Huge Spending Cuts: the right way forward for Britain

David Cameron, the British Prime Minister, recently unveiled a series of hefty cuts to public services and the welfare system in the UK. The news has dominated headlines here ever since.

The reason for the need for cuts is that the UK’s deficit is apparently at a record high (£180bn, same as that of Greece), something that everyone is blaming on the overspending of the former Labour Government.

For me, it has been amusing and bemusing watching this news (and sensational headlines) about the new “austerity drive", having just returned to live in England from Mumbai.

We were told by Cameron that the welfare budget was to be cut by £18bn. The total benefits being handed out to a single family are now being capped at £26,000 per year (a salary an Indian could only dream of and one that most Brits have to work five days a week to get.) Here in England, the people who receive these benefits don’t need to work and have all this money all handed to them in a cheque. Often they are perfectly healthy and able to work, but they simply don’t need to, since the Govenment benefits are on offer. We are hearing on the news now that there are families in London that have been getting £400 a week in housing benefit alone, living in homes in central London, that no ordinary working person could ever afford. Some families in London get £50,000 a year in housing benefit, more than double the average salary in the UK. And that is just their housing benefit! They cash in other benefits on top.

I don’t think India has a welfare budget, like the UK does. In the UK anyone that doesn’t feel like working, doesn’t have to, and can get £65 a week in Jobseeker’s Allowance from the Government just to stay at home and watch daytime TV.

Another change Cameron wants to bring out is to raise the age at which men and women can claim a state pension to 66 here. Again, I am not aware of a state pension in India, and the country seems to be ticking along quite nicely. Why? Because people there rely on their families, not the state. The French meanwhile, are torching cars over their state pension age going up to 62!

If an Indian were watching the British headlines, that I am watching, they would be simply aghast at the amount of "freebies" (or benefits) a Briton can get. We have Jobseeker's Allowance, Housing Benefit, a Carer’s Benefit (if you care for someone); free access to hospitals, medicines, treatments ; free schools; a cash allowance just for having a child; cash for fuel for pensioners; free bus passes; free school meals, all kinds of subsidies for the unemployed…the list goes on. Our income taxes are paying for all this. And now we are being told that as we are in too much debt, they all have to get cut.

While I agree some benefits are essential (free health and education, free fuel for pensioners, incapacity benefit for the genuinely sick or injured etc), some are not and too much of some is very much a very bad thing – as it creates a layer of society that simply never works and lives off the state. Plus it encourages fraud. There are thousands of people that obtain incapacity benefit through fraud - cases of people being caught out are forever being reported in national newspapers.

What no one has thought of is what about getting all these people to work! A motivation for that would be having no money. But by giving them so many benefits, right now that incentive is withdrawn from them.

Perhaps if these people went out and worked, they would not need to rely on the state. They could pay their own rent. Then the money we are ploughing into benefits could be used on defence and anti-terrorism instead.

Can you imagine if India had all these benefits? It would go bankrupt overnight. There would certainly be no maids or road labourers. No, they would all stay at home living off state benefits instead as there would be no incentive to work. No other country would have been able to find 1,000 labourers in a day to work on the Commonwealth Games stadiums for a pittance, as the Indian Government did shortly before the Games opened....

Other cuts Cameron has announced include:

The Foreign Office withdrawing its funding of the BBC World Service. This needs to be funded by the BBC now instead. Sounds like a good idea to me, since the BBC is funded by compulsory TV licenses that anyone with a TV has to pay for anyway. Not quite sure why the Foreign Office was ever funding it.

The Transport Budget needs to be cut by £1.1 bn meaning that commuters (read: hard-working people paying off mortgages) will be forced to shell out even more on rail fares, that are already exorbitant. I am totally against this, as apart from anything, it is hardly going to promote greener living, and will hit those on low incomes as well as on high incomes. This is a matter which England would do well to learn from India on. I am not sure if rail travel is subsidised there, but it is amazingly cheap, meaning that anyone in India can afford it. And accessible transport is a vital ingredient in anyone’s quality of life. I remember how in May all the maids and watchmen would flock to their villages on trains. In England such distances by rail are far too expensive for anyone other than a fat-cat investment banker.

