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Drastic measures will have to be taken. They are justified by the present financial position of the nation; THE DIRE SITUATION FACING BRITAIN CONFRONTED WITH CUTS AND MORE CUTS; Sound familiar? In fact these are the words of Britain's Chancellor around the Great Depression...and look what happened then; EXCLUSIVE.

Byline: Nigel Nelson POLITICAL EDITOR

THE Chancellor was grave as he rose in the Commons to make his financial statement.

"Drastic measures will have to be taken," he told MPs. "They are justified by the present financial position of the nation. There is clearly a limit to borrowing. We cannot afford to increase debt." No, that wasn't George Osborne delivering his doomsday Autumn Statement this week - though it could have been.

It was Chancellor Philip Snowden on September 10 , 1931 when Britain was in the grip of the Great Depression.

One in four was jobless, with up to 70% out of work in some areas.

Then - as now - the Chancellor increased taxes and hammered unemployment benefit and public sector pay.

Snowden, as part of Ramsay MacDonald's coalition National Government, made the depression worse because there was less money to spend.

The pound fell 25%, investors took flight, the Navy mutinied and unemployment hit three million in three months. The fall in purchasing power in the country led to a deflationary spiral of lower production, falling wages and an increase in the value of debt.

That is why economics professor Mark Blyth, author of Austerity: The History of a Dangerous Idea, says George Osborne will come a cropper.

Failed

"Austerity was tried and it failed," he said. "Countries cutting more than the UK are mired in depression. Confidence only returns when austerity stops."

In America, president Franklin D Roosevelt did the opposite of Snowden and lifted his nation out of the Great Depression with the New Deal in 1933.

It involved huge public spending on airports, hospitals, schools, roads, bridges, and dams. That created jobs, putting money in people's pockets.

Here, history is about to repeat itself as George Osborne plans more than PS60billion of cuts. The Economist magazine says spending by Whitehall departments will fall from PS147billion today to PS86billion in 2020.

That means spending on public services will drop from 21.2% of national income in 2010 to 12.6% by 2020, says the Office for Budget Responsibility.

The OBR, relied on by Mr Osborne for his figures, also questioned how such swingeing cuts could be possible.

On top of that there will be another PS30billion of cuts in welfare spending over five years. That will reduce spending as a share of national income to levels last seen in the 30s.

The Great Depression was caused by the Wall Street crash of 1929 - just as our current economic woes began with the banking crisis of 2008.

The US had called in foreign loans and put up trade barriers plunging the rest of the world into depression.

Our Government has pledged to not touch health, schools and international aid. So areas bearing the brunt will be welfare, town halls, police, environment, defence and transport.

We have committed 0.7% of Britain's earnings to developing nations which means raising the target of PS12billion a year by another PS400million.

If the "ringfences" stay, other departments' spending would fall from PS3,020 a person in 2009-10 to PS1,290 by 2019-20, a 57.3% drop.

Brian Strutton of the GMB union said: "Cuts in expenditure of this order for law enforcement, armed forces, social and community services and public sector pay are not remotely realistic."

And WELFARE cuts could wreck Work and Pensions Secretary Iain Duncan Smith's plans to help the working poor through the new Universal Credit.

Freezing the Work Allowance element means hopes of the working poor earning up to PS734 a month before benefits are clawed back will be dashed.

That will plunge one in four families into poverty - after feeling their cost of living rise by 50% since 2004.

Julia Unwin, head of Social research charity the Joseph Rowntree Foundation, said: "We're concerned recovery will be built on rising poverty. A long-term economic plan should have a poverty-free UK at its heart."

Ruth Somerville of kids' charity Barnardo's said: "We're concerned a further freeze in working benefits will leave poor children in the cold.

Struggling families already choose between heating and eating, as cuts have left them unable to pay bills." And another cut in the current PS500 a week benefit cap could leave some families PS160 worse off a week.

The DISABLED face benefit cuts, despite DWP spending PS2billion more than estimated. It follows delays in assessing Employment & Support Allowance and roll out of Personal Independence pay.

Shadow Work and Pensions Secretary Rachel Reeves said: "The failure of ministers to get a grip is hitting disabled people.

Public services plunge from "And it's putting public finances under greater pressure with billions wasted."

to 12.6% of income by Office for Budget " Richard Hawkes of disability charity Scope said Disability Living Allowance and Personal Independence Payments must be protected if the disabled are to meet extra costs of PS550 a month.

He added: "This support is a lifeline for the disabled and their families."

The POLICE have already lost one in five posts and Association of Chief Police Officers president Sir High Orde expects another 20% cut and 34,000 jobs to go.

COUNCILS have had budgets slashed 40% since 2012 and they face similar cuts if Mr Osborne is to hit targets. London School of Economics Professor Tony Travers said: "Local government would look different to anything we've known."

The TRANSPORT network will either have to do away with road maintenance and fare subsidies or increase rail fares.

We will no longer be able to afford to protect threatened species of wildlife.

DEFENCE budgets will need more huge reductions.

Changes to Stamp Duty will make buying HOMES cheaper taxwise for 98% of purchasers but it will also push up prices.

The levy will now be graduated like income tax rather than imposed in bands.

No longer will buyers have to pay full rate on properties just a PS1 above PS250,000, PS500,000 and PS1million. Higher house prices will mean soaring RENTS when 29% of tenants are already struggling.

Matt Hutchinson of SpareRoom.co.uk said: "A Government obsession with the property ladder highlights a lack of concern for Britain's nine million renters." Unison general secretary Dave Prentis said: "More cuts will mean more pay freezes. An increasing number of full time public sector workers will have to borrow every month and rely on second jobs."

Steve Turner of Unite said: "Only investment, pay rises and growth can release us from dead hands of deficit and debt."

And Tony Dolphin of think tank the Institute for Public Policy Research said: "Cuts in deficit are associated with weaker growth and more moderate cuts with healthy expansion. The Chancellor has not learned this lesson. He will be taking a big risk with the economic recovery."

Even deputy PM Nick Clegg said deficit reduction could not be achieved through spending cuts alone. He told the CBI last month: "It would lead to very, very deep cuts in policing, in the business department and in social care. It would also penalise the working-age poor."

Shadow Chancellor Ed Balls said: "We will make different and fairer choices."

That includes reversing the PS3 billion a year tax cut for people on over PS150,000.

Mr Balls added: "We will have a mansion tax to transform our NHS.

"And we'll scrap elected police commissioners to protect frontline policing."

nigel.nelson@people.co.uk Voice of the People: Page 14

need Budget Responsibility. Public services plunge from 21.1% to 12.6% of national income by 2020

CAPTION(S):

CUTS: Osborne's only policy

CON: Snowden poll promise

TREASURY SLASHER Chancellor Snowden cut Britain to the bone in 1931
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Publication:The People (London, England)
Geographic Code:4EUUK
Date:Dec 7, 2014
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