Public spending cuts could plunge Britain into a double-dip recession, driving unemployment above 4m and threatening to provoke riots on the streets, the country’s most senior union leader has said.
Sunday’s warning from Brendan Barber, general secretary of the Trades Union Congress, came as public sector unions told Labour and the Conservatives they would hold industrial action ballots if jobs were threatened.
Union leaders said they expected an “onslaught” against the public sector, whichever party won the general election due by next spring. Lord Mandelson, business secretary, will on Monday say Britain faces a “period of public spending constraint” and Labour should not try to solve problems “simply by throwing money at them”.
On the eve of the TUC conference in Liverpool, Mr Barber said replacing the government and Bank of England’s stimulus programme with public spending cuts to reduce the £175bn budget deficit would have a catastrophic effect.
“A double-dip recession would not just be deeper but also longer. Prolonged mass unemployment would not just do economic damage, but have terrible social effects. I don’t think Britain is broken, but this would be one way to break it,” he said.
The congress is taking place on Liverpool’s rejuvenated waterfront, only half a mile from where the Toxteth riots broke out in 1981, resulting from tension between police and the black community.
Mr Barber said: “Last time we suffered slash and burn economics we had riots on the streets here in Liverpool. I make no prediction that this would happen again, but I do know that prolonged mass unemployment will have terrible effects on social cohesion, family break-up and the nation’s health.”
Lord Mandelson will set out Labour’s credentials as “wise spenders, not big spenders” in an attempt to fine tune the party’s position on public investment ahead of the election. Until this summer, Gordon Brown and other ministers were insisting that the party could continue to increase public spending in spite of the black hole in Britain’s public finances.
But the business secretary will tell a London audience in a speech to the Blairite think-tank Progress: “We should not allow ourselves to be painted as a party that is oblivious to economic conditions.”
The speech will reflect an agreement made in recent weeks between Lord Mandelson, Mr Brown and chancellor Alistair Darling to abandon the illusion that Labour could escape spending cuts.
Lord Mandelson will argue that the Tories are anticipating an era of “deep, savage, indiscriminate” cuts with “zeal” because they want a small state as a matter of principle. He will maintain that Labour has spent so much money in the past decade – a “huge catch-up investment in public services” – that it will be possible to keep “higher standards” even in tough times.
However, it would be wrong to turn that higher spending into “some kind of eternal doctrine; that social democracy is about high growth in public spending for its own sake”.
Mr Brown will urge the conference on Tuesday not to disrupt the “fragile” recovery with industrial action. Dave Prentis, general secretary of Unison, the largest public sector union, said its focus would be campaigning, but “if our members are facing job cuts and compulsory redundancies, we will ballot members for industrial action”.
Mark Serwotka, head of the Public and Commercial Services union, urged joint industrial action by unions where necessary.
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