

    But it won't be doing much building itself.


    Down with the cuts!


    In the harsh new world unveiled, the pension age goes up quicker. There are massive cuts to councils' budgets, policing budgets, and sizable hikes in commuter ticket prices, too.

    But the chancellor cheered his own backbenchers, claiming he had undercut Labor's notional target of 20 percent cuts for departments.


    The average savings in departmental budgets will be lower than the previous government implied in its March budget.


    ALAN JOHNSON, shadow chancellor of the Exchequer: We have seen people cheering the deepest cuts to public spending in the — in living memory, in living memory, the deepest cuts in living memory.

    Mr. Speaker, some people opposite, for some members opposite, this is their ideological objective. This isn't…



    Not all, not all of them, not all of them, but, for many of them, this is what they came in politics for.



    A bit of shoving, but not exactly Paris street fighting outside Downing Street tonight.

    George Osborne knows that the stakes of his leap into the unknown are great. He only tweaked his overall deficit plans today, adding an extra two-billion-pound wedge of capital spending. He has staked the coalition's reputation on going faster and deeper with cuts than Labor said was wise, and he's gambled that the pain will seem worthwhile in four-and-a-half years' time.

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