Erikka Askeland: Tears ahead as George Osborne axe makes its first cut

SO FAR, reaction to the elevation of George Osborne to Chancellor of the Exchequer has been benign, affectionate even, as if the electorate and the markets have welcomed him by merely ruffling his hair and giving him a little wink.

Obviously there has been sufficient distraction as the eurozone last week threatened to collapse in on itself. It is as if Europe's dalliance with bankruptcy was like a 50 car pile-up that made the prangs to the UK's economy look manageable in comparison.

Except this will change today as the wailing and gnashing of teeth heard in Europe starts coming from here too. For this is the day Osborne hauls out the axe he's been diffidently hiding behind his smart suit. He's got 6 billion to lop off public spending this year alone and it will be neither pretty nor popular.

Aiming to reduce the deficit by dedicating 80 per cent to spending cuts and 20 per cent to tax rises means the blood will flow. Many before him have promised a "bonfire of the quangos", but this has always proved much easier to say than to do. These quasi- autonomous non-governmental organisations are funded to do all sorts of things government is often too unwieldy or unwilling to achieve. They usually employ senior people, from government and industry, with long track records. But this time, Osborne will not be able to hold back.

The wailing will be coming from those who argue that their quangos or funding streams provide value for money, and to axe them will only end up costing more.

There will be some easy wins. Yesterday Nick Clegg accused the Labour government of "throwing money around like there was no tomorrow" and there have been some fine examples. Few will miss Labour's ID card scheme, for example.

Expected tomorrow is the announcement to scrap an 8m refurbishment of the Blackpool Tower. What is extraordinary about this small speck of the cuts is that the deal to buy the tower from its multi-millionaire owner Trevor Hemmings for 32m was sealed mere weeks before the election, in what was clearly a sop to the largely Labour-voting electorate in England's north west.

Of the public money promised to Hemmings, 14m came from European funding, 7.9m from the local regional development agency – which is also facing the prospect of a severe budget haircut – an amazing 10m from Blackpool Council and 7m from Whitehall in the guise of the Homes & Communities Agency. Once seen as a sure bet for big regeneration plans, dismal Blackpool clearly lost the chance to return from the brink of dereliction when Labour's plans for a northern supercasino came to naught.

But, just like former chief secretary Liam Byrne's note said, there is no money left for such projects, particularly after having stuffed the pockets of the local landlord.

But there is still an argument that sprucing up the Blackpool Tower may have been a decent investment if it served to prevent the expense of a continued downward spiral of deprivation, lawlessness and despair. But Blackpool's bleak beaches and down-at-heel visitor attractions serve as an instructive example to the rest of us of what austerity looks like.

Other decisions look harder still. How about the 55bn Building Schools for the Future programme? An English project, the closing down of the UK's largest schools building project will hit an already burdened construction sector, as well as give major legal headaches to local authorities that have already contracted out work. Likewise, there are as many as seven English universities on the brink of insolvency. Mergers in this sector have happened before, but never yet on this scale.

There are still fears that cutting too hard, too fast will strangle the UK's economic recovery at its birth. But the wee bairn's growth is also at serious risk of being smothered in its bed by Europe if she rolls over on it.

Yet there are hopes that Osborne's hand might be stayed, if only a little, by the government's new Office for Budget Responsibility (OBR). It is thought that the OBR's three wise men – Sir Alan Budd, Geoffrey Dicks and Graham Parker – aren't the hardliners many fear.

Dicks for one has previously argued that recovery is faster if cuts are delayed. But nor will they allow Osborne to try it on with overly optimistic growth forecasts. But the fact remains, no matter how it is cut, it is still going to hurt.