The Arts Budget is going to be cut by 30 per cent too, which I am also against as the Arts (theatre, films, museums, creative writing, fine art etc) are the heart and soul of Britain, something the British are proud of and a major reason why tourists visit. Many of Britain’s theatres, museums and films are currently subsidised by the Government. One could argue though that these organisations could be more efficiently run if their belts were tightened and could look to be patronised by private business instead.

University fees look set to double by 2012 and will no longer be capped for British students at £3, 290, which I am also against. It would be better if the Government forced universities to forge better ties with industry and make their courses more vocational, in my view, than simply withdrawing subsidies.

The Schools and Health budget remain unaffected, which is good and The Queen is being forced to cut her spending by £6 million.

Bizarrely, despite all these cuts, Britain, in a huge philanthropic gesture, is going to increase its overseas aid by 40 per cent, we are told. This has raised a few eyebrows.

In Mumbai, on the contrary, I saw barely any public services. The police and fire services aside (the former, which you may have to bribe, I am told), I can think of few public services, apart from road building that existed in India. To my knowledge, healthcare and education is not free for most people. (I think there are a few government-sponsored vernacular schools, but these tend to cater to the children of slumdwellers and the homeless, most of whom aspire to sending their kids somewhere better anyway. I am not aware of any free healthcare at all, as we have in the UK.) I don't remember going to any government-sponsored art galleries either, although Mani Bhavan, the highly inspirational Gandhi museum in Mumbai may have been free. Do you have to pay to go to the Jehangir Gallery? I can’t remember but I certainly don't remember seeing anyone collect the rubbish or sweep the streets. Oh, the army and defence - yes, there is a lot of money invested in that in India, for which we can be thankful. The army is very good (and the men super hot.) Airport security in India is unrivalled. But apart from defence, I am not especially aware of what public taxes in India are spent on. I don't think many Indians are either which is why there seems to be a national subversive attempt to not pay any taxes, or pay as little as possible. "All politicians are corrupt," is a comment often made in India. I do not agree with this as I have no evidence either way. Indeed the MP expenses scandal in the UK has exposed the "white-collar" corruption that exists in Britain.

And this is not the point. The point is that despite there being barely any public services in India, (and a hell of a lot of tax avoidance, which is not possible in the UK - the Inland Revenue catches everyone), Indian people do pretty well. Indians survive despite having none of the benefits on offer in the UK. One reason for this is that Indians depend much more on the family and themselves than the state. In my previous blog, Expat on the Edge, I touched on some of this: http://blogs.hindustantimes.com/expat-on-the-edge/2010/05/19/living-in-a-material-or-spiritual-mumbai/

Now, I am not for one minute advocating England axes everything and we end up like India where public services are woefully lacking; but there needs to be a happy medium between the two extremes. The worst part about Britain wasting so much money on benefits, is that there are plenty of jobs in the UK! Plenty of them. And imagine if half the money we currently ploughed into benefits was instead ploughed into more job creation and investment in British business!

At least in India there is a sense of and pride in working and saving. The ideology in India is that if you want something, you have to work for it and save to get it rather work out how to scam a benefit out of the government for it, or put it on a credit card. Perhaps a study should be done on the impact living in a society like India has on the individual and his attitude towards work, earning a living, his family, and his dependence on the state. It could reveal some interesting findings that Britain could learn from. Being born into a welfare state could  perhaps not be particulalry good for the average individual.

I wonder if as we barge forward into the 21st Century, with all the globalisation and competitiveness that comes with that, whether the welfare state, such as the one Britain currently has, can afford to continue, or whether nations like Britain will have to change and learn from countries like India.