Asked what the PM’s approach is on the issues facing Greece and the Eurozone, the PMS said that the PM would deliver a speech touching on these things the next day. The UK had been consistent on what was required: the Eurozone countries needed to address the problems with Greece, strengthen their banks and ensure a sufficient bailout fund was in place. After that, structural reforms were needed to increase competitiveness alongside greater fiscal integration.
Asked if the UK would provide money to support Greece if it left the Eurozone, the PMS said that there was a bailout mechanism in place, which the UK is not part of. It was for Eurozone countries to stand behind the Euro.
Asked when action would be needed, the PMS said that there was uncertainty in the Eurozone which was undermining confidence and the recovery. The sooner these issues were addressed the better.
Asked whether there was a need for a Council meeting to be brought forward, the PMS said that an additional informal Council meeting had been scheduled.
Asked whether the Government had a response to the Bank of England report revising growth forecasts down to 0.8%, the PMS said that the Bank of England was highlighting higher than expected inflation and the biggest risk to the economy, which was the situation in the Eurozone.
Asked whether the unemployment figures were signs of green shoots, the PMS said that the country was still facing challenging economic times. We welcomed the latest figures and the drop in unemployment. The Government was doing everything it could to ensure unemployment continued to fall.
Asked if there was a fundamental shift in employment, from full-time to part-time work, the PMS said that there was still uncertainty in the economy and a lack of confidence due to the Eurozone. That would affect businesses’ decisions to take people on, but it was better for people to be in some form of employment so that they could gain skills and experience to help them secure a permanent job if they wanted one.
Asked if the PM was planning a further £25bn cut in welfare spending, the PMS said that the Government has set out its welfare spending plans in the spending review. There have been no decisions taken for years beyond the spending review.
Civil service reform
Asked whether there were plans to cut the civil service by 90%, the PMS said that the Government was not planning cuts on that scale. We were cutting spending which meant that the number of jobs in the public sector would fall over the spending review period.
Asked whether the cabinet were planning to outsource policy to think tanks, the PMS said that the Government was looking at a range of options to reform the civil service. We wanted to address its weaknesses and build on its strengths. This particular idea had been mentioned by the Cabinet Secretary at an IfG conference in March.
Asked whether the PM still backed the police reforms despite pressure from the Police Federation, the PMS said that the Government was having to find savings in the police force. A significant portion of any public service was staffing costs which was why we had introduced pay freezes and pension reforms across the public sector. This was a necessary part of finding savings whilst protecting the front line.
Asked why the PM was not fussed about the date of the Scottish referendum, the PMS said that the Government has consistently said that it wanted a referendum sooner rather than later